PRICING ELECTRIC HARMONICS

Rapid growth in power electronic equipment (PEEs) implies that in abou t 10 years, more than 50% of electric utility output will be consumed by PEEs. While PEEs yield benefits of large energy savings and product reliability, they cause the problem of harmonics. Harmonics deteriora te power quality, produce metering errors, increase reactive power, an d exacerbate line losses and heat in transmission cables and power equ ipment. Thus, harmonics directly affect electric utility revenue and c osts. Our objectives are: (i) to characterize harmonics, (ii) to descr ibe the effects of harmonics on utility revenue and costs, and (iii) t o propose alternative strategies for pricing harmonics. We show that p ricing harmonics efficiently by using the marginal cost principle is i mplementable with current metering technology and existing utility bil ling systems.