CUB Stands Up Against Time-of-Use Rate Proposal
Posted on September 28, 2011 by Gordon Feighner
Tags, Consumers and Utility Customers, Generation, Transmission, Distribution, Utility Regulation
On Tuesday, September 27, CUB Staff headed to Salem to provide commentary before the Public Utility Commission regarding the Commission Staff’s recent straw proposal for setting up an approval process for time-of-use (TOU) rates for electricity customers. This type of rate structure has a number of drawbacks for customers if it is made mandatory (read our previous post on the issue here). Joining CUB’s Executive Director, Bob Jenks, in testifying was CUB’s expert witness for this issue, Barbara Alexander. Mr. Jenks introduced Ms. Alexander as “a rock star in consumer advocacy circles,” and she lived up to her billing in providing compelling commentary that bolstered CUB’s case.
The hearing began with a clarification from the Commissioners and the docket’s administrative law judge of the intent of the straw proposal. It was not the intent of the Commissioners to compel electric utilities to seek approval for mandatory time-of-use rate structures for residential customers in the near future, which was CUB’s greatest concern with this docket. Instead, the Commissioners simply wanted to develop a framework for evaluating future proposals rather than address proposals as they come up in the context of general rate cases. The Commissioners also want utilities to investigate the potential costs, benefits, and concerns that would result from the implementation of TOU rates and other programs such as peak-time rebates (PTRs).
Barbara Alexander opened CUB’s commentary in the proceeding by challenging the Commission’s focus on price signals. She stated that electricity is an inelastic good, so increasing prices at different times of the day or year will primarily result in higher bills for customers without much reduction in electricity consumption. If the goal of having smart meters and other advanced infrastructure, she continued, is to help reduce capacity demands on the grid and reduce costs, then the Commission should help utilities develop programs that can be proven to meet these objectives rather than express a preference for TOU rates. Programs Ms. Alexander suggested the Commission focus on include PTR programs that reward customers for cutting electricity usage during peak load times and direct load control programs where utilities can directly control household appliances, such as water heaters, to shift energy usage away from peak times. She related a story from her home state of Maine, where TOU rates implemented in the 1980s prompted a customer revolt that led to a quick shift away from mandatory programs for residential customers.
Bob Jenks also offered some commentary on the issue, expressing CUB’s concerns regarding TOU and seasonal rates, as well as critical peak pricing programs. All of these programs, he said, essentially penalize customers while providing little benefit to the utility. Many customers are unable to shift their electricity usage away from peak hours or improve the efficiency of their homes, so these customers would suffer from increased prices under TOU or seasonal rate structures. Mr. Jenks recommended that the Commissioners get rid of the idea of mandatory TOU rates once and for all so that the Commission Staff can focus its energy on other programs that are more equitable and have greater potential for energy savings.
Other parties that went on record as opposing mandatory or large-scale implementation of TOU rates included PGE, Pacific Power, and the Industrial Customers of Northwest Utilities (ICNU). Only Idaho Power and the Commission Staff expressed a favorable attitude towards TOU rates, and neither party explicitly favored a mandatory TOU rate structure at this time. Commissioner Susan Ackerman again reiterated that the Commission has no intention of making TOU rates mandatory for customers, and that any change in rate structures will need to be accompanied by significant consumer education efforts.
CUB will continue to monitor this issue closely, and we’ll certainly post an update on this blog when the Commission issues its final order in this docket in the coming months. If you are interested in reading more of what CUB has to say on this issue, you can find the written comments of Bob Jenks and Barbara Alexander on the PUC website.
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03/27/17 | 2 Comments | CUB Stands Up Against Time-of-Use Rate Proposal