Smart Energy Prices – For Efficiency and Equity By Scott Thach
Utility pricing structures face daunting challenges. Smart energy prices should reflect the true cost of generation and distribution; the time and locational value of energy to the grid; the cost of emissions and other external impacts; support energy equity; and increase of the overall efficiency of the energy system.
These issues were discussed in the Smart Pricing and Energy Affordability Executive Dialogue, moderated by Paul Allen, SVP of MJ Bradley. The panel of utility experts and analysts considered the role of dynamic pricing in achieving outcomes like decarbonizing the electric grid, supporting a rapidly expanding array of distributed energy resources, and increasing affordability across many different consumer groups.
Allen framed the discussion by noting that we live in an age of technological and energy abundance, but “we also have an abundance of greenhouse gases.” The imperative to decarbonize our energy system is coupled with the need to share the value of energy democratically, so that no one is left out.
Mark McGranaghan, EPRI’s VP of Integrated Grid, added that this requires “a paradigm shift in how we think about energy efficiency.” This shift must take into account not only source pollutants, but also the need for increased flexibility of the electric grid.
As Dr. Kathleen Spees of the Brattle Group pointed out, this must be accomplished as we double load on the electric system by 2050, driven by increasing electrification and fuel-switching. This will require the coordination of distributed resources and the supporting price structure to optimize their use.
ConEd’s Rebecca Roberts described the early success of two pilots that are introducing dynamic pricing and consumer engagement to help shift energy use, optimize the grid and lower customer bills.
Melissa Lavinson, Pepco’s SVP for Government and External Affairs, described the current transition as “the most accelerated change I’ve seen in 20 years.” She stressed the need for coordination and transparency as we create an integrated energy platform that maintains affordability while making the system smarter, cleaner, and stronger.