What would it take to get those customers to voluntarily shift their energy use to less congested times?
That's a question that Pennsylvania utilities and their regulators have been experimenting with for more than a dozen years, ever since a 2008 energy efficiency and conservation law mandated energy demand reductions at each large utility.
That law, Act 129, also required utilities to install smart meters, which digitally record how much electricity is used in real time and make that information available to the utility and the customer.
Smart meters, in turn, would allow utilities to offer special rates that charge more during peak hours and less during lower-use times, incentivizing consumers to change their behavior.
Or, as the Pennsylvania Public Utility Commission waxed poetic in 2019, "the true usefulness of smart meters is to provide information to empower customers to control their electric use, for knowledge itself is power."
So far, only about 3,000 residents are thusly empowered. Although there are about 5.9 million smart meters installed in Pennsylvania, utilities have been slow to offer "time-of-use" rates to residential consumers. Some, such as Downtown-based Duquesne Light, had small pilot programs that came and went but didn't extend to the general population.
Duquesne ran a pilot program in 2016 where about 300 residential customers signed up for time-of-use rates.
"They saved a little bit of money, but not a lot," Jamie Davis, the utility's director of rate and tariff services said in an interview last month. The utility isn't making the option available for all of its residential customers. At least, not yet.
"We haven't seen much of a need at this point," he said.
A General Motors Chevrolet Bolt electric vehicle charges up on June 12, 2018. Some utilities are focusing on a small but potentially powerful group of residential customers whose electric demand can have an outsized impact on the local grid and who could save the most by actively managing their electric use — electric vehicle drivers.( Jeff Kowalsky/Bloomberg )
Instead, Duquesne Light is focusing on a small but potentially powerful group of residential customers whose electric demand can have an outsized impact on the local grid and who could save the most by actively managing their electric use — electric vehicle drivers.
Special rates for electric vehicle drivers are also available at PPL and PECO, two large utilities active in Eastern Pennsylvania. FirstEnergy Corp., the Akron-based company that owns the remainder of Pennsylvania's large electric utilities, including West Penn Power, plans to introduce time-of-use rates next year.
Splitting The Day
Most residential consumers who buy their electricity through the utility, as opposed to shopping for a rate through an electric supplier, pay the same rate for each kilowatt of electricity they use regardless when they use it. Time-of-use rates, on the other hand, split up the day into two or three time periods, each attached to a different per kilowatt rate.
Peak rates carry a price penalty. Off-peak rates offer a discount.
In Duquesne Light's territory, electric vehicle owners enrolled the time-of-use program, which went into effect June 1, are now paying less than half for their electricity when they charge at night ( between 11 p.m. and 6 a.m.) than they would have on a regular fixed rate. Their penalty for charging during peak hours ( between 1 p.m. and 9 p.m.), however, is more than 150 percent the cost to all other consumers.
Of the 3,000 Pennsylvania residential customers who are signed up for such rates, some 1,200 of them are electric vehicle drivers, according to data compiled by Michael Wurst, an adviser to the chair of the PUC.
Shaving The Peak
During an early pilot of time-of-use rates, PECO found that customers who enrolled were able to save about 5 percent on their electric bills while the utility's peak demand dropped by 6 percent.
That 6 percent is significant, Mr. Wurst said.
"The whole grid is designed around these peak hours," he said. "So, if they can avoid seeing their peak demand going up, they can avoid having to invest" in more infrastructure to handle that infrequent but critical load.
"Avoiding those peak hours is key to making the whole entire electric grid more economic," he said.
Beyond the local distribution grid, there is the transmission grid that connects power generators to utilities. Shaving peak demand alleviates the need to build more peaking plants, which are expensive to operate and which drive up the price of electricity when called to provide power to a stressed grid. Historically, such plants have also been more polluting ones.
Industrial and some commercial consumers whose electric rates are tied directly to the price of power on the grid are familiar with these dynamics. Smart meters were intended, in part, to ease residential customers into participating in market's peak and off peak pricing. The idea was that curbing their peak use wouldn't just lower the price for those who participate but, by unburdening the grid during peak times, it will lower everyone's electricity prices.
That, however, would require enough consumers to take up the task.
A PPL pilot which enrolled 448 residential customers showed they used only 2 percent less energy at peak times than those on a fixed rate plan.
The utility concluded the program had "no meaningful impact on load shifting, energy prices, or consumption."
"There were two promises with smart meters, one of which has been fulfilled, the other hasn't," said Sonny Popowsky, who served as the Pennsylvania Consumer Advocate when the 2009 energy efficiency and conservation law passed.
The devices certainly improved the accuracy of billing and communication with the utility when something goes wrong.
But in terms of consumers getting "into all kinds of complicated rates where, if they do their laundry at night (they get a discount) — most customers don't seem interested and many utilities don't offer it," he said.
Mr. Wurst said that Pennsylvania is still in the beginning of the learning process when it comes to time-of-use rates and that the growth of electric vehicles is providing some momentum for utilities and the electric generation suppliers that customers can contract with to buy their power to explore new rate structures.
The relatively low price of electricity in recent years has provided little incentive to sway most residential consumers, he said.
"The ultimate goal is to improve the efficiency of the utility's grid at the same time holding the customer harmless" or saving them money, Mr. Wurst said. One is not more important that the other, he said. In fact, while people get used to these kinds of rates, the customer experience may be the more critical variable.
After all, customers have to volunteer to change their behavior. A smart meter might have the data, but the will to use it rests with the consumer.
(c)2022 the Pittsburgh Post-Gazette. Distributed by Tribune Content Agency, LLC.
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