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Coming soon: Peak pricing.

Byline: The Register-Guard

A vexing problem faced by electric utilities is that people use more electricity in the morning and evening than they do at noon or at night, and even more during hot spells and cold snaps. The entire electrical system must be sized to meet peak demand - which means it's oversized most of the time, with a lot of expensive capacity sitting idle. Solutions to this problem are being tested, and one day soon the cost of power is likely to depend on when it's used.

Utilities long have talked about demand management, peak shaving and load shifting. The idea is to flatten the jagged line on the graph of electricity demand. It can be done by getting people to use less power during periods of peak demand - running the dishwasher late at night, for instance, rather than just after dinner. Such behavior can be encouraged by charging a premium price for peak power, and by providing a discount for off-peak demand.

Northwest utilities have been cushioned against the problem of variable demand by their reliance on a system of variable supply - the region's hydroelectric dams. Water is stored behind dams during periods of low demand and spilled to supply peak power. But the hydropower system's cushioning effect is wearing thin as demand grows and as intermittent energy sources such as wind and solar power are integrated into the electric system. The addition of a big new load on the electrical system, such as a fleet of plug-in hybrid cars, would bring the problem of variable demand to the forefront.

Portland General Electric, which serves the Portland metropolitan area, already is facing the problem. Since the closure of the Trojan nuclear plant in 1993, its power plants and contracts supply only 80 percent of its customers' demands; the rest must be purchased on the spot market. PGE's spot market purchases spike during the hottest and coldest days of the year, when the utility's average demand of 2,500 megawatts grows to 4,000 megawatts.

Last week, the state Public Utility Commission approved a PGE pilot project to test variable electric rates. Customers who agree to participate will pay 4.5 times the normal rate for electricity during the 40 hottest hours of summer and the coldest 40 hours of winter. In exchange, they'll pay a discounted rate at other times. Some participants also will agree to let PGE set their thermostats by remote control, within temperature parameters chosen by the customers.

Puget Sound Energy in Washington state tried a different type of voluntary peak-pricing program in 2001. It set power prices for participating customers at 6.25 cents per kilowatt hour during the morning and evening hours, charged a lower rate in midday, and a still lower rate of 4.7 cents at night. The utility found that customers shifted 13 percent of their power usage out of the higher-priced periods and slightly reduced their electricity consumption overall.

The utility dropped the program when spot power prices moderated.

Electric meters that can track consumption by the hour or the minute are the key to both these variable power-pricing programs. Puget Sound Energy installed meters that transmitted readings 30 times an hour. PGE will complete its conversion to smart meters by the end of next year.

Some types of time-of-day pricing can be implemented without smart meters - timers on water heaters, for instance, can shift part of a household's power load to low-demand hours. But meters that send information in two directions - devices that tell utilities how much power is being consumed and consumers how much it costs - promise to become the standard. Such meters would be essential to an electrical system that relies on intermittent sources of power, such as wind, and serves customers who can choose when they will use power for such purposes as recharging a car battery.

A simple version would be a meter with a green light that comes on when lower-priced power is available. More sophisticated systems could inform power users of several pricing levels, allowing them to avoid electric consumption during periods of peak demand and take advantage of bargain rates when demand slackens.

Programs such as PGE's are just the beginning. One day, the size of people's power bills will depend not just on how much electricity they use, but when they use it.
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Title Annotation:Editorials and Letters
Publication:The Register-Guard (Eugene, OR)
Date:Sep 28, 2009
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