Creating higher value in residential time-of-use rates
The economic environment in which electric utilities operate has changed dramatically, but even more radical change looms with the advent of open access. Electric retail markets will soon be exposed to outside competition. To protect market share, utilities must learn to maximize service value through product differentiation. Although the future is uncertain, competition is surely coming, if it is not already here. Whether the future brings retail wheeling or deregulation, the outcome will involve more competition. This competition may take the form of ESCOs, IPPs, cogeneration, or something else. Whatever form it takes, the utilities that offer the best package of services to their customers will be the ones that survive and profit. As pricing alternatives are an important way to provide the best package of services for customers, time-of-use pricing deserves special attention from utilities. Traditional electric utility marketing differentiated electricity from competing fuels through non-price attributes, such as convenience, reliability, and safety. Now, utilities must find more creative ways to differentiate their products and services. Pricing and rate design can help. For example, priority services in the form of curtailable or interruptible service contracts and time-of-use rates have provided utilities with an effective means for managing load and improving overall system efficiency. New developments in monitoring, meters, and control technologies expand the potential of these options to maximize value to customers. Residential time-of-use programs offer customers choices. This paper explores how time-of-use rate programs can be used to differentiate residential utility services. It describes a comprehensive methodology for measuring the impacts of time-of-use rates, improving market acceptance, and measuring and reducing freeridership. The application of time-of-use programs as a product differentiation strategy is demonstrated.
- OSTI ID:
- 192234
- Report Number(s):
- CONF-9501113--
- Country of Publication:
- United States
- Language:
- English
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