Emerging distributed technologies aren’t just spurring remarkable changes for electricity providers—they’re also empowering energy consumers like never before.
Table 1: Time-of-use results
Ratio of on-peak to off-peak price
|TOU off-peak discount
|Estimated on-peak consumption change
|Estimated off-peak consumption change
|Estimated revenue impact
|Potential system peak load reduction (MW)
Looking to the Future: With Ongoing Rate Design Reform Comes the Need for More Analysis
So what do this case study and market trends tell us about the changing face of rate design? For one, the peaking nature of load creates both a challenge and an opportunity in the corresponding variability in the cost to generate and supply electricity. The disproportionate impact of system peaks on system costs means that reliable peak reduction can have an outsize impact on cost. Consequently, a growing number of utilities are actively investigating opportunities to transition toward rate designs that lower overall system costs while simultaneously achieving cost.
Despite the rapid pace of change, it’s clear that utilities must understand how the energy price signals provided by TOU rates and other rate designs will impact system cost, cost allocation and recovery, while maintaining reliability and affordability. s. Utilities conducting similar analyses can glean value in a number of ways:
- Building a business case for leveraging advanced metering infrastructure (AMI) by demonstrating applications that increase system efficiency and decrease system cost
- Optimizing rate design with other DSM or DER to achieve defined targets (e.g. total electricity consumption, peak demand reductions, load shifting, etc.)
- Evaluating revenue impacts of various designs
Smart meters provide a way of measuring site-specific information, allowing utility companies to introduce different prices for consumption based on the time of day and the season. Achieving equilibrium of the costs of generating gas and electricity presents a clear challenge for utilities — but it also promises to create more resilient relationships with consumers and to inform stronger DSM programs. Ultimately, technology-enabled price-responsive energy management may allow for greater integration of DER while supporting both reliability and customer choice.
How are you using time-variant pricing or other types of cost-efficient energy programs? What questions do you have and what kinds of challenges have you encountered? Tell us on Facebook, Twitter, or LinkedIn.