November 13, 2011


Pricing of electricity could use a jolt: Common-sense pricing systems that consider the time at which energy is used could save consumers money on their power bills and encourage conservation. (Frederick Taylor-Hochberg, November 13, 2011, LA Times)

During the day, businesses and large office buildings are humming along, sucking up vast amounts of juice. During these peak demand hours, utility companies often have to turn to expensive and polluting "peaker" plants to keep the supply flowing. Electricity should cost more during these times, but because tiered prices are blind to when a kilowatt hour is consumed, it doesn't.

So what should be done? An alternative way to charge for energy, known as time-of-use pricing, is beginning to gain some traction, and it makes economic and environmental sense.

The idea is to do away with complex tiers and instead charge consumers a price based on the time of day they consume a kilowatt hour, with higher prices during peak times and lower ones during off-peak times. This would encourage people to consume power when it's cheaper and better for the environment to produce, and it would discourage them from using it at peak times.

It would let consumers take charge of their own electricity bills: Instead of accidentally slipping into an upper tier and getting charged exorbitant rates for electricity, people could make informed decisions about when to consume and set simple behavioral rules, such as washing clothes at night.

Posted by at November 13, 2011 7:37 AM

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