Design and Management of Curtailable Electricity Service to Reduce Annual Peaks

Shmuel S. Oren and Stephen A. Smith
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Shmuel S. Oren: University of California, Berkeley, California
Stephen A. Smith: Santa Clara University, Santa Clara, California

Operations Research, 1992, vol. 40, issue 2, 213-228

Abstract: Curtailable electricity service is a voluntary option in which customers receive credits for permitting the utility a certain number of discretionary interruptions per year. This paper describes a methodology that allows an electric utility to design and manage these service offerings to achieve maximal peak load reduction. This methodology was developed in a project jointly sponsored by the Electric Power Research Institute (EPRI) and New England Electric Service (NEES). A spreadsheet decision support tool was developed for and used by the NEES system dispatcher, who must decide on a daily basis, when to call for an interruption. The methodology also provides guidelines for designing new service offerings, by determining the service attributes and corresponding pricing that will lead to the most efficient use of customer interruptions. Simulated application of the spreadsheet model to NEES's historical loads indicated that significant cost savings can be achieved during years with high daily peak loads. Although the methodology was developed for NEES, it can be applied at other electric utilities, including those who use curtailable service offerings to reduce peak energy costs or to improve tight reserve margins.

Keywords: forecasting; applications: peak load forecasting; industries; electric: credits for service interruptions; marketing; pricing: dispatching service interruptions (search for similar items in EconPapers)
Date: 1992
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