Time-of-Use Pricing for Electric Power: Implications for the New York Dairy Sector, A Preliminary Analysis

This paper examines the cost of electric power consumption on New York dairy farms. More specifically, it is a preliminary evaluation of the cost changes that dairy farmers may experience when residential time-of-use electricity rates are implemented by New York State utilities. Using a model developed for Niagara Mohawk Power Corporation, the operating cost of farm electrical equipment is estimated using both flat rate pricing and NMPC's new time-of-use rates, which are now being implemented for their farm and residential customers. Twenty-five "typical" family-operated dairy farms are evaluated with this model. Initial results indicate a cost decrease up to 10 percent as a result of the switch to time-of-use rates. Larger farms will experience a greater percent decrease in electricity costs than smaller farms. Electricity costs for all major end uses are lower with time-of-use rates than with a flat rate. These estimates assume no response in the farmer's schedule or equipment usage. Model refinement will continue.