RTP (Right to Produce / Real-Time Pricing)

In economics and energy policy, RTP (Real-Time Pricing) is a form of dynamic retail pricing in which the per-kWh rate paid by end-users changes frequently—typically hourly or sub-hourly—based on prevailing wholesale electricity prices. It contrasts with flat tariffs, time-of-use (TOU) blocks, and critical-peak pricing (CPP), which use predetermined rate schedules.

The economic rationale is straightforward: when retail prices reflect short-run marginal cost, consumers face efficient signals to shift or reduce consumption during scarcity, lowering system peak demand and the need for costly peaking generation. Pioneering work by economists including Severin Borenstein (UC Berkeley / Energy Institute at Haas) has argued that RTP captures most of the welfare gains available from demand response, since price spikes—often confined to a handful of hours per year—drive the bulk of system costs.

Implementation typically requires:

• Interval metering (smart meters capable of hourly or 15-minute reads),
• A day-ahead or hour-ahead price signal transmitted to customers, and
• Settlement mechanisms that reconcile actual consumption with variable prices.

RTP is most common for large commercial and industrial customers. Georgia Power's RTP program, launched in the 1990s, is one of the longest-running examples for industrial users in the United States. Residential rollouts have been slower due to concerns about bill volatility, customer comprehension, and equity—low-income households with inflexible loads may face higher bills without automation. ComEd in Illinois has offered a residential hourly pricing option since the mid-2000s.

RTP gained renewed attention after the February 2021 Texas winter storm, when some customers on indexed wholesale-price plans (notably from retailer Griddy) received bills of thousands of dollars as ERCOT scarcity prices hit the $9,000/MWh cap, prompting debate over consumer protection in dynamic pricing.

Note: in trade policy contexts, "RTP" may instead abbreviate Right to Produce or Regional Trade Partnership; check usage carefully.