Why do power plant companies (power suppliers ) want us to save energy?


I see many commercials especially now just before summer, from the power supplier, urging the customers to save power; by setting the AC temperature to “room temp” or turning off the water boiler. And I can’t understand why they would spend money on media to ask their customers to “buy less product”.

In: 11

Because too much demand and not enough supply. This can put a huge strain on the power grid that will make it fail and then it’s lights out for everyone. Instead, they ask people to conserve that way everyone gets a little without everyone getting cut off.

Mostly because they are required by some regulation to spend money on energy saving initiatives. Or have some funding that is required to be spent on the same.

It gets their marketing team paid, and they get feel good advertising out of it so you don’t hate them as much for being a monopoly.

Residential consumers also make up like 20% of the market. A few people turning off the lights occasionally to save a few bucks isn’t gonna make a dent in their profit margins.

So my dad actually works in the distribution control center for an electric utility. For one, despite popular conception, some companies do appreciate the climate impact of electricity generation. Coal and oil is on the decline, but still represents a major percentage of the grid’s generation capability. Additionally, those are usually the plants that get ramped up as demand spikes, because stuff like solar and wind don’t have the ability to increase production on demand. So they want to reduce demand to those dirtier, not-green generators.

Secondly, one only has to look at the history of California to see why reducing demand is good. There have been rolling blackouts there for decades, because everyone turns on their AC and strains the grid so much that breakers in the grid get tripped. That may sound like an inconvenience to you, but it could be life and death for old people in the middle of a heat wave, or it could interrupt power to critical infrastructure or facilities. And now the utility company has to shoulder the cost of getting the grid back online.

The grid you need to build for isn’t a system powerful enough to power your city for the average day. It’s a grid powerful enough to power your city on the hottest summer days with the highest load. That is really expensive especially when summers are getting hotter and hotter every year. Power companies will need to eventually upgrade their plants to provide more power due to population growth requiring more power on the average day and hotter summer days increasing power requirements for the worst days. The more it can get people to consume less power the longer it can go without having to invest millions in a new power plant.

When you sign a contract with an electricity company to wire your house, you’re not just agreeing to buy electricity at a certain price but the power company is also agreeing to sell you electricity at a certain price. If the power company has several ways to make electricity and they don’t all cost the same. Some plants, “base plants” like hydroelectric plants produce electricity cheaply all the time, but have high costs to build, and can’t easily be shut down if they’re producing too much energy. Some plants, “peak load plants”, like gas plants produce electricity expensively but are cheap to build and easy to shut on and off. The power company needs to supply as much power to the network as all the users are using but the users don’t use the same amount of electricity all the time. People use more electricity during the day and less at night. So power plant companies usually turn on their gas plants during the day, then turn on more gas plants during the day, then shut them off at night. The hotter it gets and the more people crank up the AC the more gas plants they turn on. However gas plants are expensive per kilowatt, and they sell electricity at a fixed price no matter what plant it comes from. Thus power plant companies can lose money during the hottest days but more than make it back from selling hydropower at near gas prices at night.

They actually make less on really hot days when people overload the system, because of the systems they need to use to manage all of the stress.

They want you to use less so their infrastructure doesn’t melt down or burn up. If the electrical demand is at 99% and the hot summer comes and everyone turns on the air con, the demand will go up to 110%, 120% of generating capacity.

Power transformers, transmission lines are not designed to operate in an overloaded condition and will damage itself if overheated too long. Overheating causes power outages and pissed off customers and angry government regulators.

The power company may not be able to purchase anymore power from suppliers due to the generators being at capacity with no reserve left. That can lead to brownouts or rolling blackouts like what happened in California many years ago during the enron troubles.

Thanks for all the great answers,
So to summarize, I understand that there are two main reasons:

1. The power suppliers can’t supply the needed amount, so they ask customers to reduce consumption in order to prevent blackouts, and I assume that they don’t increase production capabilities since the demand only spikes for a relatively short period
2. The governments make them do it

Makes sense, did I miss anything?

Utilities like Cooperatives and Municipals (in ERCOT) have charges allocated to them based on their demand. One of these is transmission rates, which I believe is based on the 4 peak months in Texas (June through September) so it’s obviously in the utilities best interests “even” out the peaks and keep their average demand as low as possible. Another similar, but different, transmission charge is from congestion on the transmission lines, which is more like a penalty since those charges are significant.

Also, there’s the concept of peak demand establishing the utilities rate burden for the year. A utility is often charged a percentage of their peak all year long. For example, if they peaked at 100 mw in August, but never came near that level again all year long, they’d still get billed a percentage (I think it’s 90%) of that peak every month for the next 11 months, or until the actual demand exceeded the 90%..

Answer: It’s not so much “Consumer, buy less product”, but more like “Consumer, buy less product so we can sell our product to businesses at a higher rate and reliability”. In short, it’s because of money. Business and industrial consumers have lawyers that can sue for costs of downtime. The average Joe doesn’t.

Here in Eastern Canada, my monthly electricity price includes

* $0.11 / KWH cost of electricity used
* Connection fee
* $7 / month water heater rental

The first of these is power used, which fluctuates. My normal bill is around $100 CAD / month.

57% of that bill is money they get even if I use zero electricity. In essence, this is free money for them.

43% of that bill is for power used. If everyone doubles their power usage because of an air conditioning device, it doubles the amount of power they have to provide, but only increases their profit by 43%. This is a losing proposition for them as they run into additional maintenance and other problems.

It is very expensive to build new power plants, and when you aren’t able to meet the demand, customers aren’t happy. So rather than spend hundreds of millions on new generation, it’s better to stick with what already exists.