SCE Dynamic Rate Pilot (Flexible Pricing Rate Pilot)
In A.22-05-002 et al. Exhibit SCE-03 (available here), Southern California Edison proposed the Flex DR pilot to demonstrate the viability of leveraging water systems to reduce renewable curtailment through shifting consumption to periods of overgeneration. In D.23-12-005, the California Public Utilities’ Commission (CPUC) approved funding for the Pilot and directed SCE to conduct the pilot with an evaluation, measurement and verification (EM&V) performance evaluation by the end of 2026 that is to be submitted with SCE’s next DR application. The Pilot, also known for customers as the Flexible DR Pilot, is designed to assist SCE in determining the potential for operators of water and wastewater systems to participate in a new DR program for filling a critical role in California’s resource strategy. Providing flexible demand during periods of excess renewable energy cultivates a near term solution to address the longer-term challenges associated with the State’s energy transformation, help integrate renewables, reduce GHG emissions, improve system reliability, and reduce or minimize cost of service.
SCE, in collaboration with water and wastewater sector customers, will develop flexible demand management strategies for increasing useful electric load during periods of excess renewable energy within the California wholesale energy markets. The economic benefit of mitigating the curtailment of renewable generation is a significant opportunity that has not been addressed by retail DR programs. The timing and duration of these opportunities, the identification of the most cost-effective strategies that customers could adopt, and a recommendation for future DR program design, will be the targeted core deliverables from the Pilot.
The Pilot will assess certain standards and metrics that address the water sector’s safety concerns such as those pertaining to water quality, recycling, and wastewater disposal when responding to dispatch signals. Water and wastewater utilities will also need to operate their systems prudently with cost containment in mind given their existing electricity rates. Dispatch protocols are also important standards to develop for this Pilot. SCE will examine each customer’s oportunities for maximizing their flexibility and develop the appropriate advance notice period for dispatches. With advance planning, more flexible DR capabilities may be enabled when there is a close coordination between day ahead and week ahead water and wastewater system operations.
Program Tasks
There are several approaches being considered for customer incentives in the Pilot, such as a performance capacity payment to the customer of $/kW-month based on frequency and duration of dispatch, tariff riders on the otherwise applicable tariff (OAT), and/or adjustments to the OAT to offset bill costs that result from shifting. Early discussions with customers have indicated that barriers to participation in any utility pilot or program can vary.
Customers have indicated often that non-financial incentives can have more value for them, such as services to provide engineering assistance, training, and other customer-related technical support that have been identified by the water sector facilities staff. Further discussions with customers as the Pilot is initiated will provide more detailed information to develop a set of customized incentive solutions that may include financial performance payments, equipment subsides, or in-kind services that can best meet the needs of each customer.
The key operational tasks of the pilot will be to demonstrate the ability of water sector customers to provide renewable curtailment mitigation via demand flexibility operational changes. Specifically, the Pilot will:
- Demonstrate the technical viability and economic value for SCE and its customers, stakeholders, and constituents of leveraging the flexibility in California’s water system to provide cost-effective renewable curtailment mitigation to the State’s renewable energy resources
- Inform the design of a cost-effective Flexible Demand Response (“Flex DR”)
Program - Improve future efforts for optimized planning, including water sector capital investment infrastructure forecasting, to support cost effective and widespread flexible resources as they come on-line; and help optimize grid infrastructure investments by facilitating water sector input about planned developments, siting plans, and resiliency needs for water sector operations
- Enable water sector customers participating in the Pilot to provide as much load shift as can be reasonably accommodated during the oversupply season in the winter and spring months.
Pilot Duration
The pilot was authorized for three years (2022-2024), starting no later than May 1, 2022, and is in consideration to be permanently extended after the initial period pending approval by the CPUC.
Billing and Incentive Payment
While on the Flexible Pricing Rate Pilot, customers will remain on and continue to be billed in accordance with their Otherwise Applicable Tariff (OAT). Concurrently, TeMix will configure the platform to calculate and provide monthly bill amounts based on the hourly price signals provided to customers participating. Any customer savings recognized from the hourly price signals compared to the customer’s OAT will be provided to the customer on at least an annual basis.
Per D.21-12-015, the CPUC encouraged SCE to use a “shadow bill” to limit any impact on customers.
At the end of 12 months of participation, the monthly bills paid by the customer will be compared against the dynamic, real-time rate bills, and if money is saved on the dynamic rate, then an incentive payment will be given through your ASP for the difference. In no case will customers participating in this pilot will be required to pay more than their monthly bill. Customers who are on Net Energy Metering plans will receive their compensation at the end of their relevant period, even if it comes before the 12 months. Customers are free to leave the pilot at any time — at that point, they will receive their compensation, if any, within 12 weeks of their departure from the pilot.