The Poverty of Time–Based Pricing

When it is this sizzling hot, air conditioning is not a luxury, it is a necessity.

As I’m writing this, much of Central California is baking in a severe heat wave—with temperatures topping 100, or even 110 degrees!

When it is this sizzling hot, air conditioning is not a luxury, it is a necessity. Yet PG&E, SCE, and SDG&E want you to pay a premium on dangerously hot days, with yet another unproved and potentially disastrous change to our electric system, time-based rates. That means that if you want to use electricity at peak times (weekday afternoons), or on peak days (the hottest days of the year), you’ll pay a premium.

TURN is not convinced that jacking up rates for customers who live in hot areas and are at home during the day is the right way to set prices. When it comes to electric rates, one size doesn’t fit all, so we are advocating to reward customers who can voluntarily reduce their energy usage, rather than punish customers with mandatory time-based rates.

Challenges of Time–Based Pricing

Time-based pricing, characterized by the utility industry as “Time Of Use” pricing, rests on the theory that residential customers will shift their energy use to nighttime hours if faced with drastically higher bills for daytime usage.

Of course, this presumes that customers have both the time and ability to understand the new and complex rates the utilities want, and the ability to shift their usage to off peak times. The utilities want you to start by purchasing a digital display, on your own dime, which can “talk” to your smart meter and show you just how much energy your appliances are using, and at what price, hour by hour. Then you’ll know the cheapest times to toast your toast or watch your TV.

If this sounds unrealistic to you, you’re not alone. Speculative smart meter technology threatens older or retired consumers who are often at home during peak daytime hours. Older consumers don’t tend to use a lot of electricity, and may have less discretionary use to shift to non-peak times. And with utilities increasingly using smart meters and computers to communicate with customers, those of us who aren’t online all the time will be at a disadvantage.

Dangers of Heat Wave Pricing

Did you know that heat waves in the U.S. result in more deaths than all natural disasters combined? According to the Centers for Disease Control and Prevention, 3,442 deaths from exposure to extreme heat were reported in 1999-2003, an annual average of 688. In many of the cases, the victims were elderly, poor, socially isolated, and/or infirm.
A study of a July 1995 heat wave in Chicago that resulted in 739 deaths found that some older residents didn’t use fans or air conditioners in part because of their fear of higher, unaffordable electric bills. Almost three-quarters of the victims were over age 65.

Encouraging Conservation

Even utility companies have admitted that changing the current tiered–rate structure that rewards conservation may to lead to increased usage. Isn’t it better to reward customers with lower rates for conserving energy, rather than punishing them with higher rates when many need air conditioning the most?

If California wants to experiment with time based pricing, it should be done on a strictly voluntary basis. TURN is advocating for policies that won’t allow the utilities to run roughshod over consumers with penalty pricing. We are demanding:

  • Education before any implementation.
  • Testing alternate approaches to conservation.
  • Conducting research into the impacts on seniors.

We’ve successfully fought utility efforts to institute mandatory, time-based pricing in the past, and with your support we will do so again.

Best,

Mark Toney's Signature