Loading...
HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 03/09/2021 - RESIDENTIAL TIME-OF-DAY REVIEW AND POTENTIAL NEXTDATE: STAFF: March 9, 2021 Lance Smith, Utilities Strategic Finance Director WORK SESSION ITEM City Council SUBJECT FOR DISCUSSION Residential Time-of-Day Review and Potential Next Steps. EXECUTIVE SUMMARY The purpose of this item is to review the residential Time-of-Use rate structures and to discuss what Council may want to either change or study further. In October 2018, all residential electric cus tomers were transitioned to a Time-of-Day (TOD) rate structure after an extensive pilot study. The pilot study indicated that residential customers were expected to reduce their energy consumption as well as their contribution to the coincident peak and in doing so realize some reduction in their electric bill relative to the previous three -tiered rate structure. After the first year of the TOD rates being in place for all residential customers, a review was done to ensure that the expected benefits seen in the pilot study were still being realized. This was confirmed and presented to the City Council at the February 11, 2020 Council Work Session. The second year of the TOD rate structure saw a significant load shift from commercial, and to a lesser degree industrial consumption, to the residential rate class due to COVID-19, and the associated economic slowdown, making it very difficult to assess the impact of the rate structure on customers in 2020. Higher summer temperatures and smoke from the Cameron Peak Fire also contributed to the complexity. While the challenges of 2020 make it difficult to analyze the results in the second year, there is an opportunity to consider if any adjustments may be appropriate. A subsidy within the TOD with a tier rate, which applies to 90% of residential customers, has created an unintended price differential between the two residential rate classes. This adversely impacts the portion of the 10% of residential customers in all -electric residences primarily in manufactured park and multifamily housing and use much less energy than all-electric customers in single family housing. With all residential customers already being billed on a TOD rate, and large commercial and industrial customers already being billed on a time-based rate, which includes a coincident peak demand charge, only small commercial customers remain on a rate which does not reflect the time varying cost of generation and transmission. COUNCIL DIRECTION SOUGHT: 1. If, and how, to address the price differential between the two Time of Day rate classes? 2. Are there any other requests of staff currently concerning the residential Time of Day rate? 3. Would you like staff to explore a Time-of-Day rate for small commercial customers? BACKGROUND Beginning in October of 2018 all residential electric customers of the City of Fort Collins were taken off the previous three-tiered rate structure and put into one of two Time of Day (TOD) rate structures. The 90% of residences within the City having gas service which could be used for heating available to them were put on a TOD rate structure with a tier. The remaining 10% of residences with no gas service to them were put on a TOD rate structure with no tier. This distinction between the two residential rate clas ses by heating type was intended to recognize that electrically heated residences will require more electricity than those heated by gas which would very likely place these customers above the tier threshold each month in the winter at least. March 9, 2021 Page 2 Residential Time-of-Day Rates The cost for electricity varies throughout the day, with higher costs incurred when demands on the system are the highest. Historically, limitations on metering capabilities required these higher costs to be averaged out over 24-hours across all residential customers, but with the installation of advanced metering infrastructure (AMI) meters, it became possible to charge on a more equitable basis. The TOD on -peak hours were established by identifying when the system peaks occur and averaging the associated demand costs over the narrower four- or five-hour window, depending on the season (winter and summer), rather than the full 24- hours in a day. This time-based rate structure provides a variety of benefits. Considerations for implementing a TOD rate included: • more fair and equitable structure than tiered rates, as it passes through costs more accurately • provides a time-based price signal to reduce system peak demands • provides customers with two ways to control their bills - by reducing how much electricity they use and/or shifting when they use it • reduced peak demands increase load factors on the system, creating efficiencies and lower costs overall • better aligns system costs with when solar production occurs • overall reductions in energy consumption also lower greenhouse gas emissions • encourages use of electric vehicles March 9, 2021 Page 3 The following timeline highlights the history of TOD. TOD After 1 Year Following the implementation of the TOD rates for residential cus tomers in October 2018, an extensive analysis was done to ensure that the outcomes expected based on the pilot study were realized. That analysis was presented to the Energy Board and then City Council in early 2020 (February 11, 2020 Council Work Session ) and concluded (Attachment 1): The results after one year on TOD are consistent with the results from the pilot study for overall revenue, customer bill changes, energy use reduction and peak demand shifting . • 65% of residential accounts showed a decrease in annual electric bills compared to the prior rate structure. • Average monthly bill was $1.38 lower