This is not something new or different. It has been done for decades in the industrial power market.
For example, I did work for a Natural Gas Storage facility. We used large compressors to pump Natural Gas into a depleted reservoir during off-peak periods and let it flow back out during high peak demand periods.
We had to keep enough supply in the ground to meet a future peak demand. Typical market orders were on a per month basis. We would shut down for a few hours on a few days a year to ease load on the electrical grid.
In exchange, we got a very cheap electrical rate. We owned our own 138kV Substation.
It is not about climate change. It is cheaper to find those customers whose load demand can be postponed versus running a peak, inefficient gas or other fast generator a few hours a year. Less cost and less exhaust.
I don’t see hospitals and schools fitting this role.
Apparently you didn't read the article because, in part, the decision was based on it.
I understand your supply and demand argument, but the underlying conundrum is that they are "encouraging" consumers to use less electricity or else pay a higher rate.
Not to mention the states rights issue.
I think the new part is federal intrusion into state energy markets. A camel’s nose under a tent flap that could eventually lead to federal mandates/restrictions on household energy use.
And since this is not off-peak use, but rather reduction in grid use, the article discusses incredibly wasteful strategies such as battery storage and solar arrays (no doubt subsidized by some tentacle of the government) to allow ‘hospitals and schools’ to get this discount.
Oh you and that invisible hand of self regulation!
Enter the micro-grid.
It is coming (fast) and will be a royal bitch for the congress-critters to F over the industry as a whole with the alphabet energy regulatory commissions.