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By not offering Critical Peak Pricing are we being unfair to the good guys?

By not offering Critical Peak Pricing are we being unfair to the good guys?
Used with permission.

During the heat wave a few weeks ago I remember receiving the below text message from my electricity retailer preparing me for a demand response event:

demand response text message

I have long been an advocate of demand response, and here I was being told I could finally ‘do my bit’ and take part in my first ever event.  I recall walking around my looking for devices I could ‘turn off’. Then it struck me. I would not see any benefit from taking part in this event.

I live in a small rental property in the eastern suburbs of Melbourne with my wife and four children.  We have no air-conditioning and no pool. We keep our energy usage low, well as best you can with four kids, so we do not consume much energy.  Our electricity bills float around $100 per month.

On the evening of the event, my only discretionary load was one pedestal fan running on medium and some music playing on the Apple HomePod.  That was the extent of our electricity consumption.

I must stress, I believe demand response is essential if we are to cost-effectively integrate distributed energy resources into our grid as well as prevent massive increases in network infrastructure investments.  

The issue is, the current DR implementation in Australia only rewards customers who reduce consumption during a peak event.  That’s great for most Australians, but what about those of us who never use much electricity, especially during peak times? Surely our year-round efforts should be rewarded?  

In the world of demand response, there are other reward structures, such as critical peak pricing (CPP), that would be ideal for people like me.  With CPP I sign up to a daily rate that is lower than what I would otherwise pay. During a peak event I would be charged a premium for using electricity, so my incentive is to use as little as possible to avoid a high cost during that event period.  My reward is that I get a reduced rate all other times.

In my mind, the recent demand response events were analogous to when loyal customers never receive the ‘special offers’ given to new customers.  

Should Australia start to consider ways to reward those of us who try to reduce their energy consumption all year round?

Wayne Pales's picture

Thank Wayne for the Post!

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