RTP as an Optional Service: It's Alive, But Is It Well?

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Economists have advocated for real-time pricing (RTP) of electricity on the basis of the gains in economic efficiency that would result from charging customers the contemporaneous marginal cost of supplying electricity instead of the average cost. In recent years, RTP has also become the subject of interest in a variety of policy contexts, including integrated resource planning initiatives, ongoing efforts to improve efficiency and reliability in competitive electricity markets, and implementation of default service in states with retail choice. Most experience with RTP has been as an optional service, that is, a self-selecting alternative to the standard utility service. By ... continued below

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Goldman, Charles; Barbose, Galen & Neenan, Bernie March 10, 2006.

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Economists have advocated for real-time pricing (RTP) of electricity on the basis of the gains in economic efficiency that would result from charging customers the contemporaneous marginal cost of supplying electricity instead of the average cost. In recent years, RTP has also become the subject of interest in a variety of policy contexts, including integrated resource planning initiatives, ongoing efforts to improve efficiency and reliability in competitive electricity markets, and implementation of default service in states with retail choice. Most experience with RTP has been as an optional service, that is, a self-selecting alternative to the standard utility service. By our count, approximately 70 utilities in the U.S. offered an optional RTP program at some point over the past 20 years. However, many programs are now defunct. In 2003, 47 utilities in the U.S. were still offering an optional RTP program, on either a pilot or permanent basis (see Figure 1). In addition, 10 utilities in states with retail choice currently offer RTP as the default service for large customers that are not under contract with a competitive supplier. Another two utilities have received regulatory approval to do so in the next few years. Although the results of a few optional RTP programs have been publicized, the vast majority of programs have operated in relative obscurity. To provide a wider perspective on utility and customer experience with RTP, we surveyed 43 optional RTP programs offered in 2003. We interviewed RTP program managers and other utility staff, and reviewed publicly available sources, including key regulatory documents and program evaluations. Based on this research, we identified trends related to RTP program history and outlook, program design and implementation, customer participation, and participant price response. The results are both surprising and instructive. We conclude that RTP is indeed alive but is not prospering as well it could. Thus, we offer a number of recommendations for policymakers and utilities that are considering optional RTP as a strategy for developing price responsive demand.

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  • Journal Name: The Electricity Journal; Journal Volume: 19; Journal Issue: 1; Related Information: Journal Publication Date: January/February2006

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  • Report No.: LBNL--59740
  • Grant Number: DE-AC02-05CH11231
  • Office of Scientific & Technical Information Report Number: 889328
  • Archival Resource Key: ark:/67531/metadc884792

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Office of Scientific & Technical Information Technical Reports

Reports, articles and other documents harvested from the Office of Scientific and Technical Information.

Office of Scientific and Technical Information (OSTI) is the Department of Energy (DOE) office that collects, preserves, and disseminates DOE-sponsored research and development (R&D) results that are the outcomes of R&D projects or other funded activities at DOE labs and facilities nationwide and grantees at universities and other institutions.

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  • March 10, 2006

Added to The UNT Digital Library

  • Sept. 21, 2016, 2:29 a.m.

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  • Sept. 29, 2016, 6:55 p.m.

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Goldman, Charles; Barbose, Galen & Neenan, Bernie. RTP as an Optional Service: It's Alive, But Is It Well?, article, March 10, 2006; Berkeley, California. (digital.library.unt.edu/ark:/67531/metadc884792/: accessed October 18, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.