Two Bills Deal With Time-of-Use Meters and Tariffs

By CMTA Staff

Capitol Update, April 22, 2005 Share this on FacebookTweet thisEmail this to a friend

Reducing electricity usage during peak demand periods helps ensure the reliability of the state’s electric grid.  CMTA supports a wide array of voluntary demand response programs to offer customers a menu of choices.  Because of the diverse nature of the large power load, different programs are needed to allow customers to customize a demand response approach that are consistent with customers business operations.  Many large customers operate continuous processes on a 24/7, 365 days a year basis and cannot shift load to non-peak hours.  They also tend to have flat load profiles. Unlike residential customers, their usage does not drive the peak.

Residential customers use electricity in fundamentally different ways and for different purposes than large manufacturers.  Whereas large customers require electricity as an essential input into the production process, residential customers’ usage patterns are driven in large part by comfort and convenience, i.e., air conditioning during hot summer days.

Residential customers are now served on tiered rate schedules based on amount, not time-of-use (TOU) and as a consequence are shielded from paying the actual cost of the power they receive from their utility. 

Legislation by Assemblyman Keith Richman (R-Northridge) would change that, and subject all customers, including residential customers, to TOU rates.  AB 1009 requires the California Public Utilities Commission (CPUC) to develop TOU pricing tariffs and to require real-time metering for all customers, on a phased-in basis pursuant to a specified schedule.

TOU meters and tariffs provide strong price signals and encourage conservation during peak demand periods, thus enhancing system reliability.  They also more accurately reflect the actual cost to serve each customer, compared to the current inverted tier rates.

AB 1009 phases in implementation of TOU pricing and real-time metering according to a specified schedule (new residential construction by 2009, and other residential customers by 2014). 

CMTA has a "support if amended" position on AB 1009.  The bill’s phased-in implementation schedule prejudges the current Advanced Metering Infrastructure (AMI) proceeding at the CPUC.  The CPUC will soon be reviewing applications by investor-owned utilities for AMI implementation.  CMTA would support AB 1009 if the bill were amended to let the CPUC decide the schedule for AMI implementation.  CMTA is also seeking an amendment to ensure that that TOU tariffs would be sufficient to collect the costs of the program attributable to each customer class, without shifting costs to other customer classes.

There is another TOU tariffs bill moving through the Legislature.  SB 441 (Nell Soto, D-Pomona) which CMTA opposes, prohibits the CPUC from authorizing or requiring the installation of AMI for a residential or small commercial customer with an average annual usage of less than 1,000 kilowatts per month, unless certain findings are made by the CPUC and prohibits residential customers from being placed on a default time-differentiated rate schedule without the customer’s affirmative written consent.  The bill was recently approved by the Senate Energy, Utilities and Communications Committee.

SB 441 unnecessarily limits the CPUC’s ability to examine and implement all cost effective options for AMI deployment (i.e., deployment of AMI for all customers). 

Additionally, time-differentiated rates could actually reduce rates for many residential customers with average usage of less than 1,000 kilowatts per month and they should be given that opportunity.

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