What is critical peak pricing? Peak-day events on your electric bill, explained

Why utilities offer it

The grid is built for its worst hour. A handful of afternoons a year — a heat wave with every air conditioner running, a cold snap with every heat pump on backup — set the size of the wires and the number of power plants for the whole system. Shaving demand on those few hours is worth far more than shaving it at any other time. A critical peak price is the most direct way to buy that: it makes the expensive hours visibly expensive to the people who can do something about them, and gives back the savings on ordinary days.

How it works in practice

• Event days are called a day ahead, usually by 5pm the evening before, by text, email, or app notification. Some utilities also call same-day events with a few hours’ notice in emergencies.
• The event window is a few hours — commonly 2pm to 6pm or 4pm to 9pm — on a weekday. Weekends and holidays are almost never event days.
• There is a cap on how many events can be called per year and sometimes per month; it is written in the tariff. If the cap is 12 and the utility has called 12, the rest of the summer is ordinary.
• Outside events, the plan is a normal time-of-use plan, often with a lower peak rate than the standard one, and sometimes a credit per kilowatt-hour on every non-event day.

The arithmetic

Suppose the event price is 75¢ and the ordinary peak is 30¢, with 12 events of four hours. A house drawing 3 kW of air conditioning through every event, unchanged, pays 12 × 4 × 3 × 45¢ extra — about $65 a year over what the ordinary plan would charge. If the discount on the other days is worth more than that, the household is ahead without doing anything. If the household pre-cools the house and turns the thermostat up four degrees for the event window, the air conditioner might draw a third of that, and the plan is ahead by a wide margin. If the household has a car charging at 5pm on event days, it loses badly.

So the question is not whether you can tolerate expensive hours; it is whether you can respond to about a dozen messages a year. Households with a programmable thermostat, a car on a scheduled charger, and someone who reads texts tend to come out ahead. Households with a medical need for cooling, or nobody home to adjust anything, should stay on a standard plan.

Peak time rebates: the same idea, without the risk

Many utilities offer the mirror image: a normal rate all year, plus a credit — often a dollar or more per kilowatt-hour — for every kilowatt-hour you use below your usual amount during an event. Nothing is more expensive than usual; you are simply paid to cut back. The rebate is smaller than the CPP saving for a household that responds well, but there is no penalty for ignoring it. If your utility offers both, the rebate is the one to try first.

How this site handles it

The tariff database lists the ordinary schedule for a CPP plan and notes the event price in the description, but the number of events a year is not a field and the days are not known in advance. We price these plans on their ordinary schedule and flag the event pricing in the plan’s notes. Read the annual figures on those pages as the no-events case; your actual bill will be that plus whatever the event days cost you, minus whatever you avoid. The plans are marked time-of-use on utility pages, with CPP in the plan name where the utility uses the term.