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Death --- Postmortem changes. --- Autopsy. --- Time of.
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In a recent [Public Utilities Fortnightly] article, Hans Nissel questioned the calculations in an earlier RAND study and contended that time-of-use (TOU) rates will have no effect on electricity consumption. The authors present a correction to their study, but reaffirm that the findings of their research and of ten other studies support the original conclusion that TOU rates change load curves. They then examine Nissel's principal assertions about electricity pricing and argue that his views are not supported by either facts or the personal communications on which he often relies. The authors conclude by considering the challenges that face U.S. utilities as they move into the less familiar territory of introducing and modifying TOU rates.
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This study reports an initial analysis of changes in relative peak electricity consumption for almost 4,000 industrial and commercial customers in ten U.S. utilities with time-of-day (TOD) rates now in effect. Relative peak loads declined about one percentage point on average when TOD rates were introduced. A small fraction of customers reduced their peak loads substantially, but most customers (including commercial customers as a whole) have apparently not as yet changed their consumption patterns in response to TOD rates. Average changes in load differ significantly by utility, industry, and year, and those changes are statistically related to the terms of the TOD rates that customers faced. Changes in load, while small in percentage terms, are large enough to justify TOD rates on a benefit/cost evaluation. Welfare gains average over $1,000 per year per customer, against a metering cost of approximately $65 per year when new meters are needed to monitor TOD rates.
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This report analyzes the results from three major experiments with time-of-use (TOU) electricity rates for residential customers. It finds that when common analytic and data handling techniques are used, the responses of residential customers to TOU rates are quite similar in California, North Carolina, and Wisconsin. The principal finding--that results of the major rate experiments can be transferred to other locations--should be of wide interest to electric utilities, regulatory bodies, and energy policymakers.
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