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>That’s a double-edged sword for utilities, depriving them of demand charges that help finance improvements to the transmission system but also helping them kee

by cmsmith 13y ago

>That’s a double-edged sword for utilities, depriving them of demand charges that help finance improvements to the transmission system but also helping them keep balance the grid and avoid blackouts or having to fire up a carbon-spewing fossil fuel power plant when demand suddenly spikes. I'd like to see a quote or statistic that says that this is true and that the utilities are really price-gouging customers for peak demand charges. It would not surprise me at all to learn that the added cost to utilities of handling peak demand was more than the surcharge they are recouping from businesses - in which case they would be happy for everyone to install load-balancing units in their buildings. This is supported by the article itself, in saying that the utilities are rewarding customers for using less electricity during peak times (by controlling their air conditioners).

HorizonXP 13y ago
In Ontario, we've had time-of-day electricity billing for a few years. I'm home this week, so I just heard from a friend that the government is increasing the rate charged for off-peak energy usage. After reading this article, it seems that all rates are being increased, but the off-peak rates are going up by a greater percentage. So it seems that our government has succeeded in shifting consumer energy usage to off-peak hours, and has now decided to penalize those people by charging them more by closing the gap between peak and off-peak hours. I think it's pretty outrageous and goes to show that peak demand charges are just a gouging technique and a scam. http://news.nationalpost.com/2013/10/19/cancellation-of-ontario-gas-plants-to-blame-for-upcoming-hike-in-off-peak-electricity-rates-opposition-says/ http://news.nationalpost.com/2013/10/19/cancellation-of-onta...
- krasin 13y ago
  There's one possible 'rational' explanation: the underlying economy between day and night electricity rates is mostly due to non-elasticity energy generation, which is a common thing for coal, hydro and nuclear plants. Recently, the US has got lots of gas and lots of gas plants which are pretty elastic, so that the utilities can produce the energy on demand (so, there's smaller losses for them).
  - lxmorj 13y ago
    Also, as more people shift to the off-peak time, the difference between peak and off-peak shrinks, and as such so will the price difference.
    - Goronmon 13y ago
      Also, as more people shift to the off-peak time, the difference between peak and off-peak shrinks, and as such so will the price difference. And yet, somehow I have a feeling the utility companies will 'forget' to lower peak prices to match off-peak increases.
icambron 13y ago
If that were true, wouldn't the utilities just buy the batteries themselves?
- dnautics 13y ago
  it may be a solution that can't be offered at that scale.
- aaron695 13y ago
  I assume losses would be to much to transfer the energy. Locally they couldn't afford the land.
- alextingle 13y ago
  Not if they can just charge the customer extra. Where's their incentive?
  - icambron 13y ago
    Charging the customer extra when there's not enough supply is inefficient and leaves money on the table. They just end up selling less electricity. In fact, they're depending on it to stop their grid from crashing. In general, raising prices in response to demand spikes is always worse than just increasing supply to meet it (assuming you can) because of demand elasticity. Having the customers all buy batteries fixes that, but in practice I don't see how it can be very efficient to have your customers tackle your supply problem one-by-one. It would make more sense to just charge some sort of premium to exempt them from high-demand-time surcharges. Would cover the battery cost and prevent the market distortion. Look at it from the top down: would electrical companies rather be able to meet the full demand for electricity or not? Clearly, they would. Otherwise, why make electricity at all? I'm not an economist, so I'd be happy for someone to take that apart. One objection is that this charge-more scheme allows the power company to price discriminate against customers who are less price sensitive (like hotels, who just need AC), but...well, I need to be convinced.
- jpitz 13y ago
  They have been looking at doing so for years. This is a conservative, slow moving industry.
FraaJad 13y ago
You have to look at the utility bill of a commercial building. Demand charges are right there in the bill. Even if you cross preset limit once during the year, you will be pushed to a higher slab, and your base rates will go up. /source: I work in the Industry.

by cmsmith 13y ago

HorizonXP 13y ago

In Ontario, we've had time-of-day electricity billing for a few years. I'm home this week, so I just heard from a friend that the government is increasing the rate charged for off-peak energy usage. After reading this article, it seems that all rates are being increased, but the off-peak rates are going up by a greater percentage. So it seems that our government has succeeded in shifting consumer energy usage to off-peak hours, and has now decided to penalize those people by charging them more by closing the gap between peak and off-peak hours. I think it's pretty outrageous and goes to show that peak demand charges are just a gouging technique and a scam. http://news.nationalpost.com/2013/10/19/cancellation-of-ontario-gas-plants-to-blame-for-upcoming-hike-in-off-peak-electricity-rates-opposition-says/ http://news.nationalpost.com/2013/10/19/cancellation-of-onta...

krasin 13y ago
There's one possible 'rational' explanation: the underlying economy between day and night electricity rates is mostly due to non-elasticity energy generation, which is a common thing for coal, hydro and nuclear plants. Recently, the US has got lots of gas and lots of gas plants which are pretty elastic, so that the utilities can produce the energy on demand (so, there's smaller losses for them).
- lxmorj 13y ago
  Also, as more people shift to the off-peak time, the difference between peak and off-peak shrinks, and as such so will the price difference.
  - Goronmon 13y ago
    Also, as more people shift to the off-peak time, the difference between peak and off-peak shrinks, and as such so will the price difference. And yet, somehow I have a feeling the utility companies will 'forget' to lower peak prices to match off-peak increases.

icambron 13y ago

If that were true, wouldn't the utilities just buy the batteries themselves?

dnautics 13y ago
it may be a solution that can't be offered at that scale.
aaron695 13y ago
I assume losses would be to much to transfer the energy. Locally they couldn't afford the land.
alextingle 13y ago
Not if they can just charge the customer extra. Where's their incentive?
- icambron 13y ago
  Charging the customer extra when there's not enough supply is inefficient and leaves money on the table. They just end up selling less electricity. In fact, they're depending on it to stop their grid from crashing. In general, raising prices in response to demand spikes is always worse than just increasing supply to meet it (assuming you can) because of demand elasticity. Having the customers all buy batteries fixes that, but in practice I don't see how it can be very efficient to have your customers tackle your supply problem one-by-one. It would make more sense to just charge some sort of premium to exempt them from high-demand-time surcharges. Would cover the battery cost and prevent the market distortion. Look at it from the top down: would electrical companies rather be able to meet the full demand for electricity or not? Clearly, they would. Otherwise, why make electricity at all? I'm not an economist, so I'd be happy for someone to take that apart. One objection is that this charge-more scheme allows the power company to price discriminate against customers who are less price sensitive (like hotels, who just need AC), but...well, I need to be convinced.
jpitz 13y ago
They have been looking at doing so for years. This is a conservative, slow moving industry.

FraaJad 13y ago

You have to look at the utility bill of a commercial building. Demand charges are right there in the bill. Even if you cross preset limit once during the year, you will be pushed to a higher slab, and your base rates will go up. /source: I work in the Industry.