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Now that California has AMI, what can the state do with it?

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Author Info

  • Woo, C.K.
  • Kollman, E.
  • Orans, R.
  • Price, S.
  • Horii, B.

Abstract

Recognizing the lack of retail-demand response, a state regulator, such as the California Public Utilities Commission (CPUC), seeks tariff proposals that transmit wholesale price signals to a local distribution company's (LDC) retail customers. To enable these proposals, the CPUC has authorized funding for advanced metering infrastructure (AMI) for two investor-owned LDCs. Assuming regulatory approval of the third LDC's application, the state's US$4.28 billion AMI investment will aid new rate designs for 11.3 million electricity customers. Now that California has AMI, what can the state do with it? With AMI in hand, an LDC can implement service options that can further the state's energy initiatives, ranging from resource adequacy requirement (RAR) to greenhouse gas (GHG) emissions reduction. These options can efficiently allocate limited capacity based on each customer's willingness to pay, without the unnecessary distinction between price rationing and reliability differentiation. They can be Pareto superior, welfare dominating the default tariffs that apply to these customers. A case in point is the generalized demand subscription service (GDSS) option proposed in this paper. However, it is unclear whether the option will find wide customer acceptance, without an LDC's intensive customer education and marketing efforts.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 36 (2008)
Issue (Month): 4 (April)
Pages: 1366-1374

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Handle: RePEc:eee:enepol:v:36:y:2008:i:4:p:1366-1374

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Web page: http://www.elsevier.com/locate/enpol

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References

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  1. Cramton, Peter & Stoft, Steven, 2005. "A Capacity Market that Makes Sense," The Electricity Journal, Elsevier, vol. 18(7), pages 43-54.
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  7. Seeto, Dewey & Woo, C. K. & Horowitz, Ira, 1997. "Time-of-use rates vs. Hopkinson tariffs redux: An analysis of the choice of rate structures in a regulated electricity distribution company," Energy Economics, Elsevier, vol. 19(2), pages 169-185, May.
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  12. Spulber, Daniel F, 1992. "Optimal Nonlinear Pricing and Contingent Contracts," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(4), pages 747-72, November.
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  18. Herter, Karen, 2007. "Residential implementation of critical-peak pricing of electricity," Energy Policy, Elsevier, vol. 35(4), pages 2121-2130, April.
  19. repec:reg:rpubli:207 is not listed on IDEAS
  20. Woo, Chi-Keung, 1988. "Optimal electricity rates and consumption externality," Resources and Energy, Elsevier, vol. 10(4), pages 277-292, December.
  21. Woo, Chi-Keung & Karimov, Rouslan I. & Horowitz, Ira, 2004. "Managing electricity procurement cost and risk by a local distribution company," Energy Policy, Elsevier, vol. 32(5), pages 635-645, March.
  22. Chi-Keung Woo & Orans, Ren & Horii, Brian & Peter Chow, 1995. "Pareto-superior time-of-use rate option for industrial firms," Economics Letters, Elsevier, vol. 49(3), pages 267-272, September.
  23. Roger E. Bohn & Michael C. Caramanis & Fred C. Schweppe, 1984. "Optimal Pricing in Electrical Networks over Space and Time," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 360-376, Autumn.
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Cited by:
  1. Pepermans, Guido, 2011. "The value of continuous power supply for Flemish households," Energy Policy, Elsevier, vol. 39(12), pages 7853-7864.
  2. Woo, C.K. & Li, R. & Shiu, A. & Horowitz, I., 2013. "Residential winter kWh responsiveness under optional time-varying pricing in British Columbia," Applied Energy, Elsevier, vol. 108(C), pages 288-297.
  3. Takanori Ida & Kayo Murakami & Makoto Tanaka, 2012. "Keys to Smart Home Diffusion: A Stated Preference Analysis of Smart Meters, Photovoltaic Generation, and Electric/Hybrid Vehicles," Discussion papers e-11-011, Graduate School of Economics Project Center, Kyoto University.

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