Innovation: ESB Customer Supply's new Tracker Tariff

ESB Customer Supply has designed a new transparent tariff for Large Energy Users i.e. customers supplied at 10kV or higher voltage.

The new tariff, known as the Pool Price Pass-through Tariff, builds on the transparency of the new pool market. It is essentially a pool-price tracker tariff whereby the price changes with the pool price on a half hourly basis. In December 2007, ESB Customer Supply billed customers for their November consumption operating on this new Pool-Price tracker.

The tariff is the result of the work of a cross-functional group across ESB Customer Supply that includes Electricity Pricing, Customer Billing, SAP Billing, ITS and CRM. The tariff was brought from concept to delivery within two months of agreement of the tariff with the Commission for Energy Regulation (CER). New IT processes in terms of extracting pool data and combining with quarter hourly consumption data for billing and for the on-line display in ESB Customer Supply's Energy Extra web-interface for LEUs (Large Energy Users) were designed and tested in record time.

The key features of the new pool-tracker tariff are:

• Customers are charged based on the (day ahead) half-hourly pool prices (System Marginal Prices (SMP) and the halfhourly Capacity Payment Demand Prices (CPDP).
• By going on-line, customers can review their quarter hourly electricity consumption history and the corresponding SMP and CPDP prices. A customer on this tariff can now reconcile their monthly energy bill right back its quarter-hourly electricity consumption and the pool price pertaining in each halfhour of that month.

The huge advantage of this tariff to customers is that it is transparent - customers can relate their energy bills directly back to the pool price. Also, because of the half-hour price granularity and with day-ahead notice of prices, customers can manage their consumption to coincide with the half-hours, when price is lowest and thereby minimise consumption at peak price hours.

The benefits of the tariff to customers are potentially much lower electricity costs if they successfully manage their load. The benefit to ESB Customer Supply is that if fuel or pool prices rise above those forecast, it will not be at a loss. The benefits to the consumer in general are lower electricity prices by reducing peak consumption, deferring investment costs and reducing CO2 emissions.

"We believe this is the most transparent electricity tariff there is, a genuine innovation that was brought to market in record time by a dedicated cross-functional team within ESB Customer Supply," says Déaglán Ó Dónaill, Pricing Manager.