allow choice between price, reliability, and scheduling.
Customers with a choice are demanding, and getting, lower electric bills. These customers generally include municipals and large industrials. Municipals, as wholesalers, gained access to alternative suppliers via the Energy Policy Act of 1992. Large industrials enjoy various supply choices, including onsite generation or relocating to another service territory.
What factors underlie this buyer's market? First, many utilities have excess capacity available throughout much of the year. System load factors typically run about 60 percent. Second, customers are growing weary of subsidizing social programs and other customer classes. Third, customers want more control over their energy bills. Gone are the days of one rate fits all.
This buyer's market calls for innovative rates. In fact, electric utilities can tailor rate options to suit a variety of customer needs:
supply reliability, frequency of price changes (to enable production optimization), or energy management services (such as offpeak storage), among other things. From the utility perspective, innovative rate options can help retain or even increase customer load. Customers gain more control over bills and pay only for services they want. And if rate options track utility costs more closely, they will encourage customers to manage their load in a way that improves system load factor and reduces the utility's planning and operating costs.