Seeking to reduce peak demand and avoid potential blackouts this summer, the California Public Utilities Commission on January 27 approved a demand-response program authorizing utilities to install advanced meters for large customers with monthly loads of 200 kW or greater and place them on time-differentiated rates. The CPUC estimated that the utilities? combined demand-response programs will reduce peak loads by about 600 MW this summer. Demand-response programs will be triggered by day-ahead temperatures, prices, and forecasts of demand levels. The programs will provide technology and technical assistance to enable customers to quickly reduce their loads through automated signals. Installing time-of-use and interval meters will enable large industrial and commercial customers to participate in a variety of programs for which the CPUC approved funding:<ul><li><b>Day-ahead notification programs.<\/b> These include the Demand Reserve Partnership currently administered by Pacific Gas & Electric; 20\/20 programs for loads between 20 kW and 200 kW for residential, commercial, and industrial customers; demand bidding; and critical peak pricing.<\/li> <li><b>Reliability-triggered programs.<\/b> These include the statewide base interruptible program and Southern California Edison?s air conditioning cycling and smart thermostat programs.<\/li> <li>Statewide technical and technology assistance programs. <li><b>Customer education, awareness, and outreach.<\/b> This includes Flex Your Power Now!, the Community Partnership Program, and other initiatives.<\/li><\/ul>The CPUC denied demand-reduction program funding for San Diego Gas & Electric?s Rolling Blackout Reduction Program and PG&E?s Diesel Retrofit Generation Program but authorized the utilities to continue offering these programs. The CPUC noted that the lines between price-responsive and reliability-triggered demand-reduction programs has been increasingly blurred since high market prices tend to coincide with high temperatures and high peak demands. Theoretically, price-responsive programs are called on before reliability programs to reduce system load. Price-responsive loads have a longer lead time?typically the day ahead?and are thus useful for reducing predictable high peak loads. By contrast, reliability-triggered programs have much shorter notice times and are thus useful in mitigating unforeseen power shortages, transmission constraints, and local distribution problems. Since the California Independent System Operator currently has not established a ?day-ahead market price,? the CPUC?s day-ahead demand-reduction programs are not actually tied to market prices and are thus not truly price responsive. The CPUC concluded that any demand-response program that is designed to be triggered the day ahead by price, temperature, or system demand conditions would count as a day-ahead notification program toward fulfilling the utilities? price-responsive demand goals. The commission noted that in order to reduce critical peak demand, it must modify its rate design to provide stronger price signals to customers to shift their load out of critical peak periods. Despite utilities? request, the CPUC declined to reopen PG&E?s and Edison?s interruptible rates at this time because the commission previously directed the utilities to file rate design applications for customers with demands of 200 kW or greater by January 20, 2005. The CPUC plans to consider all options for large customer tariffs at the same time.