





I wrote about the weaknesses of TOU pricing in my PhD dissertation,  more than 35 years ago! The issues that were relevant then are even more relevant now, because of the growing penetration of renewable generation. One TOU problem is that since the TOU prices have to be fixed for about 125 days per year (all weekdays in the Summer, for example), they cannot track the actual fluctuations in demand, solar generation, or wind generation. The time blocks are also forced to be fixed.

TOU fixed prices and timing no doubt accounts for the tiny 1¢ price changes during the winter in the new San Diego rates. There are going to be some winter days when much bigger shifts would be appropriate; but there will be others when the optimal price is not correlated with those time blocks at all. So the rate will basically suppress all the change.

For comparison, here are the Summer rates, which are active five months a year. My prices will vary from 67¢ to 36¢ per kwh – definitely enough to get my attention.

And to be fair, SDG&E will also have a rate with up to 18 special super-price days a year, which are not fixed. This is a degenerate version of real-time prices, but better than nothing. But I can’t figure out what the actual prices will be!

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