Types of Gas and Electric Utility Loads

Consumer electric and gas loads may be characterized as peak, off-peak, baseload, and seasonal. Each is rated differently by the utilities, produces different costs to the end-user, and has different implications for the system.

Peak and Off-Peak Loads

The broadest and most critical distinction is between peak and off-peak loads. Peak loads are those that occur during the time periods that the utility must supply the maximum amount of energy and, therefore, use the highest amount of system capacity. Increases in peak load are closely tied to the need for investment in facility expansion. For electric utilities, peak loads often necessitate the use of the less fuel-efficient peaking plants. During peak periods, the rate of transmission and distribution system line losses also increases, further adding to supply requirements. For these reasons, peak capacity is the most expensive to purchase and carries with it the burden of increased capital cost and decreased fuel and delivery system efficiency. For gas utilities, peak loads that must be served on a firm basis determines the capacity requirements of the local distribution system piping network and the amount of gas supply and transmission capacity that must be reserved on interstate pipelines and/or the amount of gas storage capacity required.

Off-peak loads are those that occur during the time of day, week, month, or year when the utility uses a relatively small amount of its total system capacity. Consequently, off-peak loads do not contribute to the need for facility expansion. For electric utilities, off-peak loads are usually served by the most efficient electric generation plants and distributed with relatively low line losses. For gas utilities, off-peak loads are generally served by a low-cost source of gas supply. For all of these reasons, off-peak capacity is the least expensive to purchase and carries with it the benefits of operating cost-efficiency and minimized capital cost impact.

In addition, many utilities further segment loads into intermediate categories, sometimes referred to as shoulder- or intermediate-peak periods. These loads and their effects lie between the peak and off-peak loads.

Baseloads

Baseloads, from an end-user perspective, are those that occur all of the time (i.e., a 100% load factor). The quantity that can be referred to as baseload is the baseload rate times every hour in a given period (i.e., day, month, year). Baseloads are served, in theory, by the portion of the utility's capacity that is used constantly. Baseloads are often considered optimal loads because the fixed costs, associated with capacity-related investments, are spread over the maximum potential units of sales, and, in the case of electric utilities, the life-cycle costs of highly efficient power plants are at the lowest possible rate.

In many rate structures, baseloads carry a higher weighted average cost than off-peak loads. This is because off-peak load is a component of baseload that is separated from the peak component. Capital investment-related costs are frequently stripped away and added to the peak constituent. Variable operating costs, which are typically lower than the average due to increased efficiency, are broken out and assigned incrementally to off-peak load. Baseload costs are thus a composite of a fixed load experienced continuously in both periods.

Different rate structures separate or stratify costs to varying degrees between peak and off-peak. Traditional rate structures tend to have a relatively low differentiation of costs in different rate periods. More progressive rate structures, on the other hand, have a wider range of prices. They attempt to assign costs to a greater number of finite blocks of usage based on their varying impact on capital and operating costs, with the result that the cost of a kilowatt-hour (kWh) of electricity or thousand cubic feet (Mcf) of gas at any given time may be far different than the average cost.

Seasonal Loads

Utility systems are generally either summer peakers or winter peakers, referring to the season during which their peak-capacity requirements are highest. Most of the nation's electric utilities are summer peakers, because summer cooling loads outweigh the winter-heat-load component. In most regions of the country, heating loads are mostly served by direct on-site fuel use, such as gas or oil.

Even though fuel costs (driven by supply and demand) are even greater in the winter, the capacity-related capital cost component and the inefficiency of electric generation peaking plants produce a greater effect on seasonal electric costs than do their fuel cost component. Summer peakers, therefore, will often construct seasonally differentiated rates that are higher in the summer than in the winter.

Not all electric utility systems are summer peakers, however. Some are winter peakers, some are balanced, and some (due to a high growth rate) set a new peak every season. Winter peakers are found in certain northern regions where cooling loads are modest and/or electric heat is predominant. Winter peakers or balanced systems may also be found in moderate climatic regions that are more conducive to the use of electric heat. Balanced systems are more likely for utilities with a heavy industrial base in which temperature-related end uses are minor, compared with the baseload process end uses.

Almost all gas utilities are winter peakers, due to the preponderance of space heating loads. Northern climate local distribution companies (LDCs) tend to have the most dramatic winter peaking load profiles. LDCs that serve a significant industrial sector and/or provide large quantities of gas to electric generation plants tend to have more balanced loads, as do LDCs in warmer climates.

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