PPT Slide
Problem 1.4: Electricity Tariffs & Load Management
Suppose a utility’s production cost is given by: C(P) = 0.1P2 - 100p + 85,000 $/h, where P is the utility’s load power (P ? 500 MW). Suppose the utility’s load consists of four 500 MW customers having the following power usage requirements: One customer operates around-the-clock while the other three each require their power for one eight-hour shift. Currently, the three one-shift customers are all operating during the same eight-hour shift. Therefore the utility’s load profile has an eight-hour 2000 MW peak-load period with the remaining sixteen off-peak hours 500 MW.
Part A: What is the utility’s daily production cost?
Part B: Suppose the utility is somehow able to convey incremental price signals to the customers and charge them accordingly. In other words, suppose the utility is able to charge its customers whatever it costs the utility to serve them. Furthermore, suppose the customers are willing to respond to any opportunity to cut their costs. What will happen to the load profile under these conditions?
Part C: What is the utility’s production cost for part B? If the utility’s energy is sold at cost, how much should each customer pay (in ˘/kWh) for their energy?
Part D: Design a tariff scheme based on time-of-day rates and/or demand charges which produces the same savings as Part B. Be sure to consider carefully the customer’s point of view, i.e.; be sure to carefully consider whether or not the customer is able to respond appropriately to your tariff.
Part E: For the incremental cost driven tariff of part B, how can the utility tell which customer is which? How important is the answer to this question to the feasibility and success of Part B’s tariff?