with TOD pricing. • Overall revenue collected for the residential class was lower by 2.3% on TOD. • Overall energy consumption was 1.9% lower, or 16,775 megawatt-hours (MWh), which also decreased wholesale electricity expenditures. • Reduced electricity use from TOD saved over 15,800 metric tons of carbon emissions, equivalent to 0.8% of the 2018 community carbon inventory. • Peak hours electricity use was 7.5% lower than in the previous year. TOD in 2020 (Year 2) Due to the unusual circumstances of 2020, there was a significant shift in energy consumption from commercial and industrial rate classes. This shift was largely due to COVID -19, and the ensuing economic downturn, making it very difficult to understand any impacts of the TOD rate structure in 2020 on residential customers. Higher summer temperatures and smoke from the Cameron Peak Fire also contributed to the complexity of trying to understand how TOD would have performed without the pandemic. With residents being encouraged to stay in their residence as much as possible throughout most of 2020, an increase in residential energy use was seen. Similarly, with many commercial businesses b eing partially or completely closed for periods of time a decrease in commercial energy use was realized. March 9, 2021 Page 4 2020 over 2019 Rate Class Energy Revenue Residential 4.1%8.0% TOD with Tier 5.2%13.1% All electric TOD -1.2%3.4% Commercial -7.6%-3.9% Industrial -3.5%-3.3% Total -1.8%2.5% This 4.1% year over year increase in residential electricity use far exceeds any expected fluctuation in the year over year change due to a TOD rate structure making it difficult to say much about TOD in 2020. Could the TOD rate structure have driven some of this year over year growth? With 90% of residential customers having a tiered charge for using any more energy than 700 kWh /mo. the TOD with a tier rate structure is intended to discourage increased use of electricity. Another reason to suspect that the rate structure did not drive this significant shift is that both Loveland, who has a flat residential rate, and Longmont, who has a 3 -tiered residential rate, saw a similar growth in residential consumption in 2020. Opportunities for Improvement Opportunity 1: Better understand the price differences between the two rates for individual customers While staff had recommended that all residential customers, whether gas-heat or all-electric, be billed on one TOD rate structure with an on-peak and off-peak charge, and without a tier, the final direction from City Council was to separate customers based on heating source into two rate classes. In rate design, each rate class is expected to cover their share of the operation, maintenance, and renewal costs of the utility through the applicable rate structure. Because the operation, maintenance, and renewal of the electric utility does not vary by the heating source of the residence, both rate classes have the same rate of recovery just through two different rate structures. The table below shows the individual components of each rate structure for 2021. March 9, 2021 Page 5 Tiered TOD All-electric TOD $ Difference % Difference Summer On-Peak May-September Monday-Friday 2-7 p.m. Off-Peak All other hours, weekends and major holidays Non-Summer On-Peak October-April Monday-Friday 5-9 p.m. Off-Peak All other hours, weekends and major holidays $0.2708 $0.0804 Fixed Charge Paid by all customers each month $8.59 $8.59 Tier Charge Additional charge for all kWh used in excess of 700 kWh in any month. $0.2326 $0.0804 No Charge $0.2624 $0.0719 $0.2242 $0.0719 $0.0246 -100.0% $0.00 $0.0084 $0.0084 $0.0085 ($0.0246) $0.0085 0.0% 3.2% 11.8% 3.7% 11.8% Aside from all residential customers paying the same fixed charge, there are a few differences between the two rate schedules. The first being that the on and off peak per kilowatt -hour charges are higher for the all-electric TOD. The second being that there is an additional rate component on the tiered TOD. Because both rate structures are intended to recover costs at the same rate in total, this additional rate component must be offset partially by lowering another rate component. Hence, the on and off peak per kilowatt -hour charges are higher for the all-electric TOD. The graph below compares the two rate structures to show that customers using less than 1,050 kWh per month are paying more on the all-electric TOD rate than they would under the TOD with a Tier rate for gas heated customers. The unintended price difference between the two residential rate classes has impacted those on the all - electric TOD rate using less than 1,050 kWh / mo. March 9, 2021 Page 6 Opportunity 2: Better understand energy use of the Income Qualified Assistance Program Recognizing that the cost burden of utilities can be daunting for customers with income significantly below the area median income, an Income Qualified Assistance Program was implemented when TOD began in 2018. The program provides a 23% discount on billed uti lity charges each month to those customers who are enrolled in the federal Low-income Energy Assistance Program (LEAP). This discount was established at a level so that the fraction of monthly income that goes toward utility costs, the utility cost burden , is the same as a residence with the area median income. The immediate benefit of such a program to those eligible is to lower their monthly utility costs. The benefits to the utility include reduced administrative costs and more targeted outreach and m arketing of energy efficiency programs. Another significant benefit to the utility is to have a subset of residential customers with a known income level identified to understand better how their energy usage may differ from other