The California PUC has directed the three investor-owned utilities in the state under its jurisdiction to develop critical peak pricing plans for summer 2005. From a Los Angeles Times article,
The California Public Utilities Commission directed the state’s three investor-owned utilities, including Edison International’s Southern California Edison Co., to install special meters and draw up “critical peak pricing” tariffs that would make electricity more expensive at times of heavy use. The higher rates could spur some commercial users to shut operations on the 15 or so days when the state might be faced with blackouts.
The pricing plan, along with beefed-up energy efficiency and conservation programs also approved by the commission Thursday, could be crucial in avoiding a crisis in Southern California this year. The recently released state Energy Action Plan predicted that the Southland could run short of power in August and September if temperatures are exceptionally high.
The new pricing plan is aimed at about 25,000 large users consuming 200 kilowatts of power at peak periods. Such large users range from office buildings and big retailers that use about 200 kilowatts to steel and cement plants that need more than 500 kilowatts when operating at full tilt, said Marcel Hawiger, an attorney with the Utility Reform Network, a San Francisco-based ratepayers advocate.
This San Diego Union-Tribune article has a better and more in-depth discussion of the move. But both articles do this move the disservice of spinning it as bad for customers, bad for large customers especially. I don’t think that is correct, particularly if the IOUs do a thoughtful job of revising their entire rate structure instead of just raising peak-hour rates.
The complaints of large customers also reflect static thinking. This pricing plan gives them an opportunity to use technology (i.e., thermal storage, voltage management) to reduce their peak use even if they can’t fully shift away from peak hours.