Demand Response

627 Number of megawatts of electricity avoided in 2013 as a result of PG&E’s demand response programs

Providing reliable electric service is a cornerstone of PG&E’s commitment to customers. However, when the need for electricity is high—such as during hot summer days—the wholesale price of electricity rises and the risk of customer power interruptions increases due to the added stress to the grid. PG&E’s demand response programs reward customers with incentives for reducing or shifting their energy use at these times, helping to lower costs, reduce strain on the system and ensure that PG&E is there when our customers need us most.

Our Approach

PG&E’s demand response options are enabled by SmartMeter™ technology, which helps customers better control and reduce energy costs. Hundreds of thousands of PG&E’s residential customers take part in the programs, along with many larger commercial and industrial customers. These programs enable PG&E to take a more fiscally and environmentally responsible approach by avoiding the need to build and maintain additional power plants that would only be called on for short periods throughout the year.

Since 2012, as part of a plan by the CPUC, PG&E has been transitioning business and agricultural customers to a Time-Varying Pricing (TVP) electric rate structure that better aligns prices with the cost of generating energy at the time it is used. Under TVP, customer rates are higher when electric demand is at its peak, typically during weekday afternoons. In return, customers pay lower rates at all other times.

PG&E also offers several voluntary demand response programs for homes and businesses, including:

Program Description
SmartRate Gives residential customers a discounted rate throughout the summer, with the exception of up to 15 declared “SmartDays” when their rates are higher as demand for electricity reaches its peak. In 2013, 120,000 customers participated in SmartRate and saved an average of 14 percent on their summer energy bills.
SmartAC Provides residential customers with a device on their air conditioner. During the months of May through October, the device receives a signal during electricity demand peaks, slowing the air conditioner to use less energy.
Peak Day Pricing Provides business customers with discounted rates from May through October. In exchange, prices are higher for energy used during designated peak “Event Days” and times (no more than 15 per year). In 2013, participating customers reduced their energy demand by 8.6 percent during these peak times.
Aggregator Managed Portfolio and Capacity Bidding Program Engages demand response companies who aggregate customers together. These “aggregators”—and, by extension, the customers in their portfolios—act as virtual power plants and receive payments from PG&E in exchange for reducing load on peak days.
Base Interruptible Program Customers agree to reduce their usage to a predetermined level during special emergency circumstances. Participating customers—typically large customers—receive incentives in exchange for their commitment to help ensure grid reliability.
Demand Bidding Program Offers incentives to businesses for reducing energy usage during hot days. Unlike some other programs, this is a “best effort” program that gives customers incentives for reducing their usage but does not apply additional charges if they opt out on any given day.
Automated Demand Response (AutoDR) Works with customers to identify specific ways to reduce electricity use during peak demand periods and provides them funding to automate their equipment. Then, during a demand response event, PG&E sends the equipment a signal that initiates a series of automatic, customer-defined and pre-authorized demand reduction strategies.

To further encourage customer participation, both Peak Day Pricing and SmartRate offer bill protection, which reimburses customers in their first year of program enrollment if their bills are higher than they would have been under their previous rate plan.

2013 Milestones

In 2013, we continued to transition eligible small- and medium-sized agricultural customers to Time-of-Use rates, following the transition of similarly sized business customers in 2012. A “Time for Business” mobile tour invited customers to learn what time-of-use rates would mean for their business and talk with local PG&E representatives about our programs and rebates.

PG&E also continued to provide online tools, programs and services to help businesses thrive with Time-of-Use pricing. Customers can log in to our website to see a custom rate comparison and learn more about available pricing options.

Measuring Progress

In 2013, customer participation in PG&E’s array of demand response programs avoided up to 627 MW of generation capacity—roughly the capacity of a natural gas-fired generating station. In addition, we met the challenge of a heat wave when, on one hot day in July, we “called” over 500 MW of demand response participation on the same day, significantly reducing demand and ensuring reliable electric service for customers.

Chico State saves $6,000 to $8,000 a year through Peak Day Pricing, a PG&E program that helps curb electric demand on selected days when the grid’s resources are stretched.

Looking Ahead

In 2014, we will begin transitioning eligible small- and medium-sized business customers to voluntary Peak Day Pricing, following the transition of large business and agricultural customers.

We are also developing new demand response programs that will help ensure reliability as more intermittent renewable energy sources are integrated into the grid. For example, in 2014, we are launching a permanent load-shifting program that encourages business customers to make use of thermal energy storage. This technology allows customers to make and store ice or chilled water overnight, during off-peak hours when energy costs are low, and then use it to cool their buildings during peak periods to save money on their bills. PG&E is offering financial support for the upfront cost of the technology.

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