Last week, the California Public Utilities Commission (CPUC) issued a proposed decision on residential rate reform. Residential rate reform – how and what Californians pay for electricity – is a thorny subject, and the Commission’s proposed decision is being met with a range of reactions.
We at Environmental Defense Fund (EDF) want to highlight a bright spot in the 300-page document that we’re thrilled about: the attention paid to time-of-use electricity pricing (a type of time-variant pricing). Buried in this long legal document, we see EDF’s fingerprints in the Commission’s call for California investor-owned utilities to ramp up their use of this innovative yet well-proven pricing tool starting with pilots in 2016 and going to scale in 2019.
How TOU Works
If you’ve been following EDF’s work in this area, then you know we’ve been involved in this process for many years and have probably gathered that we’re big fans of time-of-use pricing (TOU) because it better reflects the true cost of electricity, which fluctuates throughout the day. This type of pricing also empowers customers to better control their own energy bills and reduce our reliance on fossil fuels.
TOU pricing works by breaking up the day into two or three large intervals and charges a different price for each. Rates can be divided into off-peak prices (generally during the middle of the night to early morning), semi-peak prices (daytime and evening), and peak prices (occurring during periods of highest demand, usually afternoon to early evening). These rates remain fixed day-to-day over the season.
While California never quite got a winter, we can still acknowledge that spring – with the sun shining and flowers blooming – is here. From where I sit in Sacramento, spring means allergy season, getting out and enjoying the blue skies, a last bit of cool air before a brutal summer, and oh yes, the legislature heating up on important questions of California’s energy future.
This year, all eyes are on the question of how to meet the bold challenges laid out by Governor Brown in his January inauguration speech, which set goals for: 50 percent of electricity to come from renewable energy, a 50 percent improvement in the energy efficiency of existing buildings, and a 50 percent reduction in petroleum use, all by the year 2030.
To answer that challenge, the Senate has introduced Senate Bill 350 (De Leon) and the Assembly has introduced Assembly Bill 645 (Williams, Rendon), both aimed at increasing the existing Renewable Portfolio Standard (RPS) from 33 percent to 50 percent by 2030. And, both bills are feeling the love from a diverse array of supporters. The April 7th Senate committee hearing on SB 350 enjoyed a line of supporters (including Environmental Defense Fund) which spilled into the halls! AB 645 saw a comparable showing when it was in committee on April 20th. Both bills will be discussed for the second time in committees this week.
This strong support for clean energy should come as no surprise – robust renewable energy policies can support job growth, reduce pollution, and attract clean energy businesses to the state, which is why groups representing working people, the environment, and the transition to a clean energy economy showed up “en masse” to demonstrate support. At the same time, these groups are having conversations amongst each other and with the legislature about exactly what the transition to an electricity grid that runs on 50 percent clean resources will look like. Why? Because the details matter. Read More
Editor's note: This post was updated April 9, 2015.
When the door to one power plant closes, a window to more clean energy solutions opens.
It may seem logical that once a power plant closes, another one needs to be built to replace it – after all, we need to make up for its potential energy generation with more natural gas or nuclear-powered energy, right? San Diego Gas & Electric (SDG&E) is certainly trying to convince Californians this is true. Trouble is, EDF and other environmental groups, along with the California Public Utilities Commission (CPUC), aren’t buying it. And you shouldn’t either.
This story begins in 2013, when the San Onofre Nuclear Generating Stations (SONGS) permanently closed, shutting down a nuclear power plant with a capacity of 2,200 megawatts (MW) and sparking a debate about how to replace this lost power source. When first determining how to proceed in the wake of the SONGS closure, the CPUC decided SDG&E could buy between 500 to 800 megawatts (MW) of new energy resources by 2022. Further, at least 200 MW of this power had to – and all of it could – be met with preferred resources like energy efficiency, renewable energy, energy storage, and demand response (an energy conservation tool that pays people to save energy when the electric grid is stressed). Read More
Ask most people what the Beatles and California have in common and they might very well be at a loss. However, the answer is pretty simple: they are both unabashed trendsetters in the face of resistance – the former in their musical style and the latter in its clean energy policies.
Not content with setting a Renewable Portfolio Standard that ends at 2020, Governor Jerry Brown and state legislators are pushing for the Golden State to get 50 percent of its energy from renewable resources by 2030.
To meet this ambitious target, California must build a system that is largely based on renewable electricity, like wind and solar. This is not an easy task. The primary reason? Sunshine and wind are only available at certain times of the day and can be variable during those times.
Traditionally, managers of the electricity grid have relied upon dirty “peaker” power plants – usually fossil fuel-fired and only needed a couple of days a year – to balance the grid during periods of variability or when electricity demand exceeds supply. But, in a world where 50 percent of our energy comes from renewable sources as a means to achieving a clean energy economy, we can’t rely on these dirty peaker plants to balance the variability of wind and solar.
Luckily, technology is available today that can help fill the gap of these peaker plants – and the California Public Utilities Commission (CPUC) is starting to embrace it. Read More
Map of polluting power plants in Los Angeles County. Many are located in or near the region’s most vulnerable communities that are already over-burdened by air pollution.
My mom is a pro at shopping for good deals. She taught me the importance of timing my purchases during the off-peak season to get the most value for my dollar.
Time-of-Use (TOU) electricity pricing reminds me of the lessons my mom taught me, and it can help empower families to take control of their energy use, while saving money AND improving air quality.
Like the name implies, TOU pricing allows customers to choose when to power-up large appliances (think laundry, dishwasher, A/C) in order to avoid using high-demand, “peak” energy – which is more polluting and expensive. It is a voluntary program with a proven track record.
Peak energy demand typically occurs late in the afternoon when everyone is coming home from school and work, running the A/C, charging phones, cooking, doing laundry, or streaming Netflix on a T.V. During this high-demand time, energy prices spike and electric utilities flip on expensive and dirty fossil fuel “peaking” power plants to meet energy demand (because nobody wants to lose power and heaven-forbid the Internet!). Read More
Governor Brown has the opportunity to make energy-saving upgrades possible for families and small business owners by signing Assembly Bill 1883 (Nancy Skinner- Berkeley). This bill would significantly lower the cost of Property Assessed Clean Energy (PACE), a tool which enables property owners to take advantage of energy efficiency and rooftop solar PV for their homes or buildings with no money down, allowing them to pay off the investment over time through their property tax bill.
AB 1883 would streamline the PACE process and drive down the fixed transactional costs associated with commercial projects. Lowering these transaction costs is especially important for small businesses because high transaction costs can reduce the economic viability of the smaller energy upgrades that small business typically need. AB 1883 also incorporates new options for financing rooftop solar PV through PACE, which will enable a greater number of homeowners and small businesses to qualify for cost-saving solar PV contracts. Read More