Competing for the underappreciated electric customer.
Howard M. Spinner is director of special contracting and pricing at Central Vermont Public Service Corp. Among other responsibilities, he heads the company's load research effort. Spinner's opinions do not necessarily reflect the views of Central Vermont Public Service.
It may appear odd that, in moving to competition, a key cost characteristic surrounding the production and consumption of non-storable electric power (i.e., its pattern of use) is deemed too expensive, too impracticable or unnecessary to measure. 1
One problem stems from the dynamic nature of electric consumption. Electric consumers impose costs on suppliers and distributors. Current rate structures employing a demand charge are imperfect because demand is not necessarily measured at the time of system peak. Time-of-day pricing does a better job of aligning prices and cost but is more complicated and expensive. For smaller customers, demand information is not collected at all. Past utility practice, which in large part determines the current stock of in-place metering, sets rates based on group averages, not the cost imposed by individual customers. Industry outcomes that produce better price signals will improve the performance of the industry. Will load profiling-based retail choice for smaller customers provide that better price signal?
The situation differs for large-volume customers. For them, the widespread practice of interval metering for large customers allows for precise measurement of cost inposition and the potential for a better post-choice price signal. Yet for millions of smaller customers, ideal metering is not in place, leaving load profiling as the only feasible way to implement retail choice.
Why, is such a regime to be allowed to determine costs and set rates in a restructured electric industry?