Will California adopt peak-load pricing for electricity?

One of Vernon Smith’s favorite ideas is on the table:

If the California Public Utilities Commission approves the business
pricing plan, 8,000 businesses that already have the meters would be
required to pay more during peak times starting in January…Even if businesses are forced to use the smart meters, home users seem likely to have a choice.

The utilities do, however, want the smart meters installed at every
home, and hope regulators will approve a rate increase in July to pay
for installation starting in the fall. PG&E said the project would
cost about $1.6 billion over several years, adding about 69 cents per
month to household bills.

The meters would transmit the data through either phone or power
lines to PG&E. Customers would be able to go online the next day
and monitor their energy consumption.

In many cases, energy experts say the pricing system used in
conjunction with the meters could lower household electricity bills by
helping them shift their use to times when power costs less. Those who
can’t adjust during high-rate hours would see higher bills.

What is the reaction?

…businesses call it an unfair burden.  The Silicon Valley Leadership Group and the Building Owners and
Managers Association say their member companies already try to conserve
power, and mandating the price system would only drive up costs.

Here is the full story.  This, of course, is the classic trade-off as identified by Brennan and Buchanan in their classic The Power to Tax.  Greater efficiency also means greater efficiency in revenue extraction.


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