Real-time pricing

Distribution Optimization: Ready for Takeoff

Part 1: How markets today are out of sync.

The time has come to consider options for optimizing distributed energy resources, with the intent of supporting a least-cost, reliable, and clean system that delivers more choice and control for customers.

Rethinking 'Dumb' Rates

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 Low-Voltage Energy Bill

While a few provisions are worth embracing, most of its 1,724 pages represent a waste of good timber.

After four years of legislative trench warfare, contentious legal wrangling, and heated partisan rhetoric, President Bush finally got what he wanted—a really big energy bill. What he did not get, however, was an internally consistent "national energy strategy." Examination of the legislation reveals that its title—the Energy Policy Act of 2005—is less descriptive than the title popularized by Sen. John McCain: the No Lobbyist Left Behind Act of 2005.

Smart Meters on The March

New federal policies portend a wave of demand-response programs, and perhaps a new era in resource planning.

When President Bush signed the energy bill on August 8, he set in motion a chain of events that might lead to major changes in the way utilities price and meter retail electric services—and ultimately in the way they value and use non-traditional energy resources.

Automatic Meter Reading: Debunking the Myths

Advanced Meter Reading

Advanced Meter Reading

An executive speaks out.

I think, frankly, that it's those marketing folks who conjure up all the myths about advanced meter reading. Rather than sheepishly admitting that their product is deficient in multiple areas, corporate spinmeisters spin webs of words and images into difficult-to-understand concepts, hoping upon hope they can fool us. They bank on the old adage: tell a lie enough and soon people will begin to believe it.

Letter to the Editor

The authors respond:</h1> <p>Jim Johnston's letter gives us an opportunity to clarify our discussion of electricity pricing. In our article we argued that there were two important defects of traditional electricity regulation from the perspective of economists: excess incentive for capital-intensive generation techniques and the use of prices as revenue-recovery rather than resource-allocation devices. Regulated retail prices for electricity consumption are weighted-average rather than marginal cost and thus incorrectly signal consumers about the true costs of electricity production: too high off-peak and too low on-peak.</p> <p>In a true deregulated market, Johnston is correct that consumers would be offered choices about how much of the continuous wholesale price variation they would face, ranging from all to none-just like mortgage products range from continuously adjustable to 30-year fixed-rate, even though the spot price of capital varies continuously.</p> <p>If genuine deregulated electricity markets are not possible, we argued that regulation could "mandate" real-time pricing. Our use of the term mandate was unfortunate because it implies that we would oppose the use of the risk-hedging and long-term contracts that Johnston describes. In addition, our use of the term allowed Johnston to infer that we favor mandating particular market institutions such as the California spot market. We neither oppose the use of the contracts Johnston describes, nor do we favor mandating any particular type of market institutions. What we do not favor is the suppression of prices as resource allocation signals through regulation. <i>-Jerry Taylor and Peter Van Doren</i></p> </p>&nbsp;</p> <p><b>Articles found on this page are available to subscribers only. For more information about obtaining a username and password, please call our Customer Service Department at 1-800-368-5001.</b></p>

Letter to the Editor

To the Editor:

Cato's Peter Van Doren and Jerry Taylor analyzed the electricity crisis in the February 2004 issue of the ("Rethinking Restructuring," p. 12) and concluded that the solution to a bad situation is vertical integration and mandatory real-time pricing. In my opinion they have got it half right.

Commission Watch

California anticipates changes in energy policy under its new governor.

Commission Watch

California anticipates changes in energy policy under its new governor.

The recall of California Gov. Gray Davis in November 2003 almost immediately led to speculation concerning possible changes in California's energy policy. Since his election, Gov. Arnold Schwarzenegger has assembled an Energy Working Group, co-chaired by Professor James L.




Late for dinner? Blame Enron. Go ahead. It may seem unfair to blame another for something you did wrong, but the post-Enron political climate makes it easy to do. California politicians already are hip to this strategy. But, blaming all of California's woes on Enron is less than politically honest and may have far-reaching effects on power markets.

Real-Time Pricing: Ready for the Meter? An Empirical Study of Customer Response

Evidence suggests a decision point at 6 cents per kWh, indicating that self-generation becomes a highly viable option at that price

WHAT ROLE SHOULD REAL-TIME PRICING play in a deregulated electricity market? Can it serve as an incentive to induce customers to remain loyal to their power supplier? How do customers respond to price changes carried out under RTP tariffs?

Real-time pricing programs are now being used as a proxy for market-based pricing.