WE HAVE SEEN THE FUTURE AND IT IS THE HOURLY pricing of electricity.
In California, the power exchange serves as the cornerstone for a restructured electric industry. The raison d'être of the PX is to reveal the hourly marginal cost of electricity. Now add PJM to the list. Like California, an integral aspect of the restructured Pennsylvania-New Jersey-Maryland Interconnection, as approved by the Federal Energy Regulatory Commission by order dated Nov. 25, 1997, is the mid-Atlantic market, which intends also to fix an hourly price for electricity.
This hourly market is supposed to send accurate price signals, permitting an efficient ordering of production and consumption, all to the economist's delight.
The new world order, however, will soon run headlong into an immutable feature of the old: the residential meter. While the market works to develop the hardware and software to measure receipts and deliveries on the bulk market at hourly intervals, the residential meter spins faster or slower with the daily ebb and flow of electricity, but most of the time, no one is listening. Rather, the meter is read monthly to reveal the total electrical consumption over the previous 30 days. To date, this state of affairs has posed no problem, since utilities have sold electricity to residential users at average cost. Even in the brave new world, utility distribution companies may continue to bill residential customers on an average-cost basis even though they may acquire power on an hourly cost basis.