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Peak and Off-Peak Industrial Demand for Electricity: The Hopkinson Rate in Ontario, Canada

The Hopkinson rate consists of an energy charge for every kilowatt-hour of electricity a customer uses, plus an additional demand charge, a peak-demand charge on the maximum usage during the month. Historically, industries in North America have generally been charged a Hopkinson rate for electricity use. In 1983, for example, 97 percent (see Blinder [1984]) of the publicly owned electric utilities in North America had demand charges in their commercial/industrial rate structure, whereas only 11 percent had time-of-day rates. However, with the exception of papers by Corio and Trimnell (1978) and Veall (1981), the focus of empirical research on industrial firms (like the focus of research in the residential sector) has been on examining the impact of time-of-use rates (e.g. Chung [1978], Chung and Aigner [1981], and Panzar and Willig [1979]).

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Energy Specializations: Energy Modeling – Sectoral Energy Demand & Technology; Electricity – Markets and Prices

JEL Codes: Q41: Energy: Demand and Supply; Prices, Q40: Energy: General, D22: Firm Behavior: Empirical Analysis, D21: Firm Behavior: Theory, Q35: Hydrocarbon Resources

Keywords: Industrial electricity demand, Peak and Off-peak load, Ontario Hydro, Hopkinson rate

DOI: 10.5547/ISSN0195-6574-EJ-Vol7-No1-10

Published in Volume 7, Number 1 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.