Service Opportunities for Electric Utilities: Creating Differentiated Products

This monograph is the proceedings of a symposium held at the University of California at Berkeley, September 12-14, 1990. It was sponsored by the Electric Power Research Institute (EPR!) and by the University of California University-Wide Energy Research Group (UERG). The sympo sium brought together researchers and practitioners from academia, the utility industry, private and public organizations and regulatory agencies to address various challenges and opportunities related to product differen tiation in the electric power industry. Electric utilities are evolving rapidly from commodity-oriented services to product-oriented services. Utilities are offering menus of service options tailored to the needs of different customers. Reliability is one important dimension of electric service that lends itself to such product differentia tion., Options include lower rate curtail able services for industrial cus tomers, higher reliability power for some commercial customers, and load control with rebates for residential customers., These specialized services are a first step toward the product differentiation goal of allowing all customers to choose the type of service best suited to their electricity needs. The symposium provided a forum for in depth examination of the complex planning, development, and implementation issues associated with differ entiated products. Its specific objectives were to: xviii - Review the state of the art in implementing reliability differ entiated electric services. - Address the entire process for developing and implementing reliability differentiated product menus including research, design, marketing, implementation, and evaluation. - Consider technical, economic, and regulatory barriers to imple menting reliabilitydifferentiated product design.

I. Introduction.- Why Service Differentiation? Why Now?.- II. Theoretical Foundations for Service Design.- Priority Service Methods.- Real Time Pricing: Bringing Added Value to Utility Programs.- III. Understanding the Customer's Needs.- Modeling Customer Preferences; Lessons From Existing Models and Data.- Introducing Market Focus into Rate Design.- What Can We Learn From Customer Surveys.- IV. Supply Side Considerations.- Technical Foundations for Pricing Systems Security.- Optimizing Demand Side Contributions to Power System Security.- Design and Management of Curtailable Electricity Service to Reduce Annual Peaks.- V. Role of Enabling Technologies.- Utility and Customer Communication, Computing and Control (UC-3C) Technologies.- Integrated Utility Communications and Distribution Automation; Building the Framework for Differentiated Products.- VI. Utility Experience with Product Differentiation.- Reliability Service Options at PG&E.- Making the Transition: Prerequisites to Product Differentiation.- Priority Service and Outage Costs in the Power Sector: The Taiwan Perspective.- VII. Experience from Other Industries.- Parcel/Message Delivery Services.- VIII. Regulatory Perspective.- Are Reliability-Differentiated Products Unduly Discriminatory?.