residential customers. If we look at those customers enrolled in IQAP who have gas -heated residences, we can see their usage patterns is very similar to all the other gas-heated customers on average throughout the year. However, our IQAP customers are using significantly less energy in the summer cooling season. This is consistent with expectations of residential energy use for gas heating and electric cooling. March 9, 2021 Page 7 If we look at those customers enrolled in IQAP who have all-electric residences, we can see there is a dis tinct difference in the usage patterns of these customers when compared to the other all-electric customers. The next two graphs highlight this difference in 2019 and 2020. This suggests that the intent of the all -electric rate, which is to recognize that all-electric customers typically consume more electricity than those in gas -heated residences, by not imposing a tier charge on these customers because of their higher -than-average consumption during the winter months. This intent may not be beneficial to IQAP customers on the all-electric rate, as their monthly usage is predominately below the 700 kWh threshold, even during the winter months. March 9, 2021 Page 8 In looking at the seasonal variability in electricity consumption we see that there is almost no seasonal variability for the IQAP residences. March 9, 2021 Page 9 Together this data suggests that the intent of the all -electric rate which is to recognize that these customers will typically consume more electricity than those in gas heated residences without imposing a tier on higher than average consumption may not be applicable or beneficial to a subset of the all - electric rate class. Opportunity 3: Better understand the impact on customers and what may be differentiating the all - electric rate class Knowing that at least the IQAP customers usage was different than expected in the all -electric rate and that the price differential impacted customers using less than 1,050 kWh / mo. led to more analysis. Most of the IQAP residential customers in all-electric residences are paying more on the all-electric rate. Next, we looked at it by housing type for these customers. The graph below shows this is consistent across housing type. The data labels are the number of customers in each category. The graph below shows the relative price difference for all residential customers on the all -electric rate. Similarly, to the IQAP customers, those in single family detached benefit the most with manufactured and multi -family housing being negatively impacted the most. March 9, 2021 Page 10 The unintended price difference between the two residential rate classes has impacted those on the all - electric TOD rate using less than 1,050 kWh / mo. Those residential customers in all -electric manufactured park or multi-family residences are being adversely impacted. Opportunity 4: Consider a TOD rate for Small / Medium Commercial Customers Large commercial and industrial customers have a coincident peak and a non-coincident peak demand component to their rate structure, where the coincident peak demand c harge captures the varying price of generation and transmission. Now with residential rate class also having a rate structure which reflects the variable cost of generation and transmission of electricity, only the small and medium commercial rate classes remain without a rate structure which captures this variability. Because these customers have an energy load profile that is more similar to residential customers than to large commercial and industrial customers, a rate structure similar to the resident ial TOD may be most appropriate for these customers, in contrast to a coincident peak rate, although a pilot study would allow more confidence in the expected benefits of providing a more accurate price signal to these rate classes. ATTACHMENTS 1. Work Session, February 11, 2020 (PDF) 2. Powerpoint Presentation (PDF) DATE: STAFF: February 11, 2020 Randy Reuscher, Utility Rate Analyst Lance Smith, Utilities Strategic Finance Director John Phelan, Energy Services Manager Lisa Rosintoski, Utilities Deputy Director, Customer Connections WORK SESSION ITEM City Council SUBJECT FOR DISCUSSION Residential Electric Time-of-Day (TOD) 12 Month Review. EXECUTIVE SUMMARY The purpose of this item is to share the detailed analysis , recommendations and outreach/feedback from the first 12 months of the Time-of-Day (TOD) residential electric rate structure, which was launched in October 2018. Pilot Study (2015-2016) While the pilot study confirmed that a switch to a TOD rate str ucture would achieve the goal of being revenue- neutral, the results also showed annual reductions in both the average residential electric bill (~2%) and overall energy consumption (2.5%). There was also evidence this rate structure would lower utility cos ts by shifting demand away from the on-peak hours. TOD One-Year Results (October 2018-October 2019) The results after one year on TOD are consistent with the results from the pilot study for overall revenue, customer bill changes, energy use reduction and peak demand shifting: •65% of residential accounts showed a decrease in annual electric bills compared to the prior rate structure. •Average monthly bill was $1.38 lower with TOD pricing. •Overall revenue collected for the residential class was low er by 2.3% on TOD. •Overall energy consumption was 1.9% lower, or 16,775 megawatt-hours (MWh), which also decreased wholesale electricity expenditures. •Reduced electricity use from TOD saved over 15,800 metric tons of carbon emissions, equivalent to 0.8% of the 2018 community carbon inventory. •On-peak hour electricity use was 7.5% lower than in the previous year. Staff also examined several methods to account for weather differences in pre- and post-TOD periods. The results show a weather-adjusted conservation effect for reductions in energy use between 3.5% and 5%. