Dynamic pricing pilots: 5 utilities' programs, technology and results

With heat waves scorching the U.S., no utility can avoid talking about dynamic pricing.

Dynamic pricing, or time-based pricing, allows utilities to charge customers more or less based on the fluctuating amount of demand in the system, altering consumers' energy usage and, ideally, shaving peak demand. As a result, utilities can avoid peak reliability issues and customers can save money. But if dynamic pricing is so great, why isn't it more widespread?

The answer is customer engagement. If utilities want dynamic pricing to become a standard energy option, they need to prove that programs will achieve what customers want above all else: cost savings.

Take a look at these 5 pilot programs to see what utilities are doing to bring dynamic pricing to the grid:

1. OG&E PRICE SIGNALS SLASH DEMAND

Program: Oklahoma Gas and Electric Company (OG&E) is reaping rewards from its SmartHouse program now in its second year, the utility announced this June. Using Energate's smart thermostats and opt-in participation options, OG&E is able to interact with its customers through price signals and notifications to effectively reduce their peak electricity use.

Results: OG&E has seen a reduction of 2.02 kW per home, with the goal of reaching 120,000 homes by the summer of 2014.

2. SMUD SEES UP TO 26% PEAK REDUCTION

Program: The Sacramento Municipal Utility District (SMUD) announced the successful results from the first year of its two-year dynamic pricing pilot this July. The Smart Pricing Options pilot, made possible by a $127.5 million smart grid grant from U.S. Department of Energy (DOE), involves several test groups, such as a critical peak and time-of-use pricing group. SMUD works with SmartSacramento, using two-way digital interaction programs to enable the utility to set retail prices closer to real-time delivery costs.

Results: In SMUD’s critical peak pricing group and time-of-use group, the utility saw peak reductions of 6% to 26%. Meanwhile, customers who defaulted into the varying rates had an opt-out rate of only 10%. Now, SMUD is looking to implement default dynamic pricing by 2018, which would guarantee peak load reduction for all its customers.

3. TAMPA ELECTRIC'S SUCCESSFUL ENERGY PLANNER PROGRAM

Program: Tampa Electric’s Energy Planner Program launched in 2005 is one of the most sophisticated automated dynamic pricing plans in the U.S. Comverge's IntelliSOURCE platform automates control of high energy-use appliances, collects metering information for the bill and features a Web portal for customers to review their energy consumption trends and control temperature settings. The residential critical peak pricing program activates a critical pricing signal during extremely high demand, controls heating and cooling systems and offers various price-based usage options, both by time of day and day of the week.

Results: Since 2008, the utility has shed 3.1 kW per customer during winter peak and 2.0 kW per customer during summer peak, helping to balance supply and demand and improve the utility’s planning efforts. More than 2,000 participants in the program have saved an average of 8% to 10% on their electricity bills every year.

4. GULF POWER'S ENERGY SELECT EARNS BEST IN CLASS

Program: Gulf Power and Comverge, an energy management firm, launched its award-winning Energy Select automated dynamic pricing program in 2000. Using Comverge's IntelliSOURCE demand response management system (DRMS), IntelliTEMP smart thermostats and IntelliPEAK digital control units, the service allows customers to pre-program their central cooling, heating systems and water heaters to respond automatically to specific price tiers and dynamic price signals. In 2013, Energy Select earned the Energy Efficiency/Demand Response Project of the Year from POWERGRID International magazine.

Result: Gulf Power, a unit of Southern Co., reached an industry milestone in 2012 having enrolled 10,000 volunteer Energy Select participants, who paid a lower price for electricity 87% of the time. Gulf Power plans to expand the program to 16,000 participants by 2016.

5. TXU ENERGY'S RIGHT TIME PRICING OFFERS OPTIONS

The program: This June, TXU Energy introduced "Right Time Pricing ,” four retail plans that use the power of advanced meter data to give customers a choice on how to pay for their electricity consumption. The utility offers residential customers two options, TXU Energy Free Nights and TXU Energy Free Weekends. Each plan charges customers a simple rate during the day or the week, respectively, and, as a result, gives customers free electricity either during the night, from 10 p.m. to 6 a.m., or during the weekend, from 12 a.m. Saturday to 11:59 p.m. Sunday. The utility also launched dynamic pricing plans for commercial and industrial customers: the TXU Business Power Hours AM and Business Power Hours PM. According to a press release, "TXU Energy Power Hours AM offers half off energy charges from 6 a.m. to 2 p.m." while "TXU Energy Power Hours PM offers the same benefit from 10 p.m. to 6 a.m. every day."

The results: To be determined.

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