California To Introduce Peak Electric Rates

Thanks to Knowledge Problem for this Los Angeles Times story about California introducing peak electric rates for large industrial customers.

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.

Large manufacturing plants and big-box retailers opposed the program because it's difficult for them to quickly reduce operations. Some fear that the rates, which are voluntary, could become mandatory.

This San Diego Union-Tribune article has more on this. Thanks to offseason increases in electricity usage, CalISO -- the entity legally responsible for the state's power grid -- estimates that the state is now 1,700 MW short in a "1-in-10 heat wave" event. That is, if the state should suffer from a heat wave of the sort that occurs one of every ten years, there would be guaranteed brownouts or blackouts.

One big impediment to all this: the federal government has reserved for itself the right to set pricing, so the state can't actually implement the program without federal approval. Shades of 1971, when the feds set the price for oil, too...