What Are You Doing to Prepare for the Rising Cost of Electricity in 2010?
One of the few positives of the current economy has been reduced electricity prices at the wholesale level. However, as the economy recovers, electricity prices will increase in response to increased demand. Other factors driving increased costs are removal of rate caps in many states with open retail markets and the effect of ever higher emissions standards for fossil fueled generating stations. A major East Coast utility states “we estimate that the increase [from elimination of rate caps] could be up to 20 percent for [our] residential, small and large business customers.”
Rising costs will create opportunities for businesses and institutions that are willing to actively manage their use of electricity to hold down costs. The Federal government has encouraged a number of initiatives targeted at helping customers realize bottom line benefits when they conserve energy and reduce consumption in response to short term prices and temporary grid shortages. Many local and regional utilities have implemented changes that allow their customers to take advantage of their ability to limit consumption when the need is greatest. How does it work?
In the PJM region, which covers an area ranging from New Jersey to North Carolina and west as far as Illinois, there are several leading programs that illustrate the possibilities. For example, customers can be paid for agreeing to limit or reduce consumption on the very highest demand days of the summer. The payments reflect the value of avoiding construction of new power plants.
Another program provides payments for reducing use when the hourly cost of electricity is high. Customer demand varies throughout each day and throughout the year. Nighttime use may be 30 to 50% less than day time peaks. Maximum hourly use on a mild fall day may be only 60% of the peak use on a hot summer day. In fact, many utilities operate at a 50% average of capacity on an annual basis. Utilities manage their generators so that the plants with the most expensive fuels are run only when demand is very high. One result is that the hourly value of electricity varies tremendously. The highest 10% hours may average 3 to 5 times the average wholesale cost of power. If your utility is selling the energy to you at a price less than their cost, there may be an opportunity to make money by curtailing your consumption for a few hours in addition to reducing retail charges. Programs that recognize the value of Demand Response are growing and are likely to be made available to you.
Flexible, voluntary demand response availability is on the rise
Price responsive load management is the next phase of demand response and FlexConnect is an effective gateway to controlling when and how you reduce. FlexConnect is a web-based energy information system which helps customers identify when prices are likely to be high and predict the benefits of timely reductions in use. By combining pricing and savings estimates with typical consumption patterns, customers can decide if it is worth reducing or shifting electricity use to a different time. Reductions of use in response to price are voluntary – the utility does not control the timing – you do.
In addition to providing an easy to use energy information system, EnergyConnect manages the administration and payment settlement with your grid operator. You, the customer, employ knowledge of your own equipment, processes and operational constraints to decide how and when to respond to prices. If an opportunity looks appealing, a simple mouse click lets your grid operator know when you intend to curtail. EnergyConnect monitors your consumption, confirms the load drop with the grid operator and secures a payment for your efforts. Learn more about FlexConnect by requesting a demo. Call us at 866.488.7642 or write us at info@energyconnectinc.com.
Posted on Monday, December 7th, 2009 - BlogConnect