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Competition in the Electric Industry Emerging Issues, Opportunities, and Risks for Facility Operators (1996) / Chapter Skim
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Perspective of an Electrical Power Customer
Pages 58-61

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From page 58...
... From the customers' standpoint, now is the time to press the advantage. Marginal Costs and the Price of Power About 44 percent of the power generated in the United States goes through the bulk wholesale markets before reaching the retail customer, so there is an active, well-established trading mechanism already.
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From page 59...
... Their fixed costs are having to be deferred unless they can get their variable costs below the marginal cost of bringing on the next unit. Low-Cost Power: A Prediction Retail electricity prices today vary widely from utility to utility in this country, between 3 and 5 cents per kilowatt-hour, and more in some places.
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From page 60...
... A big user using many units on a steady basis has the fixed costs spread over more units, so the average cost is perhaps 3 to 4 cents, while a residential customer, with a worse load factor, might be charged 7 or ~ cents. In a competitive market no one collects the fixed costs, and the variable costs apply to everyone, so price variation is smaller.
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From page 61...
... Users have an opportunity to control their own costs. Utilities can communicate in the strongest possible terms the cost of starting up that last peak load power plant, and can even influence customers consumption enough to avoid adding new peaking capacity altogether.
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Key Terms

  • variable costs
  • power plant
  • power costs
  • excess power
  • electricity prices

  • competitive market
  • marginal cost
  • demand charges
  • capital costs
  • company producing

  • percent excess
  • retail electricity
  • experienced periods
  • prices represent
  • sales cover

  • customers consumption
  • costs apply
  • capacity altogether
  • price spikes
  • average cost

  • load factor
  • competitive wholesale
  • manufacturer trying
  • retail customer
  • plant fired

  • cost signals
  • costs lower
  • loaded costs
  • giving customers
  • avoid adding


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