Weekly Update Courtesy of Utility Regulatory News #3973: Finding that they would present a good opportunity to evaluate “advanced demand response scenarios,” the Colorado Public Service Commission has approved three rate options for residential customers taking part in the Smart Grid City demonstration project, sponsored by Xcel subsidiary Public Service Co. of Colorado’s (PSCC).

The project, located near Boulder, is designed to examine large-scale applications of advanced metering infrastructure (AMI) and other smart technologies. Involving the installation of 24,000 smart meters, Smart Grid City is expected to measure customer acceptance of and adaptation to new in-home, two-way communication devices that allow customers to better track their consumption habits vis-à-vis real-time costs of their usage.

According to PSCC, the pilot smart grid project will be more effective if the AMI offerings are paired with various rate options. To that end, it proposed three specific new rate tariffs: a time-of-use (TOU) rate, a critical peak pricing (CPP) rate, and a peak time rebate (PTR) rate. The TOU schedule is a basic rate that reflects the different costs of service depending on the time of day consumption occurs. The CPP schedule expands on TOU rates by designating certain days and periods as critical and subject to higher prices, usually because of weather-related conditions that strain resources. The PTR offering takes rates one step further by making participants eligible for a rebate if they are able to keep usage below a certain baseline threshold during critical peak times. The commission approved the utility’s plan to seek 2,000 volunteers to test the three rate options. Participants would be allowed to select which of the three options they want to try on a first-come, first-served basis. In agreeing to the TOU, CPP, and PTR proposals, however, the commission emphasized that its action should not be interpreted as a predisposition to approval on a permanent basis. The commission remarked that it is simply too soon to rule on whether the three rate options represent optimal rate design measures.-Subscribe to URN for the full story.