Pricing

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.

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.

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.

Robert Garvin, MAJ, TC, 3RD Corps Support Command: Serving here and seeing how poor the people of Iraq are after 30 years of a dictatorship is truly life changing. You would not believe the electricity challenges they face here. In a country of over 25 million people, Iraq has only about 5,000 MW of electricity at any given time.

Daniel Simon decided to investigate how much the extra heat of incandescent light bulbs over CFLs might cost a customer in air-conditioning cooling costs, compared to an analysis in “Squeezing BTUs From Light Bulbs.”

In the near future, the majority of investor-owned electric utilities will request, and ultimately win, rate increases. What can utilities do to alter consumer perceptions of higher bills?