Posted by Jonathan Adler:
Variable Rate Electricity Pricing:
http://volokh.com/archives/archive_2007_01_07-2007_01_13.shtml#1168263562
A pilot program in Chicago could help make variable rate pricing for
electricity a reality for consumers. The idea is straightforward:
Because the demand for electricity varies from day-to-day, as well as
by time of day, electricity prices should reflect this fact. This
would encourage consumers to shift some electricity use, such as
running the dishwasher, from peak daytime hours into the evening. Some
industrial users already purchase electricity this way, but the
benefits of implementing such reforms could be signficiant -- and
would move retail electricity service in the direction of an actual
market in which prices provide information about supply and demand.
The [1]NYT reports:
Most people are not aware that electricity prices fluctuate widely
throughout the day, let alone exactly how much they pay at the
moment they flip a switch. . . .
Just as cellphone customers delay personal calls until they become
free at night and on weekends, and just as millions of people fly
at less popular times because air fares are lower, people who know
the price of electricity at any given moment can cut back when
prices are high and use more when prices are low. Participants in
the Community Energy Cooperative program, for example, can check a
Web site that tells them, hour by hour, how much their electricity
costs; they get e-mail alerts when the price is set to rise above
20 cents a kilowatt-hour.
If just a fraction of all Americans had this information and could
adjust their power use accordingly, the savings would be huge.
Consumers would save nearly $23 billion a year if they shifted just
7 percent of their usage during peak periods to less costly times,
research at Carnegie Mellon University indicates. That is the
equivalent of the entire nation getting a free month of power every
year.
Meters that can read prices every hour or less are widely used in
factories, but are found in only a tiny number of homes, where most
meters are read monthly.
The handful of people who do use hourly meters not only cut their
own bills, but also help everyone else by reducing the need for
expensive generating stations that run just a few days, or hours,
each year. Over the long run, such savings could mean less
pollution, because the dirtiest plants could be used less or not at
all.
References
1.
http://www.nytimes.com/2007/01/08/business/08power.html?ex=157680000&en=ce5fbf661c20579d&ei=5124&partner=permalink&exprod=permalink
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