Reasonable distribution retail price is able to promote sound operation of distribution electricity market. However
in early stages of distribution electricity market
distribution company is both market competitor and public service utility. Therefore
the benefits of both company and society need to be considered in retail pricing process
which leads the problem more complex. This paper references the concept of shadow cost of public funds
analyzes the social welfares of distribution system. Based on the analysis
elasticity and cross-elasticity of price are introduced
mathematical models of optimal retail pricing are set up with considering physical constriction of radial distribution networks. Analytical formulas of retail price are derived from the model
and recurrence formulas for series periods are also given. The examples show that the proposed method is feasible.