The benefits and barriers associated with prices to manage industrial demand

Implementation of demand-side management (DSM) programs for the industrial sector is not the same as for the commercial or residental sectors. This difference is derived from sectoral characteristics such as global competition, uniqueness of production facilities, cash flow and budget constraints, and the relationship and trust of a customer with an electric utility. Experience has shown the success of DSM programs in industry to depend on factors such as market philosophies emphasizing fulfilling the needs of customers, the ability to measure and reward performance for achieving specific conservation and load management goals, technical expertise, short-term payback, size of risk, and degree of operational disturbance caused by the program. Time-of-use pricing for the industrial sector has been the subject of very few studies in Canada. Most of these studies show that hourly rate differentiation was not beneficial and that seasonal time-of-use rates would provide little benefit due to the nature of the load and the utility system. An outline is presented of time-of-use concepts in current Canadian utility rate structures. 1 tab