# MEV maxxing California CEC Load Management Standards for profit

[TOC]

## Abstract

The component of the electricity system costs that does not change with level of household usage is effectively a public good among customers. Coupled with typical California beaurcratic policies and we can potentially exploit the State mandated incentives for 'Green Energy' to reduce our power bill without having to adopt any such costly equipmenet or capital outlays.

> TLDR: Exploit Green Energy pricing policy to reduce our power bill by extracting the value that is normally effectively a public good.

## Why Does Efficient Electricity Pricing Matter?

Borenstein, S. and Bushnell, J. “Do Two Electricity Pricing Wrongs Make a Right? Cost Recovery, Externalities, and Efficiency.” Energy Institute at Hass. July 2019. Available at: https://haas.berkeley.edu/wp-content/uploads/WP294.pdf

what causes the gap between price and the incremental cost of providing a kWh, and looking closely at who ends up paying for the gap. In essence, the rate structure imposes a volumetric tax on electricity – a surcharge on each kWh – in order to cover state energy policies and other costs that don’t vary with the amount of electricity households use.

> Many electricity system have fixed costs, including most of the cost of transmission and distribution, are also covered in those volumetric rates, but don’t really change with your electricity usage.

The result is that volumetric rates are two or more times higher than the actual incremental cost of providing electricity. This means households have too little incentive to switch to electricity from natural gas, gasoline, or other higher-carbon fuels for household and transportation services. **They also have too much incentive to install rooftop solar and outfit their basements with big batteries, when the same carbon reductions could be achieved at lower cost with large-scale renewables and storage.**

## Proposition 26

The hours of the DWP’s highest time-of-use rates — 1 to 5 p.m. — are written into the 2008 ordinance. To change the hours, the DWP and the City Council must change the ordinance. But if they change the ordinance, the city will trigger Proposition 26, the 2010 ballot initiative that bars government from charging more for a service than it costs to provide it.

The 2008 ordinance setting electric rates was passed before Proposition 26, so it’s exempt. But if the DWP revises or adopts a new rates ordinance, that opens the door to Proposition 26 lawsuits challenging the utility’s entire electricity rate structure, which includes important things like reduced costs for low-income customers and the annual $200-million-plus transfer to the city budget to pay for police, fire and other services.

## DWP is charging ratepayers more than the actual cost of electricity

Someone could argue the DWP is charging ratepayers more than the actual cost of electricity in order to subsidize city services and low-income customers, in violation of Proposition 26. (Lifeline rates are standard practice among utilities and the transfer is essentially a payment in lieu of taxes that a private utility would pay to the state, but because DWP is a city-owned utility, Proposition 26 applies.)

> Nevertheless, fear of opening the Proposition 26 Pandora’s box has stopped the DWP from modernizing its outdated rate structure.

We assume the Time of Use residential rate falls entirely in the low peak period. For reference here is the LADWP page for residential rate pricing: https://www.ladwp.com/account/customer-service/electric-rates/residential-rates

To simulate multiple scenarios varying the usage across low peak and high peak periods, we'll consider the following usage patterns for each billing period:

1. **Scenario 1**: 100% usage in the low peak period.
2. **Scenario 2**: 75% usage in the low peak period, 25% usage in the high peak period.
3. **Scenario 3**: 50% usage in the low peak period, 50% usage in the high peak period.
4. **Scenario 4**: 25% usage in the low peak period, 75% usage in the high peak period.

We'll use the following assumed rates for the TOU Rate Plan:

- **Low Peak Rate**: $0.12 per kWh
- **High Peak Rate**: $0.30 per kWh

### Naive Analysis

#### Step 1: Define the rates for each plan and the usage patterns

# Define the rates (Assumed rates)
low_peak_rate = 0.12  # $/kWh
high_peak_rate = 0.30  # $/kWh

# Define usage patterns for each scenario as percentages
usage_patterns = {
    'Scenario 1': (1.0, 0.0),
    'Scenario 2': (0.75, 0.25),
    'Scenario 3': (0.5, 0.5),
    'Scenario 4': (0.25, 0.75),
}

#### Step 2: Calculate costs for each billing period under each scenario

def calculate_tou_cost_scenario(row, low_peak_pct, high_peak_pct):
    low_peak_usage = row['Total (kWh)'] * low_peak_pct
    high_peak_usage = row['Total (kWh)'] * high_peak_pct
    low_peak_cost = low_peak_usage * low_peak_rate
    high_peak_cost = high_peak_usage * high_peak_rate
    return low_peak_cost + high_peak_cost

# store the results
tou_costs = pd.DataFrame()

# calc TOU costs for each scenario
for scenario, (low_peak_pct, high_peak_pct) in usage_patterns.items():
    tou_costs[scenario] = data.apply(calculate_tou_cost_scenario, axis=1, low_peak_pct=low_peak_pct, high_peak_pct=high_peak_pct)

#### Step 3: Compile the comparative table for each scenario

# standard tiered costs
comparative_scenarios = pd.concat([data[['Billing\nPeriods', 'Standard Tiered Cost']], tou_costs], axis=1)

import ace_tools as tools; tools.display_dataframe_to_user(name="Comparative Table of LADWP Rates Across Scenarios", dataframe=comparative_scenarios)

comparative_scenarios

Let's execute these calculations and generate the comparative table for each scenario.

