TIME-OF-USE PRICING FOR LOAD MANAGEMENT PROGRAMS IN TAIWAN POWER COMPANY

Load management (LM) programs have been actively performed by the util ities to reduce peak demand and improve system load factor. In recent years, the Time-of-Use (TOU) tariff based on the peak load pricing the ory has been one of the most effective load management strategies. TOU pricing can either be applied as an LM program or as an incentive to drive the economics and the motivation to implement other types of LM programs. TOU pricing also can be taken as an involuntary way for cons umers to adjust the electricity consumption among different time axis in accordance with the cost of electricity. Since more than 70% of tot al electricity has been consumed by the industrial customers in Taiwan Power Company (Taipower), the system load pattern can be significantl y modified by the implementation of LM programs for industrial custome rs. Five types of large and intensive electricity-consuming industries of petrochemical, textile, primary metal, non-metallic mineral and pa per, are selected to study the benefits achieved by the proposed TOU p ricing for LM programs (LM-TOU) in Taipower system. The econometric pr ice elasticity model based on customer's cost function under profit-ma ximization has been developed to investigate the customer response to electricity tariff. The own- and cross-price elasticities were derived and represented as functions of cost share of electricity during each time period in the form of transcendential logarithmic (translog) cos t function. An LM-TOU tariff according to inverse elasticity pricing r ule for a utility with regulated rate-of-return is then derived for th e LM participants. The implementation of the TOU program alter the ele ctricity consumption as well as electricity cost expenditure of the cu stomer because of the price-elasticity deviation among time period. Th e benefit of customers by apply LM programs with the LM-TOU tariff pro posed is also evaluated by economic indices such as payback period and net present worth. It is found that the TOU electricity demand is own -price elastic stemming mainly from the voluntary nature of TOU struct ure in Taipower. The benefit resulting is generally consistent with th e nature of industrial processes. According to the price-elasticity of customers' responsiveness in Taipower, the LM-TOU pricing of peak and mid-peak periods should be increased and the pricing of off-peak usag e should be decreased . By the LM-TOU tariff proposed, the economic in dex has been significantly improved and the electricity consumption ha s been shifted from peak to off-peak period effectively.