California's largest electric utility is desperate to slow down a new program that's going to revolutionize the way small businesses pay for their power. The company claims customers need more time to understand 'dynamic' pricing, but higher "time-of-use" rates will mean a new way of doing business for many of California's small business owners.
Consumer advocate groups and The California Small Business Association have come out against the new pricing for electricity, but state regulators have already approved the program. According to the San Francisco Chronicle "PG&E in November will start charging its roughly 500,000 small-business customers different rates for electricity at different times of day. Businesses will also face significantly higher rates on a handful of days each year when power supplies are strained, either by hot weather or problems with the electricity grid."
It should be noted that business owners will be able to "opt out" of the program
—for the time being, anyway. According to The Chronicle, "the California Small Business Association has now asked the California Public Utilities Commission, which approved PG&E's program, to slow down the timetable for the changes. And PG&E, to an extent, agrees, arguing that the utility needs more time to educate its customers."
What utilities like PG&E want to "educate" all of us about is the transition to "time-of-use" rates. So what does all of this actually mean? Wikipedia breaks down the different categories of time-based pricing in relation to electricity industry like this:
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time-of-use pricing (TOU pricing)—whereby electricity prices are set for a specific time period on an advance or forward basis, typically not changing more often than twice a year. Prices paid for energy consumed during these periods are pre-established and known to consumers in advance, allowing them to vary their usage in response to such prices and manage their energy costs by shifting usage to a lower cost period or reducing their consumption overall;
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critical peak pricing—whereby time-of-use prices are in effect except for certain peak days, when prices may reflect the costs of generating and/or purchasing electricity at the wholesale level
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real-time pricing (also: dynamic pricing)—whereby electricity prices may change as often as hourly (exceptionally more often). Price signal is provided to the user on an advanced or forward basis, reflecting the utility’s cost of generating and/or purchasing electricity at the wholesale level; and
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peak load reduction credits—for consumers with large loads who enter into pre-established peak load reduction agreements that reduce a utility’s planned capacity obligations.
The Wiki-editors go on to recommend dynamic pricing, saying that "time-based pricing will reflect the price variations on the market. Such variations include both regular oscillations due to the demand pattern of users, supply issues (such as availability of intermittent natural resources: water flow, wind), and occasional exceptional price peaks." The general idea is that dynamic pricing begets consumer response—once people are paying more for electricity depending on when they use it, they tend to pay more attention to their usage. While it may be true that Americans have long enjoyed cheap electric rates in comparison to other countries, but the days of power that's "too cheap to meter" are decidedly coming to an end...
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