Feb 4, 2025 · 30m · catalyst
Are utilities ready to fully harness demand flexibility? [partner content]
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this podcast discussion presented with GridX, host Stephen Lacey and Chief Commercial Officer Scott Engstrom examine how modern time-varying rate designs, advanced analytics, and automated demand flexibility enable electric utilities to balance grid reliability with ambitious decarbonization goals.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Shayle holds 7% of the talking time here. How this is scored →
Shayle as informed peer 4.6 Guest teaching 5.1 Guest disagreement 0.1 Shayle pushing back 0.1
speaking balance: gold is Shayle, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 16:27 Reframing low-income rate impacts
Scott gently pushes back against conventional assumptions, arguing empirical smart meter data proves that low-income disadvantages under TOU rates are often an unfounded boogeyman.
Hardest push from Shayle ▶ 16:25 Challenging TOU equity and energy burdenStephen presses Scott on a major criticism of time-varying rates, specifically demanding to know what the empirical evidence shows regarding equity and low-income bill impacts.
Biggest teaching moment ▶ 20:10 Dissecting the failure of unhedged wholesale pass-throughScott provides an in-depth breakdown of how Texas retail providers exposed residential customers directly to wholesale price spikes during Winter Storm Uri, explaining necessary hedging mechanisms.
Shayle holds their own ▶ 6:32 Synthesizing decarbonization reliance on demand flexibilityStephen sharpens the conversation by precisely articulating how the financial and operational value of the renewable supply stack is fundamentally contingent on firm demand flexibility.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Shayle as informed peer | Guest teaching | Guest disagreement | Shayle pushing back | Why |
|---|---|---|---|---|---|---|
| Casual Conversations on Rate Design and Electricity Demand | 4 | 3 | 0 | 0 | Stephen Lacey introduces the topic with an informal framing before Shayle Kann adds narrative detail regarding the September 2022 California heatwave. Scott Engstrom details how Southern California Edison achieved 75 MW of load reduction through time-of-use rates and alerts. | |
| Reevaluating Demand Flexibility in Modern Utility Business Models | 5 | 4 | 0 | 0 | Stephen Lacey probes why utilities have prioritized supply-side decarbonization over demand flexibility and synthesizes Engstrom's points into a coherent thesis. Engstrom details utility engineering biases toward large generation assets. | |
| Smart Meters and the Rise of Complex Rate Analytics | 4 | 6 | 0 | 0 | Lacey asks about the emergence of complex rate analytics, allowing Engstrom to provide a deep historical overview of how the mismatch between legacy monthly billing systems and smart meters created revenue uncertainty for investor-owned utilities. | |
| Designing Tiered Time-of-Use Rates for Diverse Consumers | 4 | 5 | 0 | 0 | Lacey asks which rate designs work best in practice. Engstrom explains the necessity of tiered menus of time-of-use rates to accommodate flexible loads like EVs without unduly penalizing inflexible users. | |
| Assessing Equity and Low-Income Outcomes in Time-Varying Rates | 5 | 6 | 1 | 1 | Lacey directly brings up equity concerns and criticisms that time-varying rates disadvantage low-income consumers. Engstrom reframes the concern, showing empirical data reveals diverse outcomes and opportunities for bill reduction with education. | |
| Winter Storm Uri and Lessons in Dynamic Wholesale Pricing | 5 | 6 | 0 | 0 | Lacey points to Winter Storm Uri in Texas to ask what lessons should be drawn about real-time dynamic pricing. Engstrom delivers a masterclass on wholesale price exposure, customer bill shock, and risk-mitigating insurance models. | |
| Automating Device Response for Granular Real-Time Pricing | 5 | 6 | 0 | 0 | Lacey asks about the frontier of prices-to-devices automation. Engstrom elaborates on how dynamic pricing must rely on automated IoT device pinging rather than human manual tracking, tying it to negative pricing and localized distribution congestion. | |
| Regulatory Evolution and Scaling Demand Flexibility for Decarbonization | 5 | 5 | 0 | 0 | Lacey frames the closing question around regulatory hurdles and the urgency of decarbonization. Engstrom contrasts the pace of smart meter rollouts between regions and draws a historical parallel to 1950s electrification marketing. |
Statements from this episode (10)
Engstrom: Rising AI Power Needs Are Driving Public Interest in Utilities
“And certainly, so we're seeing that more and more, I think, as awareness of data centers and AIs growing, and there, people are starting to hear that that requires a lot of electricity. They become more interested in utilities.”
Engstrom: SCE achieved 75 MW load reduction via on-peak pricing
“And they were actually able to measure that they got 75 megawatts of load reduction just as a result of customers who either actively or passively reacted to the fact that those on-peak prices are higher than off-peak prices.”
Engstrom: Utilities' demand flexibility programs remain largely in pilot stage
“Most utilities have some sort of net zero or close to net zero goal, but that goal is in 2030, 2040, 20 50, out sometime, and so thinking about what that demand flexibility is needed to meet that new supply stack is still being figured out, and we're in very m…”
GridX Is Working With Utilities on Hourly Dynamic Electricity Rates
“Currently, we are working with some utilities who are doing what they call dynamic rates. These are rates Where prices change every hour, could change every hour, trying to mimic more what's happening in the wholesale markets and or challenges on the distribut…”
Engstrom: Customers Opposing TOU Rates Often Willingly Accept EV Time-of-Use Rates
“Many customers who might say they don't they're opposed to time of use rates may have no issues at all with signing up for an EV rate, even though an EV rate typically is a time of use rate.”
Low-Income Customers Often Benefit From TOU Rates Without Changing Usage Habits
“We've seen differences in some places. We've seen actually that on the whole low income customers do better without making any changes to their usage with through a time of use rate. And in others, we've seen that not be the case.”
Engstrom: Direct wholesale-indexed retail power plans have largely died in Texas
“And so that, I think, as a pricing plan has largely died in Texas.”
Engstrom: AI and smart devices will automate dynamic electricity pricing responses
“But I think where we're really going is with technology, artificial intelligence connected devices to really be able to, for humans to say, this is a What's gonna make me comfortable in my house is at this time of day to set the thermostat here or there and gi…”
Engstrom: California electricity prices go negative due to excess generation
“For those that know, at certain times of the day, at certain months of the year we are generating more electricity Than we are using, and prices go negative. You're actually being, being paid to take electricity at certain times of the day.”
Engstrom: Many Large Northeast Utilities Are Only Now Deploying Smart Meters
“Smart meters have been around for 15 years, so in my business, I guess we get a little anxious to, or eager to see utilities change quickly, but in truth, a lot of even large utilities today, particularly, say, in the Northeast, are just now getting their smar…”