ORIGINAL REPORTING: As California leads way with TOU rates, some call for simpler solutions

As California leads way with TOU rates, some call for simpler solutions; The state continues its nearly 20-year effort to get to residential time varying rates, but hurdles remain.

Herman K. Trabish, Sept. 20, 2018 (Utlity Dive)

Editor’s note: The big shift is now underway. It will take a year or two to see how it works out.

California will lead by example again as its time-of-use (TOU) rates go into effect in 2019 and 2020, but it remains unclear whether the rates are workable for a larger population of residential electricity customers. Power systems are evolving rapidly, requiring the standard flat per-kWh rates residential customers had long paid for electricity to change. California’s utilities have been piloting TOU rates to meet increased costs to provide power, caused by load reduction from the surge in energy efficiency and customer-owned generation, like rooftop solar. By 2020, California's three major investor-owned utilities (IOUs) will begin rolling out the first U.S. system-wide default TOU rates to their 22.5 million residential customers.

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Some say TOU rates should be a lot simpler than those being proposed by California's IOUs and that they are not doing enough to educate customers. "Peak period demand drives the majority of system investments and can cause system overloads," Sara Baldwin Auck, Interstate Renewable Energy Council (IREC) regulatory program director, told Utility Dive. "If customers respond to the price signals, utilities can avoid building and running expensive natural gas peaker plants that add to system costs and to greenhouse gas emissions. That is California's primary motivation." Utilities and regulators also see TOU rates as a way to manage the impacts of distributed energy resources (DER). Where overgeneration of distributed renewables is creating challenges for grid operators, TOU rates may give DER owners a reason to use battery energy storage or load control technologies to shift their electricity usage away from peak demand periods… click here for more

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