Saturday, October 1, 2011

Large users' prices

On the website of the North Bay Nugget (though, as far as I can tell, not necessarily in the newspaper) was an article entitled ‘Energy Crisis Official with Smart Meter TOU rates - Ontario families feeling crisis to wrestle peak times/price hikes’ (30 September 2011).  A number of familiar themes can be found therein, but the passage I would like to explore is the following:  ‘Residential customers and small businesses are considered low volume users yet we’re targeted as the major cause of the energy problem and integral part of the solution. What about major corporations with multiple locations; Wal-Mart, Toyota Canada, et al. According to the FAQ page on the Ministry of Energy website, TOU rates only apply to low volume users.’
Factually, this is correct – namely, that time-of-use rates (TOU rates) only apply to low-volume users.  But it is not that larger users are on some kind of ‘flat rate’ or ‘two-tier system’, but instead they are on a system that is ‘truer’ to real-cost pricing than is time-of-use.  More specifically, large users pay the spot market price (the ‘Hourly Ontario Energy Price’ or HOEP), which is a function of supply of, and demand for, electricity in real time. (This is those who consume more than 250,000 kWh a year; these customers account for just under half of all electricity used in the province.)
To add further texture to this debate, I thought that I would pull out yesterday’s HOEP and show how it varies with time.  I did the former, but that does not necessarily show the latter.  Looking at the graph below – which is, in fact, HOEP from Friday, 30 September 2011 – one is struck by how flat it, indeed, is.  I have overlaid the ToU times and prices.  While these HOEP figures do not show ‘global adjustment charges’ (and which would thus push the whole graph upwards), they are remarkable for how constant they are.  Perhaps that is a function of being in the ‘shoulder’ season – between, that is, the peaking seasons of winter and summer.

Regardless, the relationship between ToU (prices and periods) and real-time pricing is an interesting one – one that I have explored previously in this blog and will probably do so again in the future.

No comments: