A Cost Efficient Fair Pricing Scheme for Low Energy Consumers of Networked Smart Cities

The 5th generation (5G) of communication networks will facilitate innovative and emerging services and applications having lower latency requirements, increased energy efficiency and reliability. These characteristics of 5G make it capable to act as a potential underlying network for smart city services such as for implementation of demand response in smart grids. More specifically, in terms of demand response, these low latency networks are used for the explicit exchange of messages between utility companies and customers for pricing mechanisms. According to the time to use (ToU) pricing scheme, consumers are offered a specific electricity price for each time interval i.e., off-peak, on-peak and mid-peak blocks. Unlike high energy consumers (HECs), low energy consumers (LECs) are not the reason of high peaks (on-peaks) formation; however, they pay higher rates to the utility during on-peak hours because of one price for all rule. Here, one price for all makes ToU an unjustified pricing scheme. This issue is discussed in this study and a fair pricing scheme is proposed to remove undue financial burden from LECs. The proposed fair pricing scheme (FPS) is based on energy consumption of each category customer. LECs and HECs pay the electricity bill exactly according to their electricity consumption and no one has to bear the financial load of others. Simulation results show that LECs are able to save up to 11.0075% of their total electricity bill. HECs has to pay the penalty of high energy consumption whereas, the utility company is not affected by the implementation of the proposed fair pricing scheme.