The Exchanges

Q So I want to start by maybe poking a little bit, and, and, and we're going to get into design and implementation, but if we step back and get, like, maybe your most provocative take, I'd like to hear from each of you if you have something particularly provocative that you, uh, think about rates, you know, what, what, what is your most provocative take, Scott?

A Well, I wish I was described as provocative more often, uh, but I will do my best here. I think, and, you know, I was thinking, you know, rates have been talked about for hundreds of years, so can I come up with a new and interesting take on, on rates that haven't been? But I, I do think, hopefully this is provocative, I think that rates are both, both going to get much more complex and much more simple. Uh, I think what's going to happen ultimately is you will have Some disintermediaries or what they're called aggregation service providers, ASPs, that will be sophisticated enough to work with business models that are much more complex today. We'll, at some point today, we'll, we'll talk about these dynamic prices and things like that that are very complicated for typical humans who don't pay attention to their bills. They'll get that, but they'll figure out a way to manage the risk around those complexities of the rates, maybe through a trade-off with customers to allow them to Control when they charge their EV or, or charge or move their thermostat around. And those customers may want a very simple rate. Just give me a subscription to a Netflix type rate and the disintermediator will be able to work with that complexity, manage the risk and offer us very simple product to customers. So I think, uh, I don't, I think there'll be a wide variety of rates out there, but one of the…

AI assessment note: “rates are both, both going to get much more complex and much more simple.”

Q Did the utility benefit from these successful programs? Like, how does the utility and the customer benefit in some of these cases?

A Certainly, um, PSEG on Long Island Is in the process of moving from an opt-in, um, uh, pilot to a default time of day program, but that one of the reasons they're doing that, they found in the opt-in program, they sort of got the, what I call the holy grail, which is they realize system benefits, um, they had the peak shifting we've been talking about, and at the same time, they had bill reductions, so customers benefited and the system, and so that's really, if you can achieve both of those, Um, you really hit the holy grail for, for what you want a TOU program to do, and so really excited as they move to, uh, roll that out to their whole population. You have to have a, be a little tempered and an opt-in, uh, pilot because customers may be self-selecting. They may be the ones who are most flexible, so we'll see how that goes, but early indications are that they found a rate design that works for customers and for the system. That's really exciting. Uh, Southern California Edison, we worked with, uh, they measured on one peak day, The price signal to, uh, time of use customers, this is one of the heat storms in California in August, September, I think, of twenty-twenty-two, but they measured 75 megawatts of load reduction. Just, you know, millions of customers at one and two kilowatt hours, you know, adds up. I guess I hope that math works. Maybe it's more than that, but, um, a…

AI assessment note: “they realize system benefits, um, they had the peak shifting... at the same time, they had bill reductions”

Q Scott, what is the problem that you're trying to solve? So if more and more people are paying attention to this, particularly time of use rates, like, what are the sources of conflict? What are the sources of issues that utilities are facing? And What does it mean to like modernize rate design?

A A lot of good questions there. Well, uh, hopefully in terms of the problem, uh, I made a credible argument about how we need to create demand flexibility to support decarbonization. And so, that demand flexibility, as Amin and I, I think, agreed on, you know, can be driven for, or should be driven by price signals. That's what gets customers to react to things. Certainly residential customers, as well as, uh, commercial industrial customers will react to those Price signals. Um, and so if we say that's where we have to go to reach our targets, uh, that's the problem. The problem relates to that. It's the inertia. It's the, uh, very difficult, uh, nature of getting people to change both, uh, residential customers who, you know, ultimately I believe don't think they're buying electrons from their utility. They're buying convenience. I come home. I turn on my lights. I turn on my air conditioner. It works. They're not thinking about how much am I paying for those electrons at all times. So how do we get that? A lot of customers who don't think about the energy transition or decarbonization to think about price signals for what they otherwise generally think of as a convenience that they're buying from their utility, much like other services. So that's certainly a big challenge. And then you think about large industrial customers who've maybe built their whole processes and the way…

AI assessment note: “The problem relates to that. It's the inertia. It's the, uh, very difficult”

Q get deeper into implementation. So, you know, one of the criticisms of time of use rates is that they don't make a big enough difference to justify the effort, and I'd like to get your thoughts on whether simple time of use rates actually achieve desired outcomes, and If there are any successful programs you can point to where the, you know, they actually worked. Scott, you want to start?

A Yeah, I like this question a lot. I, you know, we get asked, uh, uh, for a lot of these conferences and trade shows to come up with panel ideas, and I, I think we could do a whole panel just on debating what does that mean, success of a time of use rate. As Ahmed alluded to, you know, we do a rate case. There's all kinds of stakeholders that get involved, and I think, uh, Each of those stakeholders may have a different perspective on what is a successful time of use rate. So I will give mine, but I recognize that depending on what your role is and how you're participating in this, whether you're a consumer advocate, a regulator, the utility, a customer, all of those people may think all those personas, if we want to call it that, may look at these programs differently to measure success. I think about it, I think that the base level, the reason we went down, one of the big reasons we went down the path of Putting in smart meters to enable time of use pricing is because everybody recognized that having high peaks, uh, at the utility generates extra costs for the whole system that everyone has to bear. You know, it's, uh, uh, having a peak plant that runs 10 hours a year but costs, you know, millions of dollars that everyone has to pay for is something if we could avoid through time of use rates that pushed that off-peak load onto on-peak, or excuse me, on-peak load to off-peaks,…

AI assessment note: “So for me, the baseline is, was the TOU program successful at lowering the peak”