Priority service offers a menu of contingent contracts for distribution of scarce supplies. Prices inducing customers' efficient self-selection are expectations of spot prices for comparable service. Customers' selections reveal the benefit of capacity expansion. Priority service can be...

Recently issued U.S. Federal Energy Regulatory Commission regulations require comparable treatment of demand reduction and generation in the wholesale electric market so that they are compensated at the same market clearing price. The new regulations measure demand reduction as a reduction from...