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As a rule, electricity consumption is the second highest cost for water distribution companiesbehind labor. The price of electricity is also rising at a far higher rate than labor costs makingit likely that it will become the dominant cost in production and distribution of water in thenear future if it is not already at that position now. The nature of the electricity market ischanging dramatically in most states under the guidance of the Federal Energy RegulatoryCommission (FERC) with the intent to deregulate the energy market, and possibly thetransmission and distribution markets as well. A working understanding of concepts such asLocational Marginal Prices and both Real-Time and Day Ahead Pricing are going to be veryimportant both to the procurement team at water utilities to best manage the purchasingprocess and to the operations and planning teams to leverage the market when schedulingpumping.A prime requisite is educating the respective personnel responsible for procurement andoperations to understand the electricity industry reference framework and jargon for howelectricity is priced and the options available in a consistent way so fair "apples with apples"comparisons can be made between competing offers of supply. This paper is a primer on theterminology in use and options generally available throughout the U.S. with particularrelevance to water distribution systems. The authors also present some methods for reducingrisk in the energy purchasing process by optimizing the energy load-profile to match financialincentives set by the energy companies. Includes reference, figures.

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Edition: Vol. - No. Published: 06/01/2006 Number of Pages: 14File Size: 1 file , 590 KB