The changing architecture of demand response in America.
Pilot projects are demonstrating the potential of smart metering and smart rates to make the most of supply and demand resources. But as empirical studies show, not all pricing designs are equally suited to every region.
Engaging customers will require more than TOU pricing.
Imagine a setback thermostat programmed at the factory that the consumer couldn’t modify. Who would want this device? You could give the customer a big enough discount to get her to accept the device, but she would be happier and you could save about as much energy if the customer could decide on the temperature and time settings.
Achieving the smart grid’s potential requires a revolution in electricity pricing.
Achieving the smart grid’s potential requires a revolution in electricity pricing. Smart metering and smart rates might yield surprising and beneficial changes in the U.S. utility industry. But capturing those benefits will require an intelligent and careful approach to implementing dynamic pricing.
A step-by-step approach to intelligent rate design.
The advent of the smart grid is sparking interest in intelligent rate design. But while state and federal goals encourage more efficient rate structures, regulatory and political considerations complicate the process. Getting to a next-generation rate design will require a phased transition.
Why a risk-hedging product for small customers isn’t the gamble you may think.
New approaches account for the economic benefits of renewables.
Many green power customers benefit from long-term fixed prices. The most effective programs recognize the value of this price hedge—and fairly exempt customers from fuel cost adders in utility rates.
A survey finds that consumers would support higher costs of “clean coal” and alternative fuels.
More than three quarters of the consumers surveyed believe that alternative energy brought benefits, and a slight majority, 54 percent, would pay an additional 5 percent on their electric bills. The survey also found that 62 percent would be willing to pay higher rates to support “clean-coal” technologies
The diversity in customers’ appetites should be considered by more utilities when pricing products.
Does the volatility of the customer’s energy cost create much concern regarding the impact on the customer’s core business? One customer may be very comfortable taking on significant electricity cost risk to obtain electricity price and subsequent bill concessions. Another may be willing and anxious to pay a premium to accept less electricity cost risk than normal. Both of these customers, and all the customers in between, should be offered products that fit their needs, and these products should be priced upon sound risk fundamentals.
We are better off under restructured electric markets.
The most important action regulators can take to minimize consumer electricity costs is, and will continue to be, ensuring competitive wholesale markets, while demanding a rich mixture of products from the suppliers in these markets.
Why competitive markets are scaring regulators.
If the underlying wholesale electricity markets from which supplies are procured are competitive, then the remaining concerns regarding price levels and volatility can be addressed through regulatory policies.