Privatizing electric reliability through smart grid technologies and priority service contracts

Abstract

Smart grid technologies in combination with the methodological foundation laid by the economic theory of Priority Service, enable the conversion of electric service reliability from a public good to a private good. Such a transformation is achieved by offering electricity service as a product line differentiated according to service reliability from which customers can self-select the level of reliability that fits their needs and pocketbook. This conceptual paradigm is illustrated through a specific proposal for a multilevel Emergency Interruptable Load Response Service (EILS) program at ERCOT.