Changing TOU Tariffs Are Coming, Are You Prepared?

Recalling back to when I first starting began practicing engineering in the 90’s, PG&E has defined their peak rate period in their large/medium tariffs as noon-6:00pm. Based on proposals from the “big 3” California utilities and recent approvals from the CPUC we can expect this long held peak time to move to later in the evening. If this seems of little interest or impact to your day-day work I ask you to consider the following:

1)      Maybe you’ve successfully designed, sold, installed or otherwise implements a Photovoltaic (PV), Cool Thermal Energy Storage (TES), or grid tied electrical storage system in the past 10+ years based on some sort of life cycle cost financial analysis assuming the long held 12-6:00pm window. Have you considered how these changes will either improve of hurt the financial performance of these systems? Most owners will value a preemptive reach out from you or even better a quick high level analysis on how these changes might affect their financial performance and what strategies they be able to implement to maximize benefits under the new tariffs. And, on the flipside, if they only realize there’s a problem on their own when they see savings diminish after months into the new tariff, there may be some resentment for not “warning them”. Don’t ever assume your owners understand load shifting concepts to the same level that you do even after years of experience operating such systems.

2)      You’re currently considering or implementing one of these systems. Have you already revised your financial performance calculations to reflect how the system will perform based on your assumed startup time, tariff implementation time and just as important the sensitivity of the financial performance if these change again. Just because PG&E hasn’t changed this particular feature of the tariff is no guarantee that it would change again the next 20 years. Both you and your owner should have a “game plan” for changes in the system design and/or operation that would be needed provide the most flexibility for future changes if they materialize sooner than expected.

While I do not pretend to know what our future tariffs will be, my own research on the “Big 3” utility’s proposed changes, I believe the evening TOU peak shifts will be moving as shown in Figure 1:

There are many, many big changes coming in addition to the TOU peak evening shifts and these changes are well beyond what I could convey in this President’s message. I can add however that we can expect big changes the TDV values we’ll be using under the 2019 T-24 performance calculations, big changes to the “Tiers”, TOU structured tariffs for most or all residential customers and many more.

I have heard many opinions as to why the TOU peak moves are long overdue. This engineer for one believes that it has a lot to do with the fact that our actual net grid demand curves have not matched the TOU peaks for a long time and the increasing renewables going online are only making the “duck curve” evening peak increasingly higher than the mid-day peak. Figure 2 from the Cal ISO site illustrates this as well as the predicted changes through 2020. If you have a different opinion on this or any of the issues discussed in my message, I invite you write me or even better come to our 2 remaining dinner meeting this year to discuss.


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