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Dynamic pricing set to expand in Illinois

TWO DYNAMIC PRICING PROGRAMS INVOLVING 22,000 customers in Commonwealth Edison's and Ameren Illinois' service territories are set to expand, with the blessing of the Illinois Commerce Commission (ICC), as the two utilities roll out advanced metering infrastructure (AMI).

The Ameren program has been branded as "Power Smart Pricing," which provides day-ahead prices for residential electricity including alerts via text, voice mail and email, with information also available by phone and online. The cost is $2.25 per month.

The ComEd program is Residential Real-Time Pricing, which provides real-time hourly prices for residential electricity and also includes alerts and phone and online price information. The cost is 39 cents per month.

On average, those 22,000 opt-in customers saved 25 percent on the electric supply portion of their bills or about 15 percent on their overall bill, said Anne Evens, CEO of CNT Energy, a nonprofit which is administering the pricing project.

Net benefits increased as project grew
The ICC, in its nod, determined that its criteria for maintaining and expanding the ComEd project had been met. Those criteria included whether the net benefits to customers exceeded the costs incurred by ComEd, an assessment of direct and indirect benefits to participating customers and society at large, and the associated cost of marketing and education.

According to a third-party assessment by Navigant Consulting, Inc., "during the first three years of the program, the estimated net benefits to residential customers were negative. [A ComEd representative] testified that this was largely due to the investment needed to develop the processes and information technology systems required to commence the program, and the cost of recruiting new customers into the program."

The impact of fixed start-up costs diminished after two years, however, "when net benefits increased as more customers enrolled in the program, resulting in positive net benefits in 2010," the report stated.

Customer savings came in two categories, according to Evens. One was a drop in overall energy use over the monthly billing cycle and the other was a drop in peak use. She also noted that changes in customer behavior persisted over the course of the four-year study, from 2007 to 2010.

"We're developing a measure of how responsive to price customers are," she said. "The goal is behavior change. We believe you have to engage customers if you want behavior change. We provide tips on how to do that. Some customers in the program are adopting pre-cooling strategies. Some are changing the hours in which they charge their electric vehicle.

"And most are not using technology like automation," she added. "Most get a general education on price patterns and how they can shift aspects of their lifestyle to off-peak periods."

Grid impacts to be measured
The demographics of project participants so far have been skewed toward older families with 2.4 residents to a household. Typically, someone is home most of the day, thus participating households had the ability to take steps in real time without automation, such as pre-cooling a house and turning up the thermostat a few degrees during peak hours when electricity prices are high.

As for the original driver of improving local, feeder-based reliability, Evens pointed out that the 22,000 customers in the Power Smart Pricing program are geographically scattered across Illinois, thus reliability impacts have to be modeled. When ComEd and Ameren Illinois begin their AMI roll outs, CNT Energy will apply the dynamic pricing program to neighborhoods in the wake of interval meter installations, which will allow direct measurement of any impacts on grid reliability.


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