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The Impact of Deregulation on Energy Conservation and DSM Measures
Abstract
The regulated utility monopoly, with its defined
and quasi-permanent rate schedules has, in many
places, become a thing of the past. Therefore,
determining the benefits of various facility operating
options is no longer a straightforward calculation. In
the new market, the economics of energy
conservation and demand side management options
will depend on price signals from the market.
Unfortunately, the market is always changing and
therefore affecting an end user's cost/benefit analysis.
This problem is compounded by the fact that most, if
not all, competitive energy service providers do not
quote supply costs based on demand and energy
costs. Rather, their quotes are for a fixed energy cost
only, thereby eliminating any clear price signal to the
end user to lower their demand.
Given these problems, the following
questions must be answered for energy service
companies to compete in the new market: 1) What changes will energy service
companies that are not affiliated with a
facility's energy service provider, have to
make to operate in this new world? 2) Will long term contracts be necessary to
lock in the benefits of different options? 3) Can you still get pricing that is based on
demand and energy rates? 4) What sort of pricing and price signals have
users in the Texas market received thus far? 5) What known market indicators can energy
service companies (ESCOs) watch to know
when it is a good time to propose different
options to customers? 6) What regulatory changes could affect
economics in the future? 7) The goal of this paper will be to answer these
questions based on input from market suppliers and
actual pricing examples received by Texas end users
for the 2002 open market. Also, strategies for
dealing with energy service providers and obtaining
the needed price signals will be discussed.
Given that the new market structure will have to
be dealt with from this point forward, now is the time
to learn how to work with it, and maximize related
business opportunities.
Citation
Brasovan, M. W. (2002). The Impact of Deregulation on Energy Conservation and DSM Measures. Energy Systems Laboratory (http://esl.tamu.edu); Texas A&M University (http://www.tamu.edu). Available electronically from https : / /hdl .handle .net /1969 .1 /4581.