TOU' rates hold out $13-billion prize
By 2000, U.S. electric utilities will add 90,000 MW of generating capacity to meet peaking needs. Rather than spend $45 billion on these power plants, which will be used only a couple of hundred hours each year, electric utilities could use incentive pricing-residential time-of-use (TOU) rates-to save consumers up to $13 billion. The combination of market forces and new technology to support automatic meter reading and other applications makes these savings not only possible but practical. Unlike prices at other capacity-constrained industries such as airlines or telephone companies, electric utility prices usually do not vary by time of day. The result is average capacity factors of 43.8 percent (based on 1989 data), compared to a U.S. airlines average of 63.2 percent. Significantly, the airline average use to be below 50 percent in 1970, when they, like electric utilities, were closely regulated. Through incentive pricing, airlines were able to achieve almost a 30-percent increase in efficiency. According to studies by the Electric Power Research Institute (EPRI) and Edison Electric Institute (EEI), TOU pricing could increase the efficiency of U.S. power plant use by nearly 15 percent. Power plant needs for the next seven years offer an excellent opportunity to use TOU pricing to save consumers billions of dollars. According to Burns McDonnell, an engineering firm, new electric generation resources will not be needed before the turn of the century to prevent to projected deficit of peaking capacity. Indeed, Burns McDonnell estimates a current excess of 152,000 MW in nation-wide baseload capacity. TOU pricing, according to EPRI and EEI, causes residential consumers to reduce their onpeak electricity consumption by 20 percent. With a residential peak load of 183,000 MW, this reduction translates into over 36,000 MW of capacity.
- OSTI ID:
- 7038685
- Journal Information:
- Fortnightly; (United States), Vol. 132:6
- Country of Publication:
- United States
- Language:
- English
Similar Records
California Time-of-Use (TOU) Transition: Effects on Distributed Wind and Solar Economic Potential
2018 Wind Technologies Market Report