Utility Consumers' Action Network (UCAN) Advocates for Hourly Transmission Rate Design in Demand Flexibility Order

Strategic Insights -

The Utility Consumers' Action Network (UCAN) submitted comments to the California Public Utilities Commission (CPUC) regarding the proposed decision adopting guidelines for the Joint IOUs' Demand Flexibility Rate Design proposals. UCAN emphasized the importance of implementing hourly transmission rate components in retail rates, in compliance with California Energy Commission (CEC) Load Management Standards (LMS).

UCAN's comments highlighted the need for accurate and effective price signals in demand flexibility rates, citing examples from other states where hourly transmission pricing has been implemented to recover FERC-authorized costs. The network also emphasized the CEC Load Management Standard requirement that dynamic rates include transmission marginal capacity costs and vary on a time interval of "no more than one hour."

Key Takeaways:

  • UCAN advocated for the implementation of hourly transmission rate components in retail rates, in compliance with CEC Load Management Standards (LMS).
  • UCAN provided examples from other states where hourly transmission pricing has been implemented to recover FERC-authorized costs, including by regulated utilities in Massachusetts.
  • The CEC Load Management Standard requires that dynamic rates include transmission marginal capacity costs and vary on a time interval of "no more than one hour."
  • UCAN emphasized the need for accurate and effective price signals in demand flexibility rates to support the transition to a more flexible and dynamic grid.
  • The Joint IOUs proposed to adopt guidelines for the Demand Flexibility Rate Design proposals, but UCAN requested that the guidelines be revised to include hourly transmission rate components.
  • UCAN also proposed changes to the text of the decision to correct factual errors and clarify the process and timelines anticipated for approval of hourly retail transmission rates.

Statistics:

  • 23% of energy service costs are related to T&D marginal costs, and new transmission costs now exceed average new generation contract costs per megawatt-hour (MWh) of delivered electricity.
  • Hourly transmission pricing has been implemented in other states, including Massachusetts, to recover FERC-authorized costs.
  • The CEC Load Management Standard requires that dynamic rates include transmission marginal capacity costs and vary on a time interval of "no more than one hour."

Sources:

  • Utility Consumers' Action Network (UCAN). (2022, July 14). BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Order Instituting Rulemaking to Advance Demand Flexibility through Electric Rates.
  • Utility Consumers' Action Network (UCAN). (2025, August 14). OPENING COMMENTS OF THE UTILITY CONSUMERS' ACTION NETWORK (UCAN) ON THE PROPOSED DECISION ISSUED JULY 25, 2025, ADOPTING GUIDELINES FOR THE JOINT IOUs DEMAND FLEXIBILITY RATE DESIGN PROPOSALS.
  • California Energy Commission (CEC). (n.d.). Load Management Standards.
  • Cal. Code Regs. tit. 20 § 1623.