Charles River Associates Completes Analysis of Electricity Pricing Study in California

Business Wire, April 7, 2005

BOSTON -- Californians reduced peak loads by 15% on days with very high prices in one of the largest electricity pricing studies ever conducted

Charles River Associates Incorporated (Nasdaq: CRAI), an internationally known leader in providing economic, financial, and management consulting services, today announced that the Company has completed its analysis of one of the largest electricity pricing studies ever conducted involving residential, small commercial, and industrial customers.

The results of the study are being evaluated by California utilities and commissions to decide whether or not to implement advanced metering infrastructure for the state's 10 million residential customers.

The pilot study, designed in part by CRA, was carried out in California between July 2003 and December 2004. It was funded by California's three investor-owned utilities and conducted through a working group process involving the state's two regulatory commissions and numerous other interested parties. Last year, the study's comprehensive design won an innovation award by the Peak Load Management Alliance.

The study examined several time-varying pricing rates. One of these was a time-of-use (TOU) rate, which charged higher prices during peak periods when it costs more to procure electricity and lower prices during off-peak periods. Another rate was based on critical-peak pricing (CPP) that resembles a TOU rate on most days but on 12 summer days and three winter days, it charges much higher prices during peak periods. These high-priced days were called on a day-ahead or day-of basis, to simulate dynamic or real-time conditions that might be encountered when the power system goes critical, as it did in the Western States power crisis of 2000-2001.

CRA found that residential customers in California will reduce their peak period energy use by about 5% in response to a TOU rate, which features prices that were about twice as high as the standard price of 13 cents/kWh, and about 15% in response to a CPP rate, which features prices that were five times as high. The percent reductions in peak load vary by climate zone and customer characteristics, such as the ownership of central air conditioning.

Ahmad Faruqui, a CRA Vice President and one of the architects of the pricing study, said, "Reductions in peak loads could exceed 25% if customers are given technology to facilitate their response to higher electricity prices charged during peak periods. For example, a smart thermostat could automatically adjust the temperature setting when prices are very high, although the extent of price responsiveness would vary depending on climate and customer characteristics."

James C. Burrows, CRA's president and CEO, said, "CRA's ability to perform an analysis that has such wide ranging impact is a testament to the experience and expertise of our consultant staff. Dr. Faruqui and his team's contribution to the study could have far-reaching consequences on electricity pricing in California, one of the most important economic issues facing that state."

A copy of the study is available at: http://www.energy.ca.gov/demandresponse/documents/group3_final_reports /2005-03-24_SPP_FINAL_REP.PDF.

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About CRA

Founded in 1965, Charles River Associates is an economics, finance, and business consulting firm that works with businesses, law firms, accounting firms, and governments in providing a wide range of services. CRA combines economic and financial analysis with expertise in litigation and regulatory support, business strategy and planning, market and demand forecasting, policy analysis, and engineering and technology management. The firm is distinguished by a corporate philosophy of providing responsive, top-quality consulting; an interdisciplinary team approach; unsurpassed economic, financial, and other analytic skills; and pragmatic business insights. In addition to its corporate headquarters in Boston and international offices in Brussels, Canberra, Dubai, London, Melbourne, Mexico City, Sydney, Toronto, and Wellington, CRA also has U.S. offices in Cambridge, Chicago, College Station, Dallas, Houston, New York, Oakland, Pasadena, Philadelphia, Salt Lake City, Silicon Valley, and Washington, D.C. Detailed information about CRA can be found at www.crai.com.

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