How Does ComEd’s Hourly Pricing Program Work, and What Does Weather Have To Do With It?
You’ve likely heard us tout the benefits of hourly pricing programs, which allow participants to pay hourly, market-based prices for electricity. With these programs, shifting electricity usage to lower priced hours can lower residential electric bills. We administer both Ameren Illinois’ Power Smart Pricing program and the ComEd Residential Real-Time Pricing (RRTP) program.
In addition to consumer savings, hourly pricing helps protect the environment. By reducing electricity use during peak demand times, we reduce the need to build or operate additional power plants, which helps lower greenhouse gas emissions. Shifting electricity use helps ease stress on the power distribution system, making electric service more reliable in our communities.
How are hourly prices set, and who profits?
The ComEd RRTP program provides access to hourly electricity prices that are based on ComEd Zone PJM wholesale market prices. PJM is the regional transmission organization that manages the market where the real-time electricity prices used for RRTP are set. ComEd does not profit from the market price of electricity. It simply passes on the price of electricity without mark up; customers pay the market price.
What does weather have to do with hourly prices?
The market price of electricity varies from hour to hour and day to day, and the weather has a big impact on prices. This means that as the seasons change, ComEd RRTP participants can expect changes in the typical hourly electricity price pattern.
During the summer, prices tend to be higher during the middle of the afternoon, particularly on hot days when air conditioning use drives up the demand for electricity. Summer prices are typically lower during off-peak times such as nights and weekends.
During the cooler months of the year, electricity prices usually have remained relatively low most of the time. However, there can be exceptions to the typical pattern. In particular, last winter’s polar vortex extremes were unprecedented. As a result, real-time electricity prices were higher and more volatile than what has been seen in previous years.
Will it be different this winter?
The PJM market has learned from last winter’s extreme conditions. A PJM report on the January 2014 cold weather events identified a number of action items to improve operations and market processes. The actions include improving generator availability and performance during extreme weather, and testing and verifying generation performance in advance of winter operations. If such events were to occur again, these actions should help moderate the type of highly volatile prices that were seen last winter.
For more on hourly pricing and how to enroll, visit the ComEd RRTP website at https://rrtp.comed.com/.