Recently announced results from a survey circulated to regulatory commissions suggest a concerning—if not altogether surprising—scarcity of dynamic pricing programs across the U.S. Specifically, among 41 state PUCs or other regulatory agencies who were surveyed this past spring, a whopping 83 percent responded in the negative to the question of whether their states will require utilities to include a dynamic pricing model as part of smart meter installation plans. Included in the same survey, among 121 responding utilities just under half indicated that dynamic pricing was an integral part of their smart meter implementation. So one conclusion that may be drawn from this: In the absence of mandatory programs, utilities generally do not appear to be pushing for these programs on their own.
Again these numbers may not be surprising—the general lack of support for dynamic pricing has been broadly discussed—but the long-term ramifications that the numbers suggest are rather staggering. If an inherent component of a smart meter is its ability to enable dynamic pricing programs (whether they be TOU, CPP or RTP) and yet under half of utility smart meter implementation plans offer a DP option, can the full benefits of the smart grid truly be achieved?
I won’t use this forum to argue the pros and cons of dynamic pricing programs as that has been done extensively elsewhere. I also will bypass the debate over mandatory dynamic pricing programs and whether they are effective or not, including the impact of decisions such as the CPUC “opt out” policy that gives customers in PG&E’s territory who are opposed to smart meters to the right to refuse one. Rather, at this moment, I am more interested in the questions that remain unanswered but certainly will shape the future of the smart grid sector: Can the benefits of smart grid that have been extensively vetted and calculated in numerous business cases be achieved without dynamic pricing program going hand in hand with a broader smart grid initiative? What happens to the multi-billion-dollar utility investments in new technologies if customers have the option of rejecting smart meters that will enable those technologies to successfully operate? Can dynamic pricing programs themselves succeed if large segments of customers are precluded, obstructed, or otherwise disengaged from participating in them? And, perhaps most importantly, if a number of pilot programs that have included dynamic pricing suggest that customers who are provided accurate price signals and the necessary technology to affect change are responsive to changing their consumption habits…Why are dynamic pricing programs still so difficult to create?
By: Will McNamara