Idaho Power Testing Time of Use Rates in Oregon
Posted on May 2, 2019 by Will Gehrke
Tags, Energy
This summer, Idaho Power is going to be testing a new rate structure for its retail electricity rates. For residential customers, there are two main components of electric rates. One is the basic charge, which is a fixed monthly bill. The basic charge is meant to cover the utility’s fixed costs associated with metering and billing. The second component of an electric rate is the volumetric rate; this is the component that changes with usage. For several decades, electric utilities have structured their volumetric rates by two tiers. Once a ratepayer surpasses 1000kWh used, the ratepayer moves from the first price tier to the second, and pays an increased price for any additional electricity they use in that billing period.
Idaho Power is proposing a time of use rate pilot program starting June 1, 2019. This program will only affect the volumetric rates charged to participating customers. Instead of holding the cost of electricity constant throughout the year, time of use rates vary with the season and time of day. The goal of this type of program is to provide an economic incentive for residential customers to move their electricity load. For example, a household could delay turning on a wall air-conditioning unit in order to save money on its electricity bill.
Like other summer peaking utilities, Idaho Power’s system peak occurs during the summer afternoons when customers cool their homes with air conditioners. Time of use rates are structured to provide a higher price signal during high usage periods. Typically, time of use programs have significant price difference between summer peak and summer off-peak prices. Other summer peaking utilities have to rely on thermal generation to meet increased air conditioning load, which leads to a greater variation in peak power costs. However, Idaho Power relies substantially on hydroelectric generating units to meet its base load. Consequently, the spring runoff provides a significant amount of economic power for Idaho Power’s customers. Idaho Power’s proposed price difference between off-peak and on-peak pricing in the summer is approximately 1 percent, which is unique for summer peaking utilities.
As a representative of residential customers, CUB does not support mandatory time of use rates. Why? Because ratepayers are not always able to shift their usage between hours. Idaho Power already has optional time of use rates for its Oregon customers, with low customer participation. CUB was consulted in the construction of this rate structure program. CUB did not oppose this pilot program because it was limited to only 375 customers. On a permanent basis, CUB supports giving ratepayers the choice to have time of use rates, or to opt out of them. CUB will continue to monitor Idaho Power’s program, and update readers as its results are evaluated.
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05/02/19 | 0 Comments | Idaho Power Testing Time of Use Rates in Oregon