|Key Words||Energy Crisis, Real-Time Pricing, Prices, Consumption, Demand, Shortages, Electricity Bills|
The solution to the current energy crisis in California may be real-time pricing, whereby big consumers track prices and vary their consumption accordingly. The idea is that big organizations would decrease their use of electricity when the price is high - which is when electricity is most in demand and shortages are most likely; and increase their usage when the price is low - which is when the system is least pressured.
For example, Fieldale Farms, a large poultry producer in Georgia, shuts down its chicken-feed mixers at the first sign of a price spike, often at the end of a work day, which allows 50 megawatts of power to go 14,000 Georgia homes for air conditioning and other purposes. They then turn the mixers back on when the price falls, usually after 11 p.m. The company saves 20 percent on its electricity bills, and consumers are more likely to have interrupted power. In total, 1,650 businesses, accounting for one-third of Georgia Power's peak load, use real-time pricing, regularly cutting 5 percent off the peak load. This can make all the difference in shortage situations.
For this to work in California, producers would need pricing information over the Internet, real-time pricing meters, and billing software. The shortfall is expected to be 1,000 to 2,000 megawatts next summer, and it is estimated that real-time pricing could result in savings of 3,000 megawatts at peak times. For the time being, however, the state is focusing on increasing the generation of power.
(Updated April 1, 2001)
|Source||Bryan Acohido, "When energy prices go up, some businesses turn off," USA Today, February 8, 2001.|
Return to the Equilibrium
©1998-2002 South-Western. All Rights Reserved webmaster | DISCLAIMER