University of Mohaghegh Ardabili Journal of Operation and Automation in Power Engineering 2322-4576 14 3 2026 08 01 Novel Electricity Pricing Method Based on the Customers’ Risk Aversion Function 154 164 3567 10.22098/joape.2024.14882.2139 EN Emad Jadeen Abdualsada Alshebaney Faculty of Electrical and Computer Engineering, Urmia University, Urmia, Iran. 0000-0002-4953-9571 Mohammad Farhadi-Kangarlu Faculty of Electrical and Computer Engineering, Urmia University, Urmia, Iran. Vahid Talavat Faculty of Electrical and Computer Engineering, Urmia University, Urmia, Iran. 0000-0003-0598-2472 Journal Article 2024 04 08 Electricity pricing approaches are generally categorized into flat-rate and dynamic pricing models. Flat-rate pricing charges a fixed rate regardless of market conditions, whereas dynamic pricing adjusts rates based on system and market factors. Traditional pricing methods often lack flexibility, preventing consumers from choosing their preferred pricing plans. This study introduces a Selective Electricity Pricing (SEP) model that allows customers to select a Maximum Tolerable Price (MTP) tailored to their needs and benefit from Real-Time Pricing. The SEP model also includes a retailer-funded mechanism to shield customers from high market prices, acting as a risk hedge. Using a risk aversion function to gauge consumer preferences, the SEP method was implemented on the IEEE-24 test system. Results indicate that low-risk customers are more likely to engage in dynamic pricing. The SEP model significantly outperforms flat-rate pricing, yielding 17.27% higher retailer profits, 11.32% lower demand, and a 2.73% increase in average customer payments, compared to a 2,500MW drop under flat-rate pricing. https://joape.uma.ac.ir/article_3567_fcc440c1e9313a241d8a54e2a5e3526c.pdf