Environmental Defense Decries CPUC Inaction On Real Time Pricing

Environmental Defense today criticized the California Public Utilities Commission (the CPUC) for a rejecting a consensus proposal for immediate implementation of real time pricing of electricity for large businesses late yesterday.

“This was a common-sense proposal that would have saved energy, cut pollution, and saved overburdened consumers money. The Public Utilties Commission’s decision is bad news for California’s economy and environment,” said Nancy Ryan, an Environmental Defense economist.

Environmental Defense praised the California Energy Commission (CEC), for working with customers, utilities, environmentalists, and public agencies to develop the spurned proposal. “The CEC has developed a workable proposal with broad-based support. It’s a shame that the CPUC has declined to make real time pricing a reality in California,” said Ryan.

The CEC designed its pricing plan so that large businesses could have realized the full conservation potential of sophisticated electric meters that are being installed at public expense in over 21,000 California businesses. The $35 million meter installation program is funded by legislation approved earlier this year to ease the state’s energy crunch.

Under real time pricing, customers know the price of electricity as it varies with the relative scarcity of electricity. The highest prices tend to occur on the hottest summer days when electricity demand peaks. It is during those times that dirty, old power plants are likely to be brought on line to meet the peak load. Successful real time pricing programs in Georgia and elsewhere have demonstrated that when prices spike, customers in real time pricing programs find ways to cut their use?they shut off lights, turn down thermostats, and may even shift operations to other days when prices are likely to be lower. The higher the price, the greater the conservation effort.

CPUC’s 4 to 0 vote yesterday removes a key obstacle to installing the meters but sends all parties back to the drawing board on tariff design, all but guaranteeing that implementation of real time pricing will not occur in time to help ward off late summer black-out risks. Experts have warned that an extended heat wave could bring back the outages that rolled through the state earlier this year. California’s annual system peak, the hour in which the year’s electricity use is highest, has occurred in August or later in 8 of the last 13 years.