SEDC analyses impact of demand-side flexibility on pricing


The paper, Price Signals in Electricity Markets, provides recommendations on the pricing of electricity.

The recommendations are geared toward to increasing consumer awareness about their right to exercise demand-side flexibility programmes with associated technologies and equipment.

According to the SEDC, all customers should have the right to own a smart meter regardless how much power they consume.

The organisation adds that consumers should have the right to choose market pricing on an hourly basis and retailers should be able to comply with the demands.

Demand-side flexibility and self-generation

In addition, customers should not only be limited to using energy provided to them by service providers but should be enabled to self-generate their own electricity and even engage in integrating excess power into main grids to generate their own revenue.

The recommendations calls for the removal of regulated end-user prices but rather market prices reflecting the real value of electricity being used by consumers at a given time.

Even though scarcity prices (peak demand power pricing) are possible, utilities should reflect in electricity prices the full value of balancing costs. [Duquesne Light gets PUC approval for ToU pricing pilot].

Network tariffs introduced by service providers should support rather than hamper the use of demand-side flexibility.

At the same time, utilities should remove stubborn incentives hence the need for adjustments to mitigate the blunting effects of charges and taxes on electricity price signals.

In implementing capacity mechanisms, utilities should recognise the value of both capacity and flexibility in the system.

The organisation states that the mechanisms should reflect the structural advantages provided by demand-side resources and avoid undermining the functioning of the internal energy market including price signals on the wholesale electricity markets.


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