Electricity Pricing : Engineering Principles and Methodologies book cover
1st Edition

Electricity Pricing
Engineering Principles and Methodologies

ISBN 9780824727536
Published December 17, 2009 by CRC Press
696 Pages 179 B/W Illustrations

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Book Description

As the advent of the Smart Grid revolutionizes how homeowners and businesses purchase and manage power, electricity pricing is becoming more complicated and intricate than ever before, while the need for more frequent rate revisions remains a primary issue in the field.

A timely and accessible guide for the new industry environment, Electricity Pricing: Engineering Principles and Methodologies helps those involved in both the engineering and financial operations of electric power systems to "get the money right" while ensuring reliable electric service at a fair and reasonable cost.

Explores both the business functions and engineering principles associated with electricity pricing

Examining pricing approaches and opportunities, this book presents tools, viewpoints, and explanations that are generally not found in contemporary literature. It clarifies valuable analysis techniques, realistic examples, and unique lessons passed along from those inside the industry.

This "how to do it" guide fosters a multidisciplinary understanding that integrates information, methodologies, and techniques from accounting, economics, engineering, finance, and marketing. Detail-oriented but still mindful of the big picture, this book examines the complex relationship between electricity, customers, and service providers in relation to pricing.

Electricity Pricing also:

  • Presents mathematical methods and techniques used to establish electricity prices, determine cost causation, and evaluate pricing structures and mechanisms
  • Explores ways to translate and integrate cost elements into practical pricing structures
  • Details how engineering concepts are used to apportion production, delivery, and associated costs to determine cost of service and to support all aspects of ratemaking strategy, design, analysis, and decision making

This comprehensive professional reference addresses theory but remains grounded in no-nonsense practical applications. It is dually suited to introduce newcomers to the technical principles and methodologies of electricity pricing and provide veterans with a valuable consolidation of advanced tools for pricing analysis and problem solving.

Watch an interview of the author at http://youtu.be/4fU8nkDVhNY

Table of Contents

Overview of Electricity Pricing
Objectives of the Electric Tariff
Traditional Price Regulation
Impacts of Industry Restructuring on Electricity Pricing
The Role of Engineering in Electricity Pricing
Chapter Organization
Prerequisite Concepts
The Cardinal Laws of Electricity
Fundamental Load Characteristics
Elements of Utility Costs and Pricing
Electric End Uses
Customer End-Use Needs
End-Use Value
Customer End-Use Research
Customers: Electric Service Requirements
Customer Electricity Requirements
Nonphysical Service Requirements
The Customer as Energy Manager
Customer-Owned Power Systems
Wholesale and Compound Retail Customers
Power Delivery Systems: Transmission and Distribution
Power Distribution
Power Transmission
Electric Power Production
Power Production Technologies
Classifications of Generation
Generation Operation and Control
Revenue Metering and Billing
Metering of Electrical Energy
Metering of Demand
Special Metering Considerations
Meter Data Acquisition, Processing, and Billing
The Rate Schedule: Pricing Methods and Risk
Qualifying Service Provisions
Rate Structure Forms
Attendant Billing Provisions
The Mathematics of Rates
Graphical Representation of Rates
Formulary Representation of Rates
Rate Comparison Methods
Billing Data Statistics and Applications
Characteristics of Billing Data
Bill Frequency Analyses
Bill Frequency Revenue Analyses
Revenue Forecasting Methodologies
Cost-of-Service Methodology
Cost-of-Service Study Overview
Cost Functionalization
Cost Classification
Cost Assignment
Cost-of-Service Study Results
Translating Costs to Prices
Coincidence Factor Load Factor Relationship
Cost Curve Development
Rate Design Methodology
Guiding Principles of Ratemaking

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Lawrence J. (Larry) Vogt is the Manager of Rates for Mississippi Power Company, a Southern Company, where he is responsible for managing the research, development, and implementation of cost-of-service studies and rate designs. He is also responsible for administration of the Company’s electric tariff and for supporting other regulatory matters of the Company. He previously worked for ABB Power T&D Company as Manager of the Distribution Technologies Center and for Southern Company Services as Principal Engineer – Rates & Regulation. He has also held various pricing, marketing, and engineering positions at Public Service Company of Indiana, Inc. (now known as Duke Energy – Indiana) and Louisville Gas & Electric Company. Larry has over 36 years of experience in the electric utility business in the areas of pricing, cost analysis, commercial and industrial marketing, demand-side management, and distribution engineering and planning.

Larry is Mississippi Power Company’s representative on the EEI Rate & Regulatory Affairs Committee, and he also serves as a principal instructor in the Committee-sponsored E-Forum Rate College. In addition, he serves as an Adjunct Professor in Penn State University’s International Power Engineering Program. He has also conducted a number of industry workshops under the sponsorships of the University of South Alabama and the Electric League of Indiana, Inc. As an instructor, he has taught numerous courses both domestically and internationally on the topics of rate design, cost-of-service methodology, spatial load forecasting, distribution system planning, and the impacts of demand-side management on the transmission and distribution system. His audiences have included engineers, accountants, attorneys, and other professionals from utilities, regulatory agencies, and business.

Larry is a graduate of the University of Louisville where he earned Bachelor of Science and Master of Engineering degrees in the field of electrical engineering. He is a member of AEE, IEEE, and NSPE, and he is a registered Professional Engineer in several states. He has served as an expert witness on a variety of rate and regulatory issues. Larry is the coauthor of several technical papers as well as the textbook Electrical Energy Management, Lexington Books (1977).