Rate Design & Dynamic Rates: The Large Power Dynamic Rate

Dynamic rates and the demand flexibility agenda

California's rate design policy has been moving toward dynamic rates — prices that track wholesale market conditions — since the Demand Flexibility rulemaking R.22-07-005 adopted the Electric Rate Design Principles and Demand Flexibility Design Principles in D.23-04-040, and the CEC's Load Management Standards under D.22-10-022 required utilities to file marginal cost-based dynamic pricing rates. Ratepayers have already invested $4.5 billion in the smart-meter infrastructure that makes such rates possible.

CLECA supports that direction for large industrial customers, who can restructure production schedules to respond to price signals in ways few other customer classes can. The question is design.

What makes the LPDR different

SCE's Large Power Dynamic Rate (LPDR), filed in A.24-06-014, has three design features CLECA argues constitute its value proposition and should be approved as a package: bilaterally negotiated static subscriptions, sigmoidal price curves, and a ten-year contract term. The subscription structure — layered on the otherwise applicable tariff — is the customer-protection mechanism suited to manually billed, large industrial loads, as against the limiter mechanisms designed for the residential and small commercial classes.

SCE proposed a 500 MW enrollment cap for the program. CLECA's forty-seven positions on the LPDR across multiple recent SCE filings defend the design against proposals to shrink, delay, or homogenize it.

Do not hold the LPDR to the SDR schedule

SCE is separately developing a Standard Dynamic Rate (SDR) for all customer classes, filed in A.24-12-008 in compliance with D.22-10-022 and consolidated with the LPDR application. The SDR requires a billing-system rebuild; the LPDR does not. CLECA's institutional argument is that tying LPDR authorization to the SDR rebuild would deprive industrial customers of a dynamic-rate option for years longer than necessary — with affordability consequences for members who could otherwise restructure load to take advantage of price signals.

CLECA has made the same timing argument in the demand response rulemaking R.25-09-004: dynamic rate work should not be delayed by other proceedings.

Dual participation and retail choice

Two protections matter as much as the rate itself. First, the LPDR should preserve dual participation with the Base Interruptible Program (BIP), so that industrial customers managing wholesale price exposure on the day-ahead market through the LPDR can still provide emergency curtailment capacity through BIP. Second, the LPDR should protect Direct Access, Community Choice Aggregator, and Electric Service Provider switching rights, so that industrial customers do not surrender retail choice as a condition of dynamic-rate participation.

Both positions reflect a consistent CLECA principle: rate options for large customers should add capability without extracting unrelated concessions.

The broader rate design record

The LPDR work sits inside a longer rate design record. CLECA has supported PG&E's LMP-based dynamic rate pilots and their extension under D.24-01-032, litigated real-time pricing design in the PG&E and SCE general rate cases, and carried demand-flexibility arguments into the Advanced Rate Design rulemaking R.26-04-009 — where it argues that customers on dynamic rates should be permitted to participate in supply-side demand response programs, and that rate design reform is the structural path to making industrial electrification economic in California.