Abstract
This Energy Insights report focuses on the design of voluntary time-of-use
(TOU) programs designed to shift load from on-peak to off-peak periods. It also
examines critical peak pricing (CPP) programs, a variant of TOU pricing.
Time-based rates can send an accurate economic price signal to customers, which
can result in the load shifting that will reduce costs or allow customers to
choose not to shift if they are willing to pay the incremental costs of their
electricity usage behavior.
"A number of factors have come together to induce utilities to develop TOU or
CPP rates, including record-breaking peak demands in recent years, deregulation
of wholesale markets, requirements of the Energy Policy Act of 2005, and the
lifting of long-term rate caps at many utilities," says Craig Williamson,
program director, Energy Insights. "The trick for utilities is to design these
rates in a way that alleviates regulators' concerns about fairness but also
provides customers with sufficient incentive to participate in the programs and
shift load."
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