In an editorial concerning Texas' reserve margin and market design, The Dallas Morning News said that, "most electricity customers have no way to benefit by cutting usage at times when wholesale prices spike, particularly when the grid is facing an emergency."

The DMN goes on to say, "Many industrial users make strategic use of wholesale markets, but commercial and retail customers hardly at all," which we would note is a different issue (participation in the latter, access/availability in the former)

While we do not dispute that industrial participation in wholesale markets and/or load management dwarfs mass market participation, and while we further will not dispute that incentives (payments) for large customers to reduce load during peak times are likely much higher than those in the mass market, it is not true that most electricity customers "have no way" to benefit by cutting usage at times when wholesale prices spike

Numerous retail electric providers -- including several with the largest market shares -- have been offering no-penalty, no-obligation critical peak rebates (or peak time rebates) to customers, paying customers a $ per kWh rate for load reductions during various peak or critical peak events.

The programs were more prominent several years ago when summer conditions were hotter and reserve margins were lower than the more recent summers prior to 2019, but the programs haven't gone away.

We won't take the time to chronicle every program here (EnergyChoiceMatters.com has reported on them as they debuted here, here, here, here, here, and here).

But, for example, Reliant still publicizes an open critical peak rebate program that pays 60 cents per kWh of reduction. Numerous other REPs have offered similar programs, some of which have paid $1/kWh historically

If the DMN wishes to argue that the critical peak rebates do not reflect the payments available to larger users, or do not reflect a greater sharing with customers of the value that customers are providing to REPs by reducing REPs' load obligations at superpeak pricing, that is a separate discussion. But to say that "most" customers have "no way to benefit" from load reductions at times of spiked wholesale prices is simply wrong

As intended by the market design, REPs use such critical peak rebate programs to manage their exposure during critical events, particularly for load variability which may fall outside of their hedging instruments

Of course, REPs also offer plans that internalize incentives to not use power at peak times such as free nights and free weekends plans, offered by multiple REPs. While these plans do not pay customers a per kWh price for reduced load at peak times, they are certainly designed to allow customers to, "benefit by cutting usage at times when wholesale prices spike," by charging a higher rate for peak times, and rewarding customers (via a lower rate) for non-peak usage (essentially cutting the otherwise present peak usage by shifting usage).

-- by Paul Ring