Innovative rates: Using market forces to become more competitive and achieve DSM goals
Electric and gas utilities are perhaps the last remaining industries to describe their charges to customers as {open_quotes}rates{close_quotes} rather than {open_quotes}prices.{close_quotes} Tellingly, their customers are more often known as {open_quotes}ratepayers.{close_quotes} As competition becomes a reality, the successful utilities will be those companies who change quickly, not just to respond to their customers` needs, but also to take advantage of market economics. For this is becoming a brave new world where profits will be determined by efficiency and service rather than regulatory fiat. Innovative rates - {open_quotes}creative pricing{close_quotes} in most industries - have tremendous power to help utilities become more competitive by improving efficiency. Successful utilities will use these rates to sell more kilowatthours per kilowatt of generating capacity, spend less on fuel per kilowatthour generated, even reduce employee costs per customer. Studies of time-of-use, interruptible, curtailable, and real-time utility prices have shown consistent and reliable benefits, resting on a foundation of market economics going back to the 18th century. This paper reviews a few of those studies, focusing on the simplest type of innovative rate - time-of-use - with the greatest potential impact. It also reviews how market forces, and the resulting effect on pricing, led to an efficiency increase of 30% for U.S. airlines in only a decade. Similarly dramatic effects can be expected for gas and electric utilities.
- OSTI ID:
- 192137
- Report Number(s):
- CONF-940129-; TRN: 96:001037-0076
- Resource Relation:
- Conference: International symposium on distribution, automation and demand-side management, Orlando, FL (United States), 17-20 Jan 1994; Other Information: PBD: 1994; Related Information: Is Part Of Fourth international symposium on distribution automation and demand side management (DA/DSM 94); PB: 747 p.
- Country of Publication:
- United States
- Language:
- English
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