The greatest benefits of time-of-use pricing come from avoided costs of peaking power and T&D capacity—but only if hourly retail prices accurately model the true costs of delivered energy,...
Dynamic Pricing Solutions
How to account for lack of strong price signals. A hard year puts deregulation to the test.
A Survey of Utility Experience with Real Time Pricing, December 2004.
5. Joskow, Paul, Competitive Electricity Markets and Investment in New Generating Capacity , April 2006.
6. Because an LSE’s capacity requirement can change from month to month as customers migrate among commodity suppliers, LSEs must perform monthly true-ups by buying or selling capacity in the NYISO’s monthly balancing auction. But these transactions do not change the total amount of capacity required from a societal point of view. LSEs also might be required to purchase additional capacity each month to stabilize the spot price of capacity as dictated by the administrative demand curve. The administrative demand curve might induce an increase in the demand for capacity from a societal point of view, but this demand is not driven by customer behavior.
7 . The six-month strip price during the summer capability period in New York City is $11 to $12 per kW/mo and $6 to $7 per kW/mo in the winter capability period. In contrast, six-month strip prices in upstate New York range between $0.50 kW/mo and $2.50 per kW/mo. Prices during the summer capability period are somewhat higher than in the winter capability period, but the difference is much less extreme than in New York City.