Linuxluver:

I'm a fan of keeping it simple. 

One price everywhere for power at any time of the day or night and set so it is profitable enough to invest in more generation as required. 

Add to that a requirement for all homes to generate and store 20kWh / day each - including apartments - and you'll find you don't actually need much of the existing generation capacity. 

These complex pricing models for everything - power, water, roads, whatever - just waste an enormous amount of time on bureaucracy both personal and organisational and for what? Just because? I have better things to do.....and I know from experience all this raw of tooth and claw market forces "targeting" is a huge waste of time and a barrier to just doing the business you want to do.......instead of also having to manage all these inputs and infrastructure as well.....to be more "efficient". It's fiction that so many extra layers of added requirement results in efficiency. Maybe though each myopic keyhole of concern......but in the big picture? No way. You have to employ several extra people just to analyse and cope with the added complexity.   

 

Have a read of the Vector Price schedule for Auckland. It has fixed price options, time of use price options, and capacity based pricing options. Residential low users are charged 10.37c per unit, for just lines charges. Sure, standard user has a 6.45c /unit surcharge, but then you have to pay $1.01 per day in fixed fees.

Residential off peak is 2.52c / unit. Imagine if this was available for all low income households. You would get an end price of only around 10c / unit or less for offpeak power. That would help low income people immensely to keep warm during winter. Instead of paying around 30c per unit after all other surcharges are added in.

And commercial rates go as low as 0.57c / unit. (Price category code WLVH) For an electricity connection that is almost exactly the same as what your house has. Yes I know that you have to pay seperately for capacity, KVAR (power factor), daily demand, excess demand. But if you are careful, you can keep the add on costs low. While still having a high total usage. Meaning that your overall cost per unit of power used is far lower than what you can get on residential power plans. Note that if your usage pattern is a large load that runs 24/7, You get the best overall cost per unit of these type of plans. (EG - a Data Centre).

This pricing accurately reflects the cost of building a power lines network. Imagine a customer has a peak load of 500KVA. It doesn't matter if they draw that 500KVA for just 1 hour per year, Or if they draw that load 24/7, Or any "In between". They are still going to require the exact same amount of network capacity to supply that load. If the customer want's the ability to use that load at any time they feel like doing so.

Now if that customer is willing to agree to not draw that 500KVA load during peak times, the lines network can then resell that same capacity to other customers. So the network gets more revenue without needing to build any new assets. Cost savings can be passed on in lower prices.  And that customer can then negotiate a cheaper price per unit from their electricity retailer. As the retailer can make use of mostly idle generation capacity.

Imagine that end customer uses the electricity for pottery kilns or another type of high temp oven. Often such ovens can easily be operated on Natural Gas instead. So the customer uses gas during peak usage times (meaning they don't need to pay peak prices). And uses electricity during offpeak times. The environment wins - mostly renewable energy gets used, and the gas used offsets gas or coal that would have been used in a power station + twice as efficient to burn gas at the point of energy use, instead of in a power station. While the customer, retailer, and network all benefit from lower costs.

Sure, not every customer would be able to reduce their peak loads so easily. But the ones who can reduce their loads at at little cost to themselves will do so. There is always a cost to meet peak loads. (whether the customer self manages the load or pays the network to provide that load). Having separate capacity or peak / offpeak charges both ensures that the person who can meet the load for the lowest economic cost does so. And helps to ensure that the carbon emissions from energy use align with costs. Making sure that the polluter pays the full cost of their emissions, while at the same time avoiding situations where emitting more carbon is cheaper.