The California Public Utilities Commission (CPUC) has just authorized a new pilot program known as “matinee pricing.” This initiative will allow SDG&E to change some of its rates for energy-hungry commercial, industrial, and agricultural utility customers.
But what is matinee pricing?
Under the older pricing scheme, the most attractive electricity rates were during evening hours. Because energy demand is lower during “after business” hours, utilities charged off peak rates during these times. And as a result, many commercial utility customers shifted their business hours and factory schedules to take advantage of these lower rates.
But then along came solar power.
As more people throughout SDG&E’s territory install photovoltaic (PV) panels, the utility provider is having a harder time managing all of the excess solar electricity created throughout the afternoon.
In fact, there is so much extra solar capacity in the grid that “peak demand” is no longer during the day. It is now at night.
How Will Matinee Pricing Help to Fix This Solar Energy Imbalance?
The exact language of this pilot program is still being smoothed out. But it looks like SDG&E will be allowed to charge its largest electricity customers slightly reduced rates during the daytime – precisely when solar energy production is highest.
According to Commissioner Catherine Sandoval,
“High afternoon rates were designed to encourage customers to conserve power during that time, and created incentives to shift demand to the afternoon or evening.”
She adds that,
“Peak energy consumption has shifted to the evening between 4-9 p.m., yet our current pricing structure drives commercial users to those same evening hours to take advantage of lower rates.”
Is Matinee Pricing a Good Thing or a Bad One?
The logic behind this change in pricing is pretty sound. Utilities have a very difficult job. And it makes sense for them to price electricity based on current demand.
So in that sense, we completely understand the pros of introducing matinee pricing.
At the same time, many customers go solar with an understanding of how peak electricity prices work. And under California’s net metering program, those customers expect to receive certain benefits.
Dramatically changing prices, net metering, and payouts could adversely affect the solar PV industry, making it harder for customers to break even on their clean power investments.
And so we hope that if this pilot project extends to smaller utility customers, those who have already gone solar will remain grandfathered under the original rules.
We won’t know for sure what happens until this little experiment is finished. SDG&E will begin matinee pricing starting in the spring of 2018.
We’ll keep you posted on any new developments.
If you have questions about solar energy, matinee pricing, or peak electricity demand in the meantime, don’t hesitate to contact us for a free consultation. Call us at (858) 252-2280 of fill out the contact form and we will get back to you shortly. We will be there every step of the way from initial call, system design, permit submission and more.