Dynamic Pricing Solutions

Deck: 

How to account for lack of strong price signals. A hard year puts deregulation to the test.

Fortnightly Magazine - January 2009
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The overriding objective of dynamic-pricing programs is to create a financial incentive for electric customers to curb load on the grid when the electric system peaks, either by conserving energy, shifting use to off-peak periods or generating electricity on-site. Such action by customers helps enhance reliability and curb the potential for market-power abuse by generators; most important, it obviates the need to build central generation and delivery capacity to serve load that occurs in only a small number of hours. Indeed, experts believe most of the customer benefit from dynamic-pricing programs comes from avoided generation, transmission and distribution capacity costs rather than avoided energy costs.1

Some also believe that a wide-spread implementation of dynamic-pricing programs ultimately would eliminate the need for subsidized demand-response (DR) programs, in which all customers pay some customers to drop load during event hours called by the system operator during system peaks.2

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