Erroll B. Davis, Jr.
President & CEO
Wisconsin Power & Light Co.
WP&L advocates that the following steps be taken to create a level playing field for merchants...
drop load to near zero. The company also can shift production to avoid paying high RTP prices. For example, when high prices are announced for 3 p.m. to 5 p.m. the next day, employees are asked to work from 6 a.m. to 3 p.m. to make up the production. Interstate Containers' price threshold is 6 cents per kWh.
Liberty Towers is an office building that operates one shift from 8 a.m. to 5 p.m. and cannot shut down. However, Liberty Towers can respond quickly to high prices because of its ability to generate power and drop its load to near zero. Its RTP price threshold is 6 cents per kWh.
East Coast Potteries processes clay and runs 24 hours a day, 7 days a week. It has stand-by generators but cannot serve the entire load. However, it can shut down if required and can shift about two-thirds of its load. East Coast's RTP price threshold is 7 cents per kWh.
When Customers Can't Respond
What about customers who have little ability or willingness to shift or reduce loads? Are they also candidates for an RTP tariff?
A customer may have limited ability or be unwilling to shift or reduce load and yet still subscribe to RTP pricing, as shown in these two cases:
1. When the proportion of electric costs compared with total cost is low and the cost of shifting or reducing is uneconomic, the customer may be willing to ride through the high-priced periods.
2. When the customer's business is seasonal and levels of operation levels are inherently low during system peak periods, there may be little ability to shift or reduce off the peak. In an extreme case, the customer might take minimal power during the system peak periods and take maximum power under RTP rates during the off-peak periods.
These examples may be viewed as the limiting cases for acceptable RTP rates and require detailed analysis and scrutiny. Clearly, when RTP lowers the average cost of power for the RTP customer and lowers average costs for the supplier it enhances value. It may do so as well when the RTP rate benefits only the RTP customer, while not harming the supplier or other customers, such as through cross-subsidies.
The last example is illustrative of this limiting case.
Cranberry County School System has 70 schools and a 50-MW load. The county is growing rapidly and builds at least one new school every year. Cranberry has a sophisticated control center that allows the energy manager and his staff to monitor and control the switches in all 70 schools. They can sub-cool the facilities during off-peak and just run fans during on-peak hours. There are no thermostats in the school rooms but rather heat sensors that allow the energy staff to regulate temperatures within a half degree. They can control the system at each facility. There are backup computers.
Blueberry High School is the only Cranberry school on a two-part RTP tariff. The power company suggested Cranberry try RTP and emphasized that the customer base load must be extremely low before