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Loan Management: Rationing Versus Peak Load Pricing

Sanford V. Berg

Year: 1981
Volume: Volume 2
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol2-No1-6
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Abstract:
Rising costs in the electric utility industry have focused attention on ways to control or adjust kilowatt-hours (kWh) consumed during certain hours of the day. The economist's solution has tended to involve support for peak load pricing (PLP). In theory, PLP structures are supposed to reflect the opportunity cost to society of providing electricity at particular hours. However, the problem of measuring marginal opportunity costs is difficult at best, and few electricity-pricing schemes that have been proposed set prices equal to marginal opportunity costs. Furthermore, there are costs involved in using price signals: monitoring hourly electricity consumption involves further capital expenditures; consumer acceptance and understanding of complex pricing schemes is questionable; and, even if the "correct" signals are given, it is not clear that residential (and other) consumers are responsive to higher prices during periods of peak usage, and this ambiguity complicates the electric utility planning process.



The Effect of Load Management upon Transmission and Distribution Costs: A Case Study

Michael A. Einhorn

Year: 1988
Volume: Volume 9
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol9-No1-6
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Abstract:
A new era may be emerging for the strategists and decision makers who are responsible for reliably and economically supplying electricity to America's homes and businesses. In the last decade, fuel shortages, price hikes, record-high interest rates, and a new environmentalist awareness have led the nation's utility planners to use conservation and load management strategies in order to curtail their customers' demands for energy and plant capacity. Undertaken primarily to reduce requirements for future generation capacity, load management strategies generally succeeded in reducing system peak load. However, utility planners often implemented these strategies with little regard to the effects upon their company's transmission and distribution (T&D) capacity requirements.



Capacity Rationing and Fixed Cost Collection

Chi-Keung Woo

Year: 1991
Volume: Volume 12
Number: Number 2
DOI: 10.5547/ISSN0195-6574-EJ-Vol12-No2-9
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Abstract:
This paper proposes a simple load management program with a two-part tariff to ration an electric utility's installed capacity and to collect its fixed costs under asymmetric information and demand uncertainty. Because of its simplicity, the program is a practical alternative to spot pricing and rationing schemes with highly nonlinear rate structures.



Onsite Backup Generation and Interruption Insurance for Electricity Distribution

Joseph A. Doucet and Shinuel S. Oren

Year: 1991
Volume: Volume 12
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol12-No4-5
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Abstract:
This paper extends recent work on interruption insurance for electric power by introducing onsite backup generation capacity as a supplementary form of interruption insurance. The basic model of interruption insurance as a mechanism for differential pricing is reviewed, the incentive for providing onsite backup generation capacity is demonstrated and the interaction between onsite backup generation and interruption insurance is analyzed. Two types of onsite backup, customer and utility owned, are discussed. It is shown that individuals' economic incentives to install onsite backup generation dominate the utility's incentive. Hence customer owned onsite backup decisions will pre-empt the utility's plan to mitigate compensation payments by providing onsite backup generation.



An Actions-Based Estimate of the Free Rider Fraction in Electric Utility DSM Programs

Eric Malm

Year: 1996
Volume: Volume17
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol17-No3-3
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Abstract:
Most estimates of the free rider fraction are based on ex-post surveys of program participants. Program participants who indicate that they would have made the supported changes without the program are labeled as "free riders." This paper provides an estimate of the free rider fraction based on consumer actions. A set of energy-use clusters acts as a base against which the likely behavior of consumers in the absence of an efficiency program can be assessed. The clusters can also be used target spending at customers who are least likely to invest in efficiency on their own. The Actions-Based estimate does not suffer from the biases implicit in the standard ex-post survey estimates.



Consumer Savings, Price, and Emissions Impacts of increasing Demand Response in the Midcontinent Electricity Market

Steve Dahlke and Matt Prorok

Year: 2019
Volume: Volume 40
Number: Number 3
DOI: 10.5547/01956574.40.3.sdah
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Abstract:
This paper estimates consumer savings, CO2 emissions reductions, and price effects from increasing demand response (DR) dispatch in the Midcontinent Independent System Operator (MISO) electricity market. To quantify market effects, we develop a dynamic supply and demand model to explore a range of DR deployment scenarios. The study is motivated by the existence of regulatory and market rule barriers to market-based deployment of DR resources in the MISO region. We show annual consumer savings from increased market-based DR can vary from $1.3 million to $17.6 million under typical peak operating conditions, depending on the amount of DR resources available for market dispatch and the frequency of deployment. Consumer savings and other market effects increase exponentially during atypical periods with tight supply and high prices. Additionally, we find that DR deployment often reduces CO2 emissions, but the magnitude of emissions reductions varies depending on the emissions content of marginal generation at the time and location of deployment. The results of this study suggest regulators and other stakeholders should focus policy efforts to reducing regulatory barriers to DR deployment in wholesale markets, particularly in locations that experience high price spikes, to improve market efficiency and achieve cost savings for consumers.





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