The board of commissioners of the Snohomish County Public Utility District has approved two new rate design plans, including a pilot time-of-day (TOD) plan for commercial and industrial customers.
The rates for the time-of-day program include a nights and weekends discount designed to save customers money during the off-peak hours and a morning and evening peak rate that applies from November through February.
The utility intends to use the pilot program to study how effective time-of-day rates are at shifting electricity usage to off-peak hours during the winter in order to alleviate short-term capacity needs.
The pilot program began this month and is open to C&I customers by invitation. The program runs to December 2023. The pilot program also includes a one-time option that allows participants to revert to their original rate design if it is cheaper than the time-of-day rate.
Snohomish PUD is a winter-peaking utility and its highest winter peak load is about double the utility’s average load for the year, Brian Booth, senior manager of rates, economics and energy risk management, explained via email. The main point of the program is “to shave peaks and thus reduce our need for expensive peaking generation and transmission capacity,” he said.
“Over the past few years, the top 2% of hours served have eaten up nearly 20% of our peaking capacity,” Booth said. “If we could incentivize our customers to reduce or shift their usage out of those 2% of hours, it would be worth tens of millions of dollars per year to the utility.”
The time-of-day pilot program is aimed at the PUD’s largest C&I customers in order to “potentially get the most benefit per participant,” Booth said. In order to provide time-of-day rates to residents, the utility would need advanced metering infrastructure (AMI), which would require the replacement of hundreds of thousands of meters. “While we are examining AMI, we can leverage the small-scale systems and the handful of high-resolution meters we have already to provide this service to a limited number of customers,” Booth said.
The PUD’s commissioners in December also approved a plan to implement the utility’s first base charge for residential customers in more than 35 years. The base charge will be phased in over five years, with the first phase taking effect April 1, 2021. Commercial and industrial customers will begin to see changes to the base charge starting Jan. 1, 2021.
As with the time-of-day pilot program, the goal of the base rate charge is “to align the rates we charge our customers with the costs that drive the utility,” Booth said. “For our customers, this means greater transparency and the ability to respond in ways that benefit both themselves and the PUD. For the utility, it means more stable finances and, in the case of Time of Day rates, the potential for big cost savings,” Booth said.
The base charge does not constitute a rate increase because it coincides with a proportional reduction of the usage charge over a five-year phase-in period, Booth said.
The PUD estimates that the average (900 kWh/month) customer will see no change to the amount of their bills, while high-usage customers should see a small decrease in their bills and low-usage customers a slight increase.
And while the rate redesign is “revenue neutral” on an annual basis that does not mean it is neutral every month or on into the future, Booth said. “Within the year, it will generally mean more predictable bills for our customers with their highest winter heating bills being a little lower and their typically smaller spring and fall bills, when they aren’t using much heat or cooling, will be a little higher,” he said. “We hope that this will make it easier for them to budget and will ease the pain of those surprisingly large winter bills.”
The PUD, meanwhile, benefits from more stable revenues throughout the year, Booth said. And in the future, the utility “will enjoy new revenues as thousands of new homes connect every year and begin paying a steady stream of monthly base charges that are needed to cover the cost of connecting and serving those additional customers,” Booth said.
In California, several utilities are shifting to time-of-use rates to offset the effect of higher levels of renewable energy resources, especially solar power which peaks during mid-day, pushing other resources off the system, and then fades in the afternoon, requiring quick ramping resources to serve evening loads.
The Sacramento Municipal Utility District began transitioning to time-of-day rates in October 2018.