Plenary session D: New pricing paradigms--from cost-based to market based; What will customers expect from their energy service providers in a liberalized market?
- Olin Corp., Norwalk, CT (United States)
Olin is a Fortune 200 company with annual sales of $2.7 billion, with about 12,500 employees worldwide. Olin is a chemical company, an aerospace company, an ordnance manufacturer, and is the country`s premier brass manufacturer. Two of Olin`s main operations are chemical manufacturing and brass operations, both of which are energy intensive. The brass division constitutes about $700 million of Olin`s $2.7 billion in sales. Maintaining cost competitiveness is crucial to Olin`s health and survival. Electricity costs are a substantial percentage of the manufacturing costs. While electric consumption has grown, so have the rates from the utilities. Despite increasing use of interruptible power, demand control and off-peak usage, Olin`s cost per kilowatt-hour increased by one-third from 1985 to 1992. In other words, Olin is buying a lesser quality product and accepting much greater risk while still paying more for the product. This is clearly unacceptable from the customer`s point of view. In a competitive market, what will Olin, as a customer expect from its energy service provider? First and foremost is price. Olin cannot be a low cost producer with high cost suppliers! Olin requires a quality product. This means consistent voltage as well as dependable transmission and delivery. Olin requires a reliable product. This means that if Olin buys firm power it is firm. If Olin buys interruptible power and is told to expect 50 hours of interruption, then they don`t get 250 hours for reasons Olin does not understand.
- Research Organization:
- Electric Power Research Inst., Palo Alto, CA (United States)
- OSTI ID:
- 254462
- Report Number(s):
- EPRI-TR--106232; CONF-960330--
- Country of Publication:
- United States
- Language:
- English
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