Utilities that are short on capacity and operate in a stable regulatory environment may be able to extract value from interruptible rates.
Marketing & Competing
the RTP rate would be competitive with rates offered by competitive suppliers. The energy manager for the school system is interested in the annual cost of electricity. He said the day-ahead announcement of hourly RTP would require more workers since someone on his staff would have to monitor the announcements. He also said they would generally ride through a three- to-five-day high-price RTP period to take advantage of the lower off-peak rates. He said there was very little opportunity for load shifting at Blueberry. RTP for Blueberry is more a competitive rate offering and benefits the school system while possibly not harming the supplier. Whether it prevents uneconomic bypass or not is difficult to find out without knowing the costs of alternative suppliers. Similarly, there is a possibility that other customers are cross-subsidizing Blueberry, but whether that occurs depends on regulation (i.e., price or profit regulation) and the avoidable costs of the supplier. F
Albert L. Danielsen is a professor emeritus of economics at the University of Georgia and a consultant with Arthur Andersen Global Energy Consulting Group. He was one of the principal editors of Principles of Public Utility Rates, 2d Ed. (Public Utilities Reports Inc.), the 1988 update of the classic text by James C. Bonbright. Nainish K. Gupta is an energy management specialist with El Paso Energy Marketing.
Who to Target
Companies able to self-generate, including:
• Wood processing (such as sawmills)
• Metal processing
• Agricultural enterprises (such as chicken houses)
• Hospitals/nursing homes/retirement homes
• Large manufacturing
Companies able to reduce load, by shutting down production for short durations or shifting production to another plant, including:
• Industrial process customers
• Operators of large office buildings
• Retail stores (e.g., shopping malls)
• Hotels and motels (large)
• Colleges and universities
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