As a rule, electricity consumption is the second highest cost for water distribution companies
behind labor. The price of electricity is also rising at a far higher rate than labor costs making
it likely that it will become the dominant cost in production and distribution of water in the
near future if it is not already at that position now. The nature of the electricity market is
changing dramatically in most states under the guidance of the Federal Energy Regulatory
Commission (FERC) with the intent to deregulate the energy market, and possibly the
transmission and distribution markets as well. A working understanding of concepts such as
Locational Marginal Prices and both Real-Time and Day Ahead Pricing are going to be very
important both to the procurement team at water utilities to best manage the purchasing
process and to the operations and planning teams to leverage the market when scheduling
pumping.
A prime requisite is educating the respective personnel responsible for procurement and
operations to understand the electricity industry reference framework and jargon for how
electricity is priced and the options available in a consistent way so fair "apples with apples"
comparisons can be made between competing offers of supply. This paper is a primer on the
terminology in use and options generally available throughout the U.S. with particular
relevance to water distribution systems. The authors also present some methods for reducing
risk in the energy purchasing process by optimizing the energy load-profile to match financial
incentives set by the energy companies. Includes reference, figures.
| Edition : | Vol. - No. |
| File Size : | 1
file
, 590 KB |
| Note : | This product is unavailable in Ukraine, Russia, Belarus |
| Number of Pages : | 14 |
| Published : | 06/01/2006 |
