Your October editorial on dynamic pricing hinted one problem but missed another. You mentioned the price shock issue. That is a major concern on the individual consumer level. While business may be able to do some load shifting and thus benefit from dynamic pricing, many individual consumers do not have that option. Maryland recently rejected the residential installation of time-of-day (TOD) usage meters. It was shown that most residential customers would never save enough to pay for the upfront cost of the TOD meters. The local television news and papers said that actual national experience shows the average residential customer who switched to TOD would actually pay more due to the dynamic pricing.
A hidden issue is the cost to those residential customers who cannot load shift. For many years, my wife provided day care in our home. We could not load shift heat and AC as the house was occupied 24/7. Daytime setbacks only work for those who are not home during the day. Seniors and retired people are in the home 24/7. While they may be able to shift when they do laundry, they can't turn off the hot water, or shift heat and AC to low-cost hours. To compound the problem, the seniors are the least likely to understand load shifting. Thus, the vast majority of the seniors will see large increases in their electricity costs with TOD metering. Therefore, the 20% reduction in peak demand due to demand-response programs seems even less likely than the ability of wind power to be “boundless and free” (see Lisa Linowes's “Straight Talk” in T&D World's October issue).
Bruce Land is a senior engineer at Johns Hopkins University.