This article was posted on Sunday, Aug 12, 2012

Time-Varying Pricing
Starting this November, all small/medium commercial customers of PG&E, SoCal Edison and San Diego Gas & Electric will be required to transition to a time-varying rate schedule for electricity.  A time-varying rate schedule means that when you use energy is just as important as how much you use. This change in rate schedule will affect  most owners of multi-family properties who currently take advantage of commercial electrical rates for the common area.
Time-varying pricing has been mandated by the California Public Utilities Commission for several reasons.  It costs the utilities more to generate electricity during the high-demand periods.  The utilities need to bring more power generating plants online to meet peak demand and the last power plants brought online are the least efficient and therefore more costly to operate.  In addition, some of these power plants brought online to meet peak demand are coal-fired.  Avoiding their use reduces air pollution. Finally, the less power that is used during peak periods, the less likely we will exceed our generating or transmission capacity and incur a brown-out.

Time-varying rate schedules fall into two categories:

¢    Time-of-Use “ Where prices vary by time of day and time of year. (See Chart 1).  This is the schedule that becomes mandatory this November.  This plan can save you money if your peak-period electrical use is small.

These time-of-use (TOU) rates are most expensive from noon to 6pm period during the weekdays with a larger peak-period premium during the summer months.  Rates are least expensive overnight, weekends, and holidays.

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¢    Peak-Day Events “ Peak day events are events that occur 9 to 15 times a year when large demand threatens the electrical grid in California. It is a time-varying pricing plan that combines a time-of-use (TOU) pricing plan with Peak Day Pricing. Event Day surcharges and credits.  (See Chart 2.)

With this rate schedule the price of electricity changes by time of day as well.  But, prices are significantly higher on the 9 “ 15 Peak Day Pricing Event Days annually, typically hot summer afternoons. You will pay much higher rates between 2 “ 6 pm, but you may earn credits for usage at other times during the summer.
This rate is designed for users who can be flexible about how and when they use electricity.  If you’re willing to significantly reduce electricity on Peak Day Pricing Event Days, you can reduce your electricity costs. Peak Day pricing is an option now, but becomes mandatory in 2014.  The motivation is to reduce energy consumption even more when these Peak-Day events occur.

Affect on Apartment Owners
Apartment owners using a commercial, flat-rate plan will be required to go to TOU pricing this November.  TOU rate schedules are not new.  They have been around for 30 years and are already being used by some owners to save money.
How the time-varying rate schedules affect your electrical costs depends upon when you use electricity.  Some owners may save money on either of the time-varying rate schedules.  If your electrical consumption is primarily for lighting, you may be paying less than before since your major usage is outside of the peak or partial-peak hours.  On the other hand, if you use electricity during the day for air conditioning or for the circulating pump for the swimming pool you could be paying more with a time-varying rate schedule.
However, you are not locked into higher electrical costs just because you run the pool pump during the day or need to air condition the common area.  Variable speed pumps may allow you to dramatically reduce the volume of water pumped (and therefore electricity used) during the day, while still meeting your county Department of Health codes for water circulation, by pumping more at night.  Similarly, pre-cooling an air-conditioned space before noon may help reduce the need for air conditioning during the peak period.
Some changes, such as shifting use, can be made with little or no cost.  Besides pre-cooling air-conditioned areas, you can raise the thermostat setting a couple of degrees as well as turn off non-essential items like fountains, beverage vending machines and office equipment or lighting not in use.  Other changes, such as replacing the pool pump or installing solar panels for peak period electricity generation, will incur some upfront costs.  If these options make economic sense, you might want to factor these expenditures into your 2013 budget.  Don’t forget to include any rebates and incentives in your analysis.  Your utility has a webpage that shows available rebates.

Actions to Take
Your utility has information about the time-varying rate plans on their website.  PG&E even has a 15 minute webinar that can be viewed on demand.
To determine whether time-varying pricing will save you money or cost you more, visit your utility’s website and use the tools they provide.
For example, if you log in to your account’s My Energy page at PG&E, there is a helpful rate analysis tool that compares the cost of different rate plans for your specific consumption pattern for the past 12 months.  (A quick check for one 165-unit property showed that they could save nearly $3,000 per year, just by selecting the lowest cost, time-varying rate plan for the meters that qualify.)  For a sample of the PG&E rate comparison report go to PG&E Rate Comparison Report.
If you prefer, you can always contact your utility by phone to have them step through the different rate schedules and costs.
Regardless of which time-varying plan you choose, you can save money on the new plan by looking at what equipment uses electricity during the daytime and minimizing or eliminating their use, especially during the peak hours.
Customers transitioning to the new TOU rate schedule in November will be provided multiple notices from their utility in advance of their transition date. But, don’t go to the TOU plan by default.  You might save more by choosing the Peak-Event rate schedule.

Sample of Available Resources
The PG&E website contains important information to educate and keep you informed about the new schedule including:

¢    A description of Time-Varying pricing for business
¢    Time of Use electric rates for small/medium businesses
¢    A 15 minute PG&E webinar Time-Varying Pricing for Business Customers
¢    Comparison of your costs by rate schedule (regular, TOU, and more)
o    Log on to your account (My Energy)
o    Select an electrical account for comparison
o    Click on the upper tab My Usage
o    Then click on the upper tab My Rates
o    For a sample of what the report looks like you may visit the Pegasus Energy Solutions website at:    

¢    How to subscribe to their Energy Advisor Newsletter
¢    Contact information regarding the time-varying rate plans

In addition there are resources to help you reduce you electrical consumption:

¢    A free energy assessment
¢    Request an energy audit
¢    Energy savings tips
¢    Information on energy rebates, incentives and resources

Charles Orr, Pegasus Energy Solutions.  Mr. Orr has an MBA from UC Berkeley in Finance and a BS degree in Engineering from the University of Illinois.  He is an experienced property manager and a Certified Community Association Manager.  He is currently a senior energy-efficiency consultant for Pegasus Energy Solutions.

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