Definition: Time-Based Rate Program

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Time-Based Rate Program

Electricity rates paid by customers in which rates vary for different days, times of the day, or events (such as days with extremely high loads). Various types of customer systems facilitate implementation of these time-variant pricing programs. These systems include smart meters, controls, and communications systems and software that provide two-way information between utilities and customers. Such systems may control customer load, based on the time-variant pricing program, or provide information for customers to alter their electricity consumption pattern in response to different rates during any given hour of the day. There are different pricing programs such as: Time Of Use (TOU) where the day is divided into blocks of hours and the kWh price varies between blocks; the prices and time blocks are set in advance. Critical Peak Pricing (CPP): Very high prices are applied on a small number of "event" days during a year; the utility informs the customer one day in advance of the critical peak pricing day. The ratio of on-peak to off-peak price is higher on CPP event days than in a TOU program. Real Time Pricing (RTP): The price may vary hourly based on near real-time market prices. Peak Time Rebates (PTR): Customers receive rebates for reducing power consumption during peak periods.[1]

Related Terms
critical peak pricingtime-of-use pricingelectricity generationreal-time pricingsystem

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