Managing Your Energy Costs

Managing your energy costs can conserve energy and lower your energy costs. This has become more important as deregulation ended in Delaware and energy costs are based on current market prices.

Deregulation in Delaware
In 1999 electric deregulation became law in Delaware to help the state transition to a competitive electric supply market. For many residential customers, rates were reduced and have remained the same, except for a few small increases, for the past six years. This law did not affect residents who get their electric service from municipalities (Clayton, Dover, Lewes, Middletown, Milford, Newark, New Castle, Seaford and Smyrna).

In May 2006 the rate freeze ended and the energy or supply part of your electric bill will be based on current market prices. You have the option of buying your power supply from your local utility or a third-party electric supplier.

Peak Load Reduction: You Can Help Control Costs and Improve Reliability of Electricity

Electricity and Peak Demand
Since electricity cannot be effectively stored, electrical networks must instantaneously balance generation and load, i.e., supply must always equal demand. Therefore, there is a need to build for the peak because sufficient generation capacity must meet maximum instantaneous demand whenever it happens. Meeting varying demands requires a mix of generation capacity including base-load and peak-load generation.

Base-Load Generation vs. Peak-Load Generation
A base load generation unit is one that provides a steady flow of power regardless of total power demand by the grid. This unit runs all seasons except during the time when repairs or scheduled maintenance occur. Base-load plants usually run on low-cost fuels such as nuclear or coal and are massive enough to provide a majority of the power used by a grid. Therefore, these plants have high capital costs to build but low operating costs to run.

In contrast, peak-load units (also known as peakers) are power plants that generally run only when there is a high demand, known as peak demand, for electricity. In the U.S., this occurs in the afternoon, especially during the summer months when the air conditioning load is high. The time a peaker operates may be several hours a day to as little as a few hours per year. If a peaker is only going to be run for a short and variable time, it does not make economic sense to make it as efficient as a base-load power plant. Peak-load units are generally gas turbines that burn natural gas, which are more expensive than coal and nuclear. Therefore, peak-load systems tend to have low capital costs (so it is OK if it lying idle for most of the year) but high operating costs (but then, you don’t run it that often).

High Cost of Meeting Peak Increase
Wholesale electric prices in PJM market have risen considerably in recent years, primarily due to fast-rising natural gas prices. The jumping gas prices, however, do not fully explain the level of wholesale electric prices in PJM market. Increased demands for electricity, especially during the summer peak hours, is straining the market’s ability to supply electricity. In order to meet growing peak demand, power companies run and maintain peak load units during times of peak demand. These systems go unused 90% of the time, resulting in inefficient use of investor, consumer and capital-market resources. Ever-increasing peak demands also put a strain on the transmission and distribution systems.

Peak-Load Control and its Benefits
Compared with the supply-side option through increasing generation capacity and upgrading transmission and distribution systems, demand-side management including control of peak load is more cost-effective. Peak-load control is a way by which consumers modify their level and pattern of electricity consumption to shed their peak electricity usage or shift their usage from peak to off-peak times. There are a lot of simple actions that businesses and residents can do to shift or shed their peak electricity usage. For example, customers can shift energy-intensive tasks—like laundry and dishwashing—to off-peak hours (mornings, nights and weekends). Customers can also install a thermostat and set it at a higher temperature when not in the home at daytime. Customers’ peak load control will help reduce the peak load and change the load-shape by flattening out the load curve on utility systems (“valley-filling”).

Peak-load reduction and other demand-side management options are cost-effective alternatives to the supply-side options. It is much cheaper to create a “negawatt” (energy reduced) than to generate a “megawatt” of electricity. Peak-load reduction is good to the consumers and the environment. Reducing electricity use helps lower a customer’s energy bill; reducing peak energy use helps ensure reliable and affordable electricity for home and business; and reducing peak load minimizes the need for new capacity and, therefore, the amount of pollution produced from electricity generation.

What You Can Do
Click on Energy-Saving Tips for practical information and ideas.