In January 2027, new rules from the California Energy Commission will require utilities to adopt real-time pricing. In other words, in periods of peak demand, the cost of electricity will be determined by the incremental cost of generation.

You can create a management system to adapt to this new reality.

Or avoid this if your building energy comes from behind the meter from your own microgrid and DC-powered building.

What are LMS-Compliant Real-Time Pricing (RTP) Rates?

LMS-compliant RTP rates are an electricity pricing structure designed to encourage energy efficiency and reduce peak demand on the electrical grid. This structure complies with the Load Management Standards (LMS), a set of regulations established by the California Energy Commission (CEC).  

Key Features of LMS-Compliant RTP Rates:

1. Hourly Pricing: Rates fluctuate based on the real-time cost of generating electricity. This means that prices can change every hour, reflecting the current supply and demand conditions on the grid.  

2. Marginal Cost-Based: The rates are based on the marginal cost of generation, which is the cost of producing the next unit of electricity. This ensures that customers pay the true cost of their energy consumption.

3. Time-Dependent Signals: These rates give customers signals indicating when electricity is more expensive or less expensive. This allows customers to adjust their energy usage accordingly, shifting their consumption to off-peak hours when prices are lower.  

4. Load Flexibility: LMS-compliant RTP rates encourage customers to adopt load flexibility measures, such as installing smart thermostats or energy storage systems. These measures can help customers reduce energy costs and contribute to a more stable grid.  

Benefits of LMS-Compliant RTP Rates:

• Reduced Energy Costs: Customers who effectively manage their energy consumption can save money on electricity bills.  

• Improved Grid Reliability: LMS-compliant RTP rates improve electrical grid reliability by reducing peak demand

• Increased Renewable Energy Integration: These rates can facilitate the integration of renewable energy sources into the grid by encouraging customers to shift their consumption to times when renewable energy is available.  

In summary, LMS-compliant RTP rates are a market-based pricing mechanism that can help create a more efficient and sustainable electric grid while encouraging customers to reduce energy costs.

Specific Examples of LMS-Compliant RTP Rates

California's Electric Reliability Organization (CAISO) offers several LMS-compliant RTP rate options for customers in the state. Here are a few examples:

1. Time-of-Use (TOU) Rates: These rates divide the day into different time periods (e.g., peak, off-peak, and super off-peak) and charge different rates for each period. TOU rates are a more granular version of RTP rates, as they allow customers to shift their consumption to off-peak hours more precisely.

2. Critical Peak Pricing (CPP) Rates: CPP rates include a "critical peak" period during which electricity prices are significantly higher. Customers who can reduce their consumption during these peak periods can save money on their bills.

3. Real-Time Pricing (RTP) Rates: These rates are based on the real-time cost of electricity, which can fluctuate throughout the day. RTP rates offer the most flexibility for customers to manage their energy consumption and take advantage of lower prices.

In addition to these CAISO-specific rates, other utilities and energy providers may offer their own variations of LMS-compliant RTP rates.