Integrating time-differentiated rates, demand response, and smart grid to manage power system costs

Electricity Journal

Volumn 26, Issue 3, 2013, Pages 50-60

  Procter, Robert J ^a  

^a MICHIGAN STATE UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

COSTS; ELECTRIC POWER SYSTEM CONTROL;

CAPACITY EXPANSION; DEMAND RESPONSE; DYNAMIC PRICING; ELECTRIC CONSUMPTION; INTEGRATED APPROACH; PEAK CAPACITY; PEAK DEMAND; POWER; SMART GRID; SYSTEM COSTS;

SMART POWER GRIDS;

EID: 84876984800     PISSN: 10406190     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.tej.2013.02.017     Document Type: Article

References (35)

1. Ahmad Faruqui, Ryan Hledik, Sam Newell and Johannes Pfeifenberger, Principal, The Power of Five-Percent, How Dynamic Pricing Can Save $35 Billion in Electricity Costs, The Brattle Group, May 16, 2007.
2. Energy Information Administration, Electricity Supply, Disposition, Prices, and Emissions, AEO2011 Reference Case.
3. If AMI has been installed, and is operational, then it is relatively easy to implement DP. DP can still be implemented in the absence of AMI. Doing so does require targeted meter exchanges. For example, the RTP program in Illinois does not rely on AMI. ComEd uses interval meters read once per month and Ameren uses one-way automated meter reading (AMR) for some customers. Implementing meter data management systems may however be as important as the technology choices for the meters themselves.
4. When there are one or more hours the following day over a certain threshold (currently $0.13/kWh, energy only, but this may be lowered to $0.10/kWh), customers are notified automatically via email and telephone calls.
5. Smart Grid Investment to Total $200 Billion Worldwide by 2015, Pike Researchhttp:// www.pikeresearch.com/newsroom/ smart-grid-investment-to-total-200- billion-worldwide-by-2015
6. Pike Research.
7. Smart Grid Technologies, Pike Research,http:// www.pikeresearch.com/research/smart-grid-technologies.
8. ''What Consumers - and Retailers - Should Know about Dynamic Pricing,'' in Knowledge at Wharton http:// knowledge.wharton.upenn.edu/ article.cfm?articleid=1245
9. Nick Wreden, Advantages of Dynamic Pricing, DIRECT MARKETING NEWS, May 13, 2003http:// www.dmnews.com/advantages-ofdynamic- pricing/article/80877/
10. Leslie Anne Palamar and Victoria Edwards, Dynamic Pricing Friend or Foe, A Report on the State of Dynamic Pricing in the Contracted, Corporate Rate Segment of the North American Hospitality Industry, BTE Tourism Training & Consulting, Buckhiester Management.2007
11. For example, Faruqiu argues that ''Dynamic pricing is a form of time-ofuse (TOU) pricing.'' See: Ahmad Faruqui, The Ethics of Dynamic Pricing, ELEC. J.,July 2010, at 13.
12. A Report on Advanced Metering as Required by House Bill 2129 Public Utility Commission of Texas September 2010, Public Utility Commission of Texas, Sept. 2010.
13. National Action Plan on Demand Response, FERC, June 17, footnote 15 on p. 4.2010
14. Ahmad Faruqui and Sanem Sergici, Household Response to Dynamic Pricing of Electricity a Survey of Seventeen Pricing Experiments, Nov. 13, 2008.
15. IEEE Whitepaper, at 3.
16. Severin Borenstein, Michael Jaske and Arthur Rosenfeld, Dynamic Pricing, Advance Metering and Demand Response in Electricity Markets, Center for the Study of Energy Markets, 2002, at 33-34.
17. In this article, the term ''default rate'' refers to the rate design customers will be on if they do not exercise an opt out option.
18. This will lead to a divergence between the rates andwhat theywould be using strict MC principles.
19. Two notable exceptions are the legislatively mandated consumer advocates in both Illinois and D.C. who both went to their respective legislative bodies requesting that utilities be directed to explore and offer DP.
20. Lynne Kiesling, Dynamic Pricing Is Smart Grid's Secret Sauce, 2008http://www.smartgridnews.com/artman/publish/ article_441.html
21. Customers with flatter load profiles and those who are more able to shift their consumption will tend to benefit from DP. Customers with peakier loads, those less able to shift consumption to lower-cost periods, and those with higher overall consumption levels tend to be disadvantaged by DP.
22. Eric Hirst, Price Responsive Demand in Wholesale Markets: Why is so Little Happening?
23. Ahmad Faruqui and Lisa Wood, Dynamic Pricing and Low Income Customers: Can they Co-Exist? July 9, 2010http://www.smartmeters. com/the-news/1079-dynamicpricing- and-low-income-customerscan- they-co-exist.html
24. Faruqui and Wood noted that two studies, carried out by Connecticut Light & Power Company (CLP) and BGE, find that low-income customers were equally price-responsive to the average customers, while the California Statewide Pricing Pilot (SPP) carried out jointly by the state's three investor-owned utilities and the SmartRate program offered by Pacific Gas & Electric Company (PG and E) found that they were less responsive. The Pepco DC results, on the other hand, showed that low-income customers were much more responsive than other customers.
25. Stephen S. George, Josh L. Bode and Elizabeth Hartmann, 2010 Load Impact Evaluation of Pacific Gas and Electric Company's Time-Based Pricing Tariffs, Final Report2011
26. One demand management program omitted from this discussion is the use of interruptible contracts that allow the system operator to curtail loads and provide for very large penalty payments if the customer does not curtail loads.
27. National Action Plan on Demand Response, FERC, June 17, at 3.2010
28. PTR is one form of nondispatchable DR.
29. Borenstein argues they are difficult to set for several reasons. For his argument, see Severin Borenstein, Time-Varying Retail Electricity Prices: Theory and Practice, at 17.
30. Karen Ehrhardt-Martinez, Kat A. Donelly and John A. ''Skip'' Laitner, Advanced Metering Initiatives and Residential Feedback Programs: A Meta-Review for Household Electricity- Saving Opportunities, June 2010 http://www.aceee.org/pubs/ e105.htm
31. The Five Percent Solution. ., at 4.
32. For example, in the PowerCents DC study, the addition of a smart thermostat programmed to respond to price signals about doubled the percentage savings from both CPP and PTR (called CPR in that study).
33. One result of another experiment showed a residential peak load reduction for the average critical peak day of 23.5 percent without automatic controls and 34.5 percent with automatic controls. California Statewide Pricing Pilot (SPP) Overview and Results, 2003-2004http:// sites.energetics.com/madri/toolbox/ pdfs/pricing/pricing_pilot.pdf
34. Retail Rate Options for Small Customers, The California Statewide Pricing Pilot,'' www.raabassociates.org/Articles/ Levy_10.28.05.ppt
35. IEEE Whitepaper, at 29-30.