Critical Peak Pricing
Critical peak pricing adds temporary surcharges during a limited number of high-stress events each year, incentivizing customers to curtail load when the grid is most constrained. Utilities announce CPP events day-ahead or hours-ahead, applying premium rates that reflect scarcity costs while keeping standard TOU rates in place the rest of the year.
CPP structures require reliable communications, automation, and settlement systems so customers can respond quickly. They often integrate with demand response platforms, enabling utilities to trigger thermostats, EV chargers, or industrial controls via APIs.
Because CPP events align with capacity market or balancing authority scarcity conditions, the programs generate measurable resource adequacy benefits that regulators can credit toward procurement obligations. Customers with building management systems or storage capture significant bill savings while supporting grid reliability.
Developers bundle CPP value streams into DER offerings, highlighting verifiable event performance that strengthens financing cases for VPP portfolios.
Technical Details
- •Applies premium rates during a limited number of events per year
- •Requires day-ahead or same-day notification channels
- •Often coupled with automation incentives for controllable loads
- •Events align with system peaks or reserve shortages
- •Measurement and verification rely on interval data
Why It Matters
CPP programs translate scarcity conditions into customer level incentives, expanding the pool of flexible demand. Tera documents CPP tariffs, enrollment, and performance data to help VPP operators and corporate energy managers quantify achievable savings.
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