Service design in the electric power industry
Shmuel S. Oren, Stephen A. Smith, Robert B Wilson · OSTI OAI (U.S. Department of Energy Office of Scientific and Technical Information) · 1990
This essay reviews the basic concepts of product differentiation as they apply to service design in the electric power industry. Unbundling the quality attributes of service conditions benefits utilities as well as their customers. Each customer gains from new opportunities to match the quality and cost of service conditions to the characteristics of their end uses. A well designed product line of service conditions benefits every customer. The utility benefits from improved operating efficiency and from greater flexibility in meeting service obligations and competitive pressures. In addition, the utility obtains better information for planning investments in generation, transmission, and distribution. Together these features provide a foundation for a utility's business strategy. The basic principles of product design are described and a unified methodology for specifying and pricing service conditions is outlined. We also describe how the pricing of quality attributes enables the utility to price other service options systematically, such as long-term supply contracts, cogeneration, and standby service. 60 refs., 21 figs., 14 tabs.