Integration of the steel and electricity industries using price and load information exchange
Abstract
The purpose of the present study was to create a methodology to measure the impacts of an electricity rate structure called Modified Real-Time Price (MRTP). MRTP requires participating customers to inform the utility of the load they plan to consume given a price schedule, eliminating utility forecast error risks. Real-time pricing (RTP) is an innovative rate that updates price schedules in cycles of a week or less using the utility incremental-cost to calculate electricity prices. To the utility, incremental-cost-base prices may improve utility capacity utilization and operational costs. To the industrial customer it may reduce production cost and improve flexibility because RTP and MRTP eliminate maximum-demand charges usually present in current industrial rates. Maximum-demand charges impose a level of conservation on the customer's operation no matter how loaded the utility system is. If the utility incorrectly forecasts the customer's marginal benefit from electricity (demand curve), the electricity price will not create a suitable conservation level and the utility will bear most of the costs of this error. This reduces the benefits of the innovative rate implementation. The simulation results of the new rate implementation were discussed in terms of savings adjusted for utility net operation income losses to isolate non participant customers electric rates from the new rate. The results show that MRTP is indeed superior to RTP and would replace the current industrial rate with advantages.
Degree
Ph.D.
Advisors
Sparrow, Purdue University.
Subject Area
Business costs|Operations research|Systems design|Energy
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