Demand Response

Demand response refers to the reduction of customer energy usage at times of peak usage in order to help address system reliability, reflect market conditions and pricing, and support infrastructure optimization or deferral. Demand response programs may include dynamic pricing/tariffs, price-responsive demand bidding, contractually obligated and voluntary curtailment, and direct load control/cycling.

Dynamic Pricing

Retail prices for energy consumed that offer different prices during different time periods and reflect the fact that power generation costs and wholesale power purchase costs vary during different time periods. Types include Time-of-Use Pricing, Critical Peak Pricing and Real-Time Pricing.

Time-Of-Use Pricing

Energy prices that are set for a specific time period on an advance or forward basis, typically not changing more often than twice a year (summer and winter season). Prices paid for energy consumed during these periods are pre-established and known to consumers in advance of such consumption, allowing them to vary their demand and usage in response to such prices and manage their energy costs by shifting usage to a lower cost period, or reducing consumption overall. The time periods are pre-established, typically include from two to no more than four periods per day, and do not vary in start or stop times.

Critical Peak Pricing

A type of dynamic pricing whereby the majority of kWh usage is priced on a TOU basis, but where certain hours on certain days where the system is experiencing high peak demand are subject to higher hourly energy prices that reflect market conditions for peak generation and delivery during peak demand periods. These critical period prices may be known to electricity customers under conditions such as “day-ahead” or “hour ahead” and are typically employed a limited number of times per year.

Real-Time Pricing

Energy prices that are set for a specific time period on an advance or forward basis and that may change according to price changes in the generation spot market. Prices paid for energy consumed during these periods are typically established and known to consumers a day ahead (“day-ahead pricing”) or an hour ahead (“hour-ahead pricing”) in advance of such consumption, allowing them to vary their demand and usage in response to such prices and manage their energy costs by shifting usage to a lower cost period, or reducing consumption overall.