A Review of Critical Peak Pricing and Peak Time Rebates in California
27 March 2007
By Amparo Nieto
NERA Senior Consultant Amparo Nieto presented "A Review of Critical Peak Pricing and Peak Time Rebates in California" to members of the Marginal Cost Working Group at the 2007 Spring meeting in Georgia. Interest in electricity Critical Peak Pricing (CPP) rates is growing across the US as an alternative to "Real Time Pricing." In July 2006, the California Public Utilities Commission ordered three investor-owned utilities (IOUs) to incorporate default (opt-out) CPP rates for electricity consumers with a peak demand above 200 kW into their next comprehensive rate proceedings. In her presentation, Ms. Nieto reviews the features of the IOUs' latest CPP applications and discusses the potential for improvement in the various proposals. Her discussion focuses on the analysis of the method to set the CPP price during critical events; the residential 'Peak Time Rebate' option proposed by San Diego Gas & Electric; the expected distribution of bill impacts; and the alternatives to increase customer acceptance to these rates. Ms. Nieto emphasizes that the effectiveness of CPP rates as a demand response tool depends on the details of their design as well as the implementation approach.
