Cut off from the excess electricity that the Los Angeles Department of Water & Power has offered Southern California Edison, along with transmission bottlenecks, San Diego Gas & Electric is looking to advanced meters and dynamic pricing to manage what could be record peak loads. ?We expect supplies to be tight but adequate this summer,? said Ed Van Herik, SDG&E spokesperson. That ?adequate? supply, however, is based on reducing peak load by up to 40 MW through existing demand-management programs and another 20 to 28 MW through critical peak pricing. It also includes providing incentives for some 800 businesses to install new advanced meters to allow them to manage their load. The California Independent System Operator (CAISO) forecasts tight electricity supplies this summer, particularly in Southern California. CAISO?s grid experienced a new system peak of 45,597 MW late last summer. This year, load is expected to grow by 3-6 percent, Jim Detmers, CAISO vice-president of grid operations, said January 21 in Los Angeles at the League of Women Voters forum ?Keeping the Lights On in California.? In addition to growing demand, Southern California faces transmission congestion problems. ?We had congestion sneak up on us this past summer,? said California Energy Commission member John Geesman. If not resolved in the months ahead, congestion could compound the problem of growing peak demand this summer. There are seventeen separate transmission bottlenecks due to needed repairs or lack of capacity. That prevented CAISO from supplying as much power as possible to San Diego and other load centers last summer, Detmers said. While there have been some enhancements to transmission and generation capacity in San Diego (Circuit, Jan. 14, 2005), SDG&E believes that conservation and demand management ultimately may be a more economical way to meet at least half of projected demand growth, according to Anne Smith, vice-president of customer services for the company. The utility, she said, found that its load increases by 400 MW during the top 40 hours of demand each year. SDG&E can reduce that demand for much less than it would cost to build and maintain a power plant that it would need for only a few peak days a year. Thus, SDG&E plans to install new ?smart? electricity meters that can turn off energy-gobbling residential appliances ?such as refrigerators and air conditioners?during peak periods in the hot, fast-growing eastern part of the service area. The cost, which could be up to $200 million (compared to $500 million for a new power plant), would be covered in the rate base under the company?s plan to install those meters on 40 percent of the homes in its area in the years ahead. The success of the new meters will depend on the implementation of ?more dynamic rate designs,? said James Magill, SDG&E manager of forecasting and analysis, in prepared testimony to the California Public Utilities Commission in its critical peak-pricing proceeding. Ultimately, SDG&E believes that dynamic pricing will work best ?when implemented across all customer segments,? he said. Michael Shames, executive director of the Utility Consumers? Action Network, is skeptical about whether business and ultimately household customers in SDG&E territory would use the advanced metering systems to reduce consumption. He characterized the advanced meters as a waste of ratepayer money. The devices, like TiVo, would enable two-way communication between the utility and the customer to monitor energy usage and display current pricing information. TiVo, which many television viewers find complicated at first but often come to love once they learn to use it, allows people to record their favorite shows and then watch them whenever they want. The device collects programming information over the Internet. Similarly, smart electricity meters?which would be inside homes and businesses?allow utility customers to turn off their air conditioners when prices are high?for instance, by preprogramming thermostats on air conditioning units. SDG&E late last week proposed a critical peak-pricing tariff for 800 to 1,100 business customers with electrical loads of 300 kW or more this summer. It will push voluntary installation of advanced meters to 800 businesses with an electrical load between 200 and 300 kW. Under the proposed tariff, businesses with a load of 300 kW or greater would pay a commodity charge of almost 15 cents\/kWh between 11 a.m. and 3 p.m. and 30 cents\/kWh between 3 p.m. and 6 p.m.?compared to a normal peak demand commodity charge of about 10 cents\/kWh. Critical peak pricing would be limited to the 12 highest-demand days from June through September. Businesses would be able to opt out of the proposed tariff by paying a 5 percent premium on the summer commodity rate or by agreeing to curtail their load within 30 minutes of notification by SDG&E. Customers agreeing to curtail load would pay significantly?$3.45\/ kWh?for remaining usage during critical peaks. Despite the increases, the proposal is revenue neutral, said Van Herik, because it would give price breaks to businesses during noncritical peak periods. SDG&E would call critical peaks during CAISO alerts and when its own system experiences extreme demand or emergencies. SDG&E noted in its filing with the CPUC that its San Diego business customers are not keen on the proposal even though the utility maintains it would not substantially change their overall electricity bills.