Making Every Electricity Consumer a Market Participant (Putting Demand Back in the Equation)
30 April 2003
By Dr. Hethie Parmesano
In this article, Dr. Parmesano comments that recent history shows paying generators market prices while charging customers frozen rates is a recipe for disaster. She argues that contrary to a widely held belief, customers without fancy meters, load control equipment, and real-time price information can still respond to rising and declining market prices, and thereby moderate those fluctuations and limit market power on the supply side.
Dr. Parmesano suggests that this can be accomplished without unacceptable bill fluctuations. In this article she outlines a strategy designed with regulated utilities -- who have the usual obligation to serve -- in mind. Dr. Parmesano explains that at the heart of the strategy is an explicit contract between each consumer and the utility. Consumers would agree to purchase a specific amount of energy at fixed, regulated prices. Any additional consumption would be priced at variable, pre-determined "market" price set each month , and any reduction in consumption would be credited at the variable "market" price. Dr. Parmesano terms the strategy as a Fixed/Variable program.
This article is republished with permission from Electricity Journal, Volume 16, Issue 4, April 2003, Copyright (c) 2003 Elsevier Science, Inc., http://www.elsevier.com/locate/tej. All rights reserved.
