Time-of-use electricity pricing for industrial customers: A survey of U.S. utilities

Yong Wang and Lin Li

Applied Energy, 2015, vol. 149, issue C, 89-103

Abstract: Time-of-use (TOU) pricing serves as a cost-effective way to realize electricity demand response, which aims at relieving peak demand. Customer participation is critical to the success of TOU pricing programs. To fulfill the potential of such programs, customers must be able to access electricity tariffs and understand their terms. This paper reports a survey of 43 TOU pricing programs targeting industrial customers offered by U.S. utilities. This work is inspired by and complements the Federal Energy Regulatory Commission survey of demand response in the electric power industry, highlighting the interpretation of key pricing components and specific characteristics of TOU tariff sheets collected from public sources. The case studies examine various industrial scenarios to predict electricity cost savings when customers are facing the transition from flat rates to TOU pricing. The analysis results show that the cost savings vary enormously, ranging from −72.0% to +82.6%, depending on specific utility programs and switching strategies involved. Such information is useful for customers to determine whether to participate in a TOU pricing program. Key findings and implications for industrial customers, utilities, and regulatory agencies are also discussed.

Keywords: Time-of-use; Electricity pricing; Demand response; Customer education; Information transparency (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (38)

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DOI: 10.1016/j.apenergy.2015.03.118

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