That seems even easier to bypass, but makes more sense if they're just using that to moderate instantaneous draw (everyone's compressor kicking on at once), rather than trying to reduce total cooling demand.

But my original critique still applies. If you have two AC units, and only install the switch in series with one, do they figure it out based on your draw and cut your discount in half, or what? Or do they do the install themselves and check over your system. And if you later open up your own equipment and bypass it, they treat you similarly as if you were to just jump your electric meter?

I do wonder if this approach makes sense from the homeowner perspective too. Modulating your compressor means that you need a bigger compressor to handle the same cooling load, and short cycling isn't going to be good for it.