Tariff-based analysis of commercial building electricityprices

Abstract

This paper presents the results of a survey and analysis of electricity tariffs and marginal electricity prices for commercial buildings. The tariff data come from a survey of 90 utilities and 250 tariffs for non-residential customers collected in 2004 as part of the Tariff Analysis Project at LBNL [2]. The goals of this analysis are to provide useful summary data on the marginal electricity prices commercial customers actually see, and insight into the factors that are most important in determining prices under different circumstances. We provide a new, empirically-based definition of several marginal prices: the effective marginal price, and energy-only and demand-only prices, and derive a simple formula that expresses the dependence of the effective marginal price on the marginal load factor. The latter is a variable that can be used to characterize the load impacts of a particular end-use or efficiency measure. We calculate all these prices for eleven regions within the continental U.S. The methodology developed here can be adapted to any particular customer or utility sub-sample that may be of interest.

Non-residential Electricity Prices: A Review of Data Sources and Estimation Methods

“…For this reason, utilities generally incorporate an explicit capacity component into their billing, based either on demand charges, or on a rate structure known as hours charges. In the latter, block rates are defined for electricity consumption, and the block size is determined as a function of customer demand, which has the effect of increasing the cost of a given quantity of kWh for users with lower load factors 2 (see [3] for examples).…”

“…In applications, the value of the MLF is determined by the magnitude of load reduction during the hour that defines the metered peak demand for billing purposes. Based on simulated building data, for end-use based load reductions, the MLF ranges from 0.3 to 0.5 for peaking loads such as cooling and 0.75-0.95 for flat loads such as refrigeration or exhaust fans [3]. Most generally, there may be situations where energy savings occur but do not affect the demand at all, and the MLF is not defined.…”

“…The price estimate based on these data is the ratio of the two. Using the definition of average price in equation (3) we can write the utility-level price for utility u as…”

“…To better understand utility pricing and the marginal value of reductions or shifts in electricity use, Lawrence Berkeley National Laboratory (LBNL) began compiling a database of electricity tariffs, known as the Tariff Analysis Project or TAP, in 2004 [2][3][4]. From the perspective of database development, the tariff consists of a set of rules and data that specify how the electricity bill should be calculated from the consumer's energy use data.…”

“…In previous work, we have presented a definition of the TAP database structure and how it maps onto typical tariff structures [2], an analysis of non-residential tariffs with application to commercial buildings [3], and a detailed analysis of electricity pricing for the residential sector [4]. This paper presents both an update to the non-residential sector price analysis, and a comparison and evaluation of price estimates derived from two other data sources:…”