Demand Response

With Time-of-Use rates, the cost of electricity varies based on time, day of the week and season. Shifting even small amounts of energy use to off-peak periods—when rates are lower—can save customers money.

Occasional storms and heat waves, as well as periodic power plant or transmission line repairs and maintenance, have the potential to affect California’s supply and demand for electricity. When demand is high and supply is short—typically during hot summer days—it can increase the risk of power interruptions for homes and businesses.

PG&E’s demand response programs provide an effective way to address this challenge by rewarding customers who reduce or shift their energy use on days when demand for energy is at its highest. These incentives differ from energy efficiency programs, which result in permanent reductions in energy usage.

Program Results

By participating in demand response programs, customers earn incentives while giving back and helping to enhance power reliability for all Californians. These programs also enable PG&E to take a more fiscally and environmentally responsible approach by avoiding building and maintaining additional power plants that would only be needed for relatively few hours during the year.

PG&E’s demand response programs range from SmartAC™, which cycles residential air conditioning units on and off, to fully automated programs that reduce energy use through an electronic signal, to emergency programs where large industrial customers voluntarily reduce their electricity demand in less than an hour upon request.

Overall, customer participation in PG&E’s demand response programs avoided the purchase of 575 MW of power generation capacity in 2011.

Transitioning to Time-Varying Pricing

California businesses are moving to a new electric rate structure called Time-Varying Pricing, as part of a statewide energy plan being implemented at the direction of the California Public Utilities Commission. Time Varying Pricing plans are supported by SmartMeter™ technology and are designed to help better align the price for energy with the cost of energy at the time it is produced. With Time Varying Pricing, when a customer uses energy is as important as how much energy is used. This "time" component provides customers with even greater control over their energy costs.

Time-of-Use is a Time-Varying Pricing program offered by PG&E in which rates are higher during weekday afternoons when electric demand is at its peak (typically May through October from noon to 6 pm). In return, customers will pay lower rates at all other times.

Peak Day Pricing is a Time-Varying Pricing program for non-residential customers, which uses Time-of-Use as its foundation. However, with Peak Day Pricing, two components are added to the rate structure. The first is a Peak Day Pricing Event Day surcharge for energy consumed during extreme peak hours of 2 to 6 pm, 9 to 15 days each year. This is an added incentive for customers to further conserve electricity during critical peak hours. In exchange, customers are rewarded with the second component—additional credits for all other electric use in the summer months between May and October.

Peak Day Pricing combines a Time-of-Use rate with Peak Day Pricing Event Day surcharges and summer credits. Customers who can conserve electricity during high demand hours and Peak Day Pricing event hours can save money on their overall electric bills.

Large commercial and industrial customers began transitioning to opt-out Peak Day Pricing in 2010, followed by large agricultural customers in 2011. Eligible small and medium business customers will begin transitioning to mandatory Time-of-Use rates in November of 2012, followed by eligible small and medium agricultural customers in March of 2013. Eligible small and medium business customers will then transition to opt-out Peak Day Pricing starting in November 2014.

PG&E provides online tools, programs and services to help businesses succeed with Time-Varying Pricing. Customers can log into our website to see a custom rate comparison and learn more about the pricing options available to them. Also, via the website, customers can take advantage of energy efficiency programs and rebates on equipment and lighting, get a personalized energy assessment and use online account tools and information to help manage their energy use and bills.

Residential customers can voluntarily sign up for the SmartRate™ Summer Pricing Plan, an option enabled by SmartMeter™ technology that helps customers better control and reduce energy costs. Similar to Peak Day Pricing for non-residential customers, the SmartRate™ Summer Pricing Plan helps residential customers save money by conserving power during up to 15 SmartDays™ each summer, when energy may be in short supply.

Innovating with Automated Demand Response

PG&E’s Automated Demand Response program, or “AutoDR,” enables customers to automatically reduce their energy use when they receive an electronic signal from PG&E.

To get started, PG&E and customers work together to identify specific ways—such as turning off lights or air conditioners—to reduce or even eliminate customer electricity use during peak demand periods. After the customer defines their energy reduction strategies, they receive funds to automate their equipment or energy management and control systems. Then, during a demand response event, PG&E sends a signal via the internet to the customer’s AutoDR-enabled equipment or energy control system, which initiates a series of customer-defined, pre-programmed and pre-authorized demand reduction strategies. These events usually occur during hot, summer weekdays.

Since 2005, PG&E has successfully demonstrated the program with a small group of customers. PG&E has requested regulatory approval to support broader customer adoption of this promising technology.

As a key milestone, in 2011, the National Institute of Standards and Technology ratified the Open Automated Demand Response 2.0 (OpenADR) standard, which provides a common language for the energy industry to use for sending AutoDR signals. PG&E led the development of the OpenADR standard, drawing on our years of work with the Lawrence Berkeley National Laboratory. Our commitment will continue as a board member of the Open ADR Alliance, a group formed to accelerate the development, adoption and compliance of OpenADR standards throughout the energy industry.

PG&E continues to collaborate on other Smart Grid standards, such as Smart Energy Profile 2.0, to reduce the cost of demand-response-enabling technologies and provide incentives to customers to upgrade their demand response capabilities.

On the Horizon

Looking forward, PG&E will continue to help realize the demand response potential of California by offering new programs and technologies that enable customers to better control their energy use and reduce their environmental footprint.

As an example, we will continue to transform our programs to be more useful to the electricity system operators. We bid one of our demand response programs into the electricity market in 2011 and will continue to do so in 2012. This has allowed PG&E’s demand response programs to provide additional value to customers by potentially lowering wholesale electricity prices.

We also will continue to focus on better integrating how we develop and market our demand response programs, moving toward assessing a customer’s overall energy demand and finding the best combination of energy efficiency, demand response and other programs to meet their needs.