Under the current scheme of operations, customers pay the similar rate throughout the year, regardless of the actual cost to the utility of generating electricity in any given hour or of distributing electricity to any particular portion of the transmission and distribution grid. As an output, consumers have little opportunity to control their electricity costs through matching their preferences, timing, cost, and reliability of service to the price and character of the services purchased. New technologies are making it practical to give variable price signals and a range of other demand-side services to consumers.
Time-of-use pricing, real-time pricing, and other flexible load-shape programmes could take advantage of the substantial variation in generation prices through time and location in which is expected in a competitive market. Utilities have begun offering real-time pricing to their customers by DSM programmes which includes automated energy management, two-way communication systems, and time-of-use prices. Spot-market prices will fluctuate based on load levels, the availability of major generating units, and transmission constraints. During capacity shortages, prices could increase reflecting the cost of building new generation capacity to serve peak loads and the price signals that might be needed to match demand to available supply.
We now acquaint you along with some of these emerging DSM methods.