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AEP customers set consumption rates.


American Electric Power, an electric-utilities holding company based in Columbus, Ohio, had a good idea about customer pricing.

It had nothing to do with selling customers more dollars of product. But it did have a lot to do with creating happier customers.

It hinged on making them more knowledgeable about what electricity costs.

In response to changing price signals, 500 trial users of Appalachian Poer, columbus Southern Power, and Indiana Michigan Power regulate the amount of electricity they receive.

Through this experiment, AEP hope to find out if its customers can increase the value of their energy purchases and use electric power more efficiently.

The technology -- the Transtex Advanced Energy Management (AEM) System -- was created by Intergrated Communications Systems (ICS). AEP owns about 20% of ICS. (Other investors include The Southern Co., BellSouth, ABB T&D Power Co. Inc., and GTE.)

TranstexT offers electrical power at variable prices.

At any given moment, the price of that power reflects AEP's production cost. Consumers are changing their consumption patterns on the basis of new information.

It costs more to generate at peak -- requires more investment in generating stations -- than it does at off-peak.

The customer is given an incentive to move away from consumption at peak times.

The related benefit is that AEP becomes more competitive, McDonald says.

He expects AEP's cost structure and investment/sales ratio to improve.

Less capital investment in the company will be required over time because of deferred need to construct new generating facilities.

"Basically," McDonald says, "electrical utilities build for their anticipated peak power consumption."

The topic of interactive energy management has been discussed for a long time in the electrical-power industry. For a long time, was no practical way to implement it, as it requires the interaction be on a quasi-real-time basis.

Micro Breakthrough

In the early '80s finally, inexpensive microprocessing became available. This was a big catalyst for TranstexT.

Telcos began talking with electric utilities about more innovative use of telephone circuits and about using microprocessing to facilitate remote meter reading.

Real-time pricing for interactive energy management became possible.

In 1983, ICS was formed to develop an interactive pricing system for electric utilities.

"When you charge customers an average price," McDonald says, "they would tend to underconsume when the price of energy is actually low and overconsume when the price of energy is high.

"But the tariff, or flat rate, didn't reflect that. We're trying to create a better-informed consumer."

The TranstexT customer has five elements installed at his premises: the intelligent electric meter, ComSet intelligent communications modem, smart thermostal, energy controller, and major appliance relay.

Tier Pricing

The thermostat's computer screen showns the customer the month's energy consumption in kilowatt hours at four available rate "tiers": low medium, high, and critical.

Based on this tier pricing, he regulates his kilowatt hours used, once a month or more often as needed.

The screen displays effective time and household temperature he sets for that particular tier price.

In addition, the Bill-Info feature shows how much money he's spent so far that month. After seven days, the screen will project his bill.

If he changes the setting often, the bill projection will lose some accuracy. (Frequent changes in the wealther cause some users to change their settings from day to day.)

The first bills under the Variable Spot Price tariff (versus the flat tariff) went out in May, McDonald says.

Operating in a seven-state region, AEP operates its power network as a grid (like all power companies).

It might actually generate power up in Indiana for all AEP customers.

"We have an extensive EHV (extra high voltage) system, with a 765-kv transmission system, which is the largest in the world," McDonald says.

Switch Languages

The unique part of the TranstexT system, McDonald says, is how AEP converts telephone signals to electrical-power signals.

An AT&T 3B2 computer manages that TranstexT system. This computer was built into the TranstexT package from the outset.

This is the database for all TranstexT customers.

The computer dials out, using a modem to go over local telephone lines, to the user's facility to communicate with the ComSet.

"What's unique about the ComSet is it converts telephone communications over to power-line communications in a customer's home," says MCDonald.

"So the telephone signal is put down on the customer's electrical wiring within his house. And the various components of the TranstexT system receive those signals over that power line.

"This avoids any need for hard-wiring the system. All system components communicate over the personal area over the personal area network on an electrical-power line in the house."

AEP began moving customers over to the new tariff on April 2.

Early returns are favorable.

Followup visits to installation sites showed there was no need to fear timidity among those given responsibility to interact with TranstexT.

In only one situation, where the technology was incompatible with a customer's HVAC system, was TranstexT removed.

Everywhere else, customers dove right in and began adjusting the settings.

"We probably won't sell more energy now, but we'll sell it more efficiently," says McDonald. "If will improve customer relations."
COPYRIGHT 1990 Nelson Publishing
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Copyright 1990 Gale, Cengage Learning. All rights reserved.

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Title Annotation:American Electric Power
Author:Gitlin, Bob
Publication:Communications News
Date:Jul 1, 1990
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