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I'm not that keen on trying to limit demand by peak hour metering with price differentials. There's no way to know in advance how much it will cost to provide power during those periods, because it's going to be largely determined by the spot market.

...about the only thing the PUC could do to implement your suggestion is to arbitrarily dictate some times of the day during some times of the year as peak periods, whether they really are or not, and set a higher price for kilowatts used during those periods. Heavy users would then have to decide whether or not to shut down during those periods or incur additional costs.

Weather in California is fairly predictable on a seasonal basis, at least enough so that it would be worth implementing what you suggest (which is closely akin to what I was thinking). Given that in the short term, the markup on that power would be regulated, the "hourly price" could be a simple multiple of what was paid or a differential percentage negotiated with the PUC. Either way, the user would have the incentive to install equipment that would reduce peak demand. That's the key.

It would have to a differential amount which is set by the PUC, because the actual cost of the power used wouldn't be known until after the fact. A customer that isn't aware of the price to be paid for using power during a peak period is left without any useful information upon which to base a decision whether or not to curtail usage.

I would reluctantly support such a measure, but only as a stopgap measure until a surplus of power (even during peak usage) is available. Ideally, California would remove obstacles, and even create incentives, for new power plant construction. At the point where California has at least 15% more power capacity than peak demand, then it should phase in price deregulation for all consumers, both commercial and residential. Allow everyone to contract directly with a power provider.

If the Texas model is any indication, power providers would provide a wide range of plans and prices to fit the needs of the customer base. Some would offer adjustable pricing, some would offer fixed prices for a contractually set period, and others might offer time of day plans.

The key to a healthy and reliable power system is to quit interfering and manipulating it, as is being done now, and to let market forces work their magic.