Time Dependent Electric Rates in a Deregulated Electric Market

tc19.ashraetcs.org

Time Dependent Electric Rates in a Deregulated Electric Market

Time Dependent Electric

Rates in a Deregulated

Electric Market

By: Wayne Frazell with TXU Energy

ASHRAE June, 2002


Retail Electric Deregulation


Definition of Time Dependent

Electric Rates

Electric Rates that are not only based

on how much is used but also when it

is used.

Time dependent rates can be based on

the kW Demand set in a particular time

period and/or the kWh cost during

specified time periods.


Regulated Utility

Generation

Transmission & Distribution

Customer Service

Regulated

Customer


Deregulated Industry

Competitive

Generation

Transmission & Distribution

Competitive

Customer Service

(Retail Electricity

Provider)

A B C

(Wires Company)

Regulated

Customer


Retail Electric Provider In a

Deregulated Market

• Purchase electricity from a generator

and resells to consumer

• Pass wire charges to the customer

• Provides other services

• May offer Billing in any format the

customer wants

• DSM (Varies by State)

• Taxes and other charges


Wire Company Charges

• Lower demand

component

• Energy component

• Charges passed

through retailer

• Itemized pass through

or combined in other

charges

• Can be time dependent


Deregulated Rates

Wire Charges Retail Charges

• Demand kW

• Energy kWh

Time Based on kW

or kWh

• Nuclear, DSM,

Taxes

• Other

• Energy kWh

Time Based on kW

or kWh

• Taxes

• Other


Reasons Electric Providers

offer Time Dependent Rates

Time dependent rates encourage use of

energy in a way that allows the provider to

make a greater use of his assets.

Generators: Off peak consumption allows

the generator to make use of otherwise idle

capacity.

Wires: Consumption shifted to other hours

allow more customer load to be served

without additional capital investment.


Availability

Time Dependent rates from retail

electric providers are RARE and

must be requested by the customer

• Retail electric rates need to be

compared against tariff time

dependent rates

• Opportunity for load shifting based

on Wires charges exist in some areas


How to Use Time Dependent Rates

• Change operating hours

• Shift operation of Nonessential

equipment

• Shift operation of equipment

Through the use of Energy Storage

• Shift to other energy sources


Electric Rate Price Trends

Flat

Cost

Demand

TOD

TOU

Interruptible

RTP

Low Consumer

Risk/Simple

High Consumer

Risk/Complex


Examples of Time Dependent Rates

and Energy Shifting


Most Common Deregulated Rate

• Flat kWh charge based on expected

load shape or load factor

• Wire charges passed through or

included in a flat rate

• Wire charges often have a demand

component


Conventional Building Load

kW Demand

Cooling

Misc

Pumps & Fans

Lights

Base

1

3

5

7

9

11

13

15

17

19

21

23

Time Of Day


Load Leveling

kW Demand

Cooling

Misc

Pumps and Fans

Lights

Base

Demand Reduction

1

3

5

7

9

11

13

15

17

19

21

23

Time Of Day


17

19

21

23

Demand Rates

Demand Rates

Demand

Energy

3

5

7

9

11

13

15

Time Of Day

Demand Reduction

1

Electric Price


Load Shifting

kW Demand

1600

1400

1200

1000

800

600

400

200

0

Cooling

Misc

Pumps & Fans

Lights

Base

Demand Reduction

1

3

5

7

9

11

13

15

17

19

21

23

Time Of Day


Time Of Day Rates

TOD Rate

Period

Electric Price

Demand

Demand Reduction

Energy

1

3

5

7

9

11

13

15

17

19

21

23

Time Of Day


Time Of Use Rates

Peak

Electric Cost

Off Peak

Shoulder

Mid Peak

1

3

5

7

9

11

13

15

17

19

21

23

Time Of Day


Spot Pricing

Electric Cost

Low Base

Rate

Spot Price

15 Minute

Notice

1

3

5

7

9

11

13

15

17

19

21

23

Time Of Day


Real Time Pricing

24 Hour - 15 Minute Notice

(May be NO Notice)

Electric Cost

1

3

5

7

9

11

13

15

17

19

21

23

Time Of Day


Supply Influence on Price

• Greater Supply

generally lower rates

• Lower Prices = Can

reduce time based

rate spread and

savings


What Influences Electric

Supply & Cost?

• Transmission limitations

• Must be generated at time of use

• Generation availability by region

• Some Generation must run for

system stability

• Some generation is expensive to

cycle


Predictions


Time Dependent Rates that

Can be Expected

• TOD or demand based (Mostly Wires)

• TOU or energy based (Limited)

• Interruptible / Spot Pricing (Special)

• RTP based rates (???)


Summation

Rates will vary by region because of

supply and regulation

Time dependent rates will not be

available in all deregulated areas

Time dependent rates must be

requested

• Energy shifting may be based on

wire charges only


“The uncreative mind can spot

wrong answers, but it takes a very

creative mind to spot wrong

questions.”

Antonio Jay

More magazines by this user
Similar magazines