Real time pricing (RTP) is a utility billing model where electricity rates fluctuate hourly or even more frequently based on actual wholesale market prices and grid conditions. Rather than fixed or time-of-use rates, RTP passes wholesale market costs directly to customers, creating precise economic signals that encourage consumption reductions when power is expensive. RTP programs typically show prices to customers 24 hours in advance, allowing informed consumption decisions.
Pricing Mechanics
RTP rates fluctuate between $0.05 and $0.50 per kWh depending on demand, fuel costs, and reserve margins. Prices typically peak at $0.30-0.50 per kWh during high-demand periods and drop to $0.05-0.15 per kWh during low-demand windows. Advanced RTP systems update prices hourly, reflecting real-time wholesale market conditions and transmission constraints.
Customer Savings Potential
Customers with flexible consumption patterns reduce electricity costs by 15-30% under RTP programs. Industrial facilities with flexible loads achieve greater savings of 20-40% by shifting energy-intensive processes to low-price periods. Automated systems manage loads in response to price signals without requiring constant human attention.
Grid and Market Benefits
RTP reduces peak demand by 10-20%, increases renewable energy penetration by encouraging consumption during high-generation periods, and improves wholesale market efficiency. Utilities benefit from reduced reserve requirements and deferrals of generation infrastructure investments.