### Simulated Scenarios Analysis

The table below shows the cost comparison between the Standard Tiered Rate Plan and the Time of Use (TOU) Rate Plan for different usage patterns across each billing period. The scenarios vary the amount of usage between low peak and high peak periods:

1. **Scenario 1**: 100% usage in the low peak period.
2. **Scenario 2**: 75% usage in the low peak period, 25% usage in the high peak period.
3. **Scenario 3**: 50% usage in the low peak period, 50% usage in the high peak period.
4. **Scenario 4**: 25% usage in the low peak period, 75% usage in the high peak period.

#### Comparative Table

| Billing Period | Standard Tiered Cost ($) | Scenario 1 ($) | Scenario 2 ($) | Scenario 3 ($) | Scenario 4 ($) |
|-------------------------|--------------------------|----------------|----------------|----------------|----------------|
| 04/17/2023 - 06/17/2023 | 273.0 | 184.80 | 254.10 | 323.40 | 392.70 |
| 06/17/2023 - 08/15/2023 | 337.6 | 223.56 | 307.39 | 391.23 | 475.07 |
| 08/15/2023 - 10/16/2023 | 336.2 | 222.72 | 306.24 | 389.76 | 473.28 |
| 10/16/2023 - 12/14/2023 | 301.6 | 201.96 | 277.70 | 353.43 | 429.17 |
| 12/14/2023 - 02/15/2024 | 311.4 | 207.84 | 285.78 | 363.72 | 441.66 |
| 02/15/2024 - 04/16/2024 | 343.0 | 226.80 | 311.85 | 396.90 | 481.95 |

### Conclusions

Initial Observations:

1. **Scenario 1 (100% Low Peak)**: This scenario consistently results in the lowest cost across all billing periods, confirming that the TOU plan with all usage in the low peak period is the most cost-effective.

2. **Scenario 2 (75% Low Peak, 25% High Peak)**: This scenario still shows savings compared to the Standard Tiered Rate Plan but not as significant as Scenario 1.

3. **Scenario 3 (50% Low Peak, 50% High Peak)**: Costs in this scenario are generally higher than the Standard Tiered Rate Plan, indicating that a substantial amount of high peak usage diminishes the cost benefits of the TOU plan.

4. **Scenario 4 (25% Low Peak, 75% High Peak)**: This scenario results in the highest costs across all billing periods, surpassing even the Standard Tiered Rate Plan, emphasizing that extensive high peak usage is not favorable under the TOU plan.

### Look at ye works and get rekt'

1. **Opt for TOU Plan with Predominantly Low Peak Usage**: To maximize cost savings, it is advisable to align electricity usage as much as possible within the low peak period under the TOU plan.

2. **Monitor and Adjust Usage Patterns**: Regularly monitoring usage patterns and adjusting behaviors to minimize high peak usage can significantly reduce costs.

## Links

- https://www.predictablepower.org/

- https://emp.lbl.gov/tracking-the-sun

## Glossary

### CEC

The California Energy Commission (CEC) Load Management Standards require California’s large electric utilities and community choice aggregators to provide residential and commercial customers access to time-dependent electricity rates and programs designed to better align electricity demand with the availability of renewable energy resources.

Time-of-Use Peak Pricing 4-9 p.m. Every Day (E-TOU-C)

Time-of-Use Peak Pricing 5-8 p.m. Weekdays (E-TOU-D)

Time-of-Use Peak Pricing 4-9 p.m. Weekdays (E-TOU-B)

CRPSEA – (Capped Renewable Portfolio Standard
Energy Adjustment) a charge reflecting the costs
associated with RPS Operations and Maintenance,
RPS debt service, and Energy Efficiency Programs.

ECA – (Energy Cost Adjustment) an adjustment that
reflects the variations of fuel, energy and other
associated costs.

ESA – (Electric Subsidy Adjustment) a charge
reflecting the costs of subsidies including senior,
disabled, EZ-SAVE, traffic control lighting, and
enterprise zone.

IRCA – (Incremental Reliability Cost Adjustment) a
charge reflecting Operations and Maintenance and
debt service related to Power Reliability Program cost
and legacy RCA under-collection.
kWh – (kilo-watt-hour) the units in which electric
usage is measured. One kWh equals 1000 watts of
electricity used for one hour.

RCA – (Reliability Cost Adjustment) a charge
reflecting the costs to support additional capital
investments needed to improve reliability in areas of
power distribution, transmission and generation
infrastructure.

VEA – (Variable Energy Adjustment) a charge
reflecting the costs of fuel, non-RPS power purchase
agreements, non-RPS economy purchases, legacy
ECAF under-collection, and base rate decoupling from
energy efficiency impact.

VRPSEA – (Variable Renewable Portfolio Standard
Energy Adjustment) a charge reflecting the costs of
RPS market purchases and RPS costs above and
beyond any Operations and Maintenance and debt
service payments.

POWER ACCESS CHARGE - (Residential) a
monthly tiered consumption-based fixed charge
applied to R1A Residential customers to recover
distribution and customer service related costs.