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Marketing & Competing

Fortnightly Magazine - November 15 1997

drop load by 25 MW for only two or three continuous hours.

Metal has hour-ahead (25-MW load) RTP programs. The load is computer-monitored continuously, with close attention paid during the peak period from June through September. Load can be curtailed by 12 MW. Its response plan involves about 60 different people throughout the plant. Essentially, management announces the prices and informs the 60 responders that they should react in least-cost ways to conserve power and avoid high energy costs. Within the plant, management mainly uses moral persuasion to gain compliance. During the off-peak periods in the winter they generally ride through short intervals of two or three hours but respond to high prices expected to last five or six hours.

Metal can reduce its load by:

•  Using backup power (reaction time is 10 minutes);

•  Reducing dispensable functions (reaction time is 10 minutes to one day);

•  Scheduling production at other times (requires about a 30-minute lead).

Because Metal runs a continuous-process operation, it relies more on load reduction than on load shifting.

Florida Plastic Corp. produces plastic liners for landfills and soil erosion applications. They have two shifts, one for production and a second for cleanup. Florida Plastic can respond quickly to high prices by starting two 1.8-MW diesel generators, which are run as long as necessary. Because the generators are available, management is more inclined to drop load to near zero kW of demand than to reduce or shift production. Florida Plastic has determined the RTP threshold price signal is 6 cents per kWh.

Real-Time University comprises about 300 buildings that have central heating and air conditioning. RTU buildings operate 24 hours a day, 7 days a week all year. A primary mission of the university is research, and the administrators feel the research mission can be accomplished better if facilities are available to faculty and students at all times. In 1983, the peak demand for the main RTU campus was 19 MW; the peak rose to 36 MW in 1996 and is expected to reach 48 MW in 1999. The facilities at the RTU main campus are growing rapidly, and there is a corresponding increase in the demand for electric power.

RTU takes power at a central station and single billing point. The main response to RTP has been to allow buildings to heat up during higher-priced periods. Few investments have been made to reduce the time-specific demand for power. Based on candid but confidential conversations with line personnel at RTU, the higher-level administrators seem interested in making capital investments in new buildings and facilities, but not in making investments that would lower operating costs. There is apparently little fear that cost reductions within the physical plant division will cause a reduction in future budget allocations, since they can devote monies to building fuel oil and coal inventories.

Interstate Containers is a saw pulp mill that produces lumber to build crates. It has one shift from 8 a.m. to 5 p.m. Interstate Containers is flexible and responds quickly to high prices because of the ability to self-generate and