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Marketing & Competing

Fortnightly Magazine - November 15 1997

announced prices, they are limited again by quality degradation problems.

Shift load from on-peak to off-peak periods. Reschedule production runs to other times of the day, week or season. The company may choose to schedule employee vacations during high-cost periods.

Reduce load during on-peak periods. When consumers can shift their facilities from one power supplier to another, they obviously can reduce load by switching. They may also shift production to another plant where power is available at lower prices or by reducing their levels of production. Finally, they may reduce the load they take from their current supplier by using standby or backup generators.

Standalone generators are the most common source of alternate and backup power (see sidebar). They come in various sizes and capabilities and use a variety of fuels. The most common fuels are diesel and natural gas. Based on the capacity, fuel and related operating characteristics, the avoidable costs of standalone generators usually range from 7 to 10 cents per kilowatt-hour. There are often severe limitations on the start-up capabilities and duration the equipment can be run efficiently.

Another minor source of alternate or auxiliary power is from cogeneration. Universities such as Massachusetts Institute of Technology, Princeton, Temple University and the University of Florida (called Gator Power) have set up cogeneration plants that produce electricity and generate steam to heat buildings and chill water for air conditioning. However, cogeneration should be regarded more as a substitute for system-generated power than as an RTP response measure.

Reducing load may also be accomplished by the customer shutting down its production lines entirely or by shifting production to another plant. A three-shift manufacturing process can be reduced to two shifts, a two-shift process can be changed to a one-shift and a one-shift operation can be shut down entirely. Shifting to another plant may be cost effective for large, multi-plant customers who produce similar products in several different locations.

Curtailment: Applying the Breaks

Following are some examples of how different organizations respond to RTP programs using self-generation, energy-saving measures and shutting or shifting of production, or a combination of two or more of these tactics. While these examples are real, names have been changed to protect confidentiality.

Metal Industries is a copper recycling and manufacturing plant, using power for refining and stranding copper wire. Metal Industries generally runs 24 hours a day, 7 days a week. It has 14 MW of backup capacity consisting of: 1-MW diesel engine; 10-MW natural gas combustion turbine; and 3 MW of 1-MW natural gas engines.

There are 5 units in all, but 13 MW are fired by natural gas. These are used during the summer when gas is available and low-priced. Because Metal is an interruptible gas customer and has no gas storage, the generators are not available in the winter. Its costs of running the diesel engine is about 7 cents per kWh to run the diesel engine and about 4.5 cents per kWh for the gas engine. Any electricity price higher than 7 cents evokes a load-reducing response. Metal Industries can run its generators and