I don't think the utilities are particularly interested in shaving the peaks of demand, yes they pay a lot more for peak power but they are just sending that bill to the consumer, with a markup of course, so as long as they don't take a serious margin hit on the higher peak power revenues, if any, they are making more money with the peaks. It would save the consumer money to shave the peaks though so if you could sell back power from your car battery it would be advantageous to everyone, but the utilites, who would earn a bit less money due to a revenue cut.
I disagree for two reasons.
First, many utilities don't have means (e.g. fuel adjustment clause) that lets it get every dollar back. Usually there is some risk-sharing between customers and the utility to encourage the utility to make prudent power management choices, so the utility's shareholders can get upside by managing power costs downward.
Second, the utilities are revenue constrained. Utility commissions want to limit rate increases, and if the power cost is rising, the commission tends to limit the growth of the wires side of the bill. That puts a crimp on the utility's capex plans. Utilities don't make a profit (or very little profit) on power sales, however; they earn their returns on capital invested. Therefore, keeping power prices low expands the political headroom for rate increases to pay for more hardware.
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I'm not sure where I posted this info before, but there's an important regulatory problem that any of these retail solutions face in the parts of the U.S. where the grid is operated by a FERC-regulated Regional Transmission Operator, which is most of us:
The problem is that the D.C. Court of Appeals has ruled that these RTOs can't pay retail customers; only state-regulated utilities are allowed to play in the retail space. The case,
EPSA v PJM, narrowly read impacts only PJM's capacity market (which pays generators to be available for dispatch); retail customers willing to reduce demand on the grid are now excluded from selling their turn-down capacity. But unsurprisingly the ruling--which is binding nationally--has called into question all programs by all RTOs that involves retail customers.
EPSA has been appealed by the Solicitor General to the SCOTUS, which hasn't yet taken any action about whether it will take it up. In any case, a SCOTUS remand to the D.C. Court couldn't occur until next summer, at the earliest, and so we're not looking for an actual reversal until 2017. Until then, participation by retail customers in the wholesale grid is very much up in the air.
This is a big deal because none of the utilities within these RTOs actually operates the power grid: the RTO, not the utilities, dispatches and pays power plants, manages system reliability, secures operating reserves, and decides what transmission lines to build or upgrade. In other words, they control the pursestrings.