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED 1.Does Council need additional information or analysis from staff regarding Time-of-Day (TOD) pricing? BACKGROUND / DISCUSSION Why a TOD rate structure? The cost for electricity varies throughout the day, with higher costs incurred when demands on the system are the highest. Historically, limitations on metering capabilities required these higher costs to be averaged ou t over 24 hours across all residential customers; however, with the installation of advanced metering infrastructure (AMI) meters, it became possible to bill customers on a more equitable basis. COPYATTACHMENT 1 February 11, 2020 Page 2 The TOD on-peak hours were established by identifying when the system peaks occurred and averaging the associated costs over a narrower four- to five-hour window, (e.g., 2-7 p.m. in summer months and 5-9 p.m. in non-summer months), rather than the full day. This time-based rate structure provides a variety of be nefits, including: • More fair and equitable structure than tiered rates, as it passes through costs more accurately (e.g., when you use electricity is as important as how much you use). • Provides a time-based price signal to reduce system peak demands. • Provides customers with two ways to control their bills – by reducing how much electricity they use and/or by shifting when they use it. • Reduced peak demands increase load factors on the system, creating efficiencies and lower costs overall. • Better aligns system costs with when solar production occurs. • Overall reductions in energy consumption also lower greenhouse gas emissions. • Encourages use of electric vehicles. The following timeline highlights the history of TOD. Revenue The TOD rate structure was designed to be revenue-neutral, (in other words, collect the same amount of revenue as the prior rate structure), with all other factors being equal. However, in reality, factors do change, and the effects of energy conservation and shifting of electric use by residential customers from on-peak to off-peak hours lowered customer bills by $1.38 on average per month, reducing the overall revenue collected on TOD by approximately $1.2M. As expected, this also decreased the amount of energy purch ased, therefore the associated wholesale expenses also decreased by a comparable amount. The graph below shows that 65% of customers saved on TOD, while another 33% paid up to $5 more per month and the remaining 2% paid more than $5 more per month. COPY February 11, 2020 Page 3 Seasonal variations It is common for customers to have varying electric use patterns throughout the year/season, which means bill impacts also will vary. Some customers may experience lower bills during the summer months and higher bills during the non-summer months, or vice versa. Typically, seasonal variations are based on the types of appliances that are used (as well as how they are used), especially appliances used for heating and cooling. Examples of seasonal differences and bill impacts: • The use of air conditioning (AC) is a primary driver behind system peaks and costs. If customer s use their AC regularly during the on-peak hours, they may experience higher summer bills. • A solar customer may have higher bills during non-summer months due to the lower correlation between when solar production occurs and when they use the most electricity. However, a higher customer credit is given during the summer months, which often offsets impacts on an annual basis. The following graph shows the seasonal distribution of cost differences for a sample of solar customers. • There tends to be variability in bills during the winter months for customers in all -electric homes, depending on when they heat their homes. A large portion of heating occurs overnight and in the morning COPY February 11, 2020 Page 4 hours, when electricity is cheaper, which provides a substantial opportunity to reduce bills with minor changes. o Generally, all-electric homes do not have air conditioning, which means their summer bills are likely lower (unless they install window air conditioning or have other demands for electricity during the on-peak hours). Recognizing these seasonal variations, and because revenue requirements for the utility are set on an annual basis, it is important to analyze revenue impacts across a full 12 months. The graph below summarizes average bill impacts (compared to the pilot study) based on varying types of customers. • Roughly 89% of customers live in gas-heated homes and are on the standard TOD rate with a tiered component for electric use over 700 kWh/month. These customers had an average savings of $1.26/month. • Approximately 9% of customers live in all-electric homes and are on a TOD rate without a tier. On average, this group saved $3.51/month. • Additionally, 2% of our customers have rooftop solar systems and had an average bill increase of $2.94/month. In order to fully understand the impacts related to the TOD transition, other changes that occurred during this timeframe also need to be identified, including: 1. Expanding the summer season from three months (previously June -August) to five months (now May- September), as May and September peak demand hours align more closely to the summer season. 2. A 5% rate increase for the electric fund went into effect January 1, 2019. 3. Other utility programs also have contributed to energy conservation or peak -shifting, such as the Peak Partners Electric Water Heater Control Program. a. This program has seen success with 1,936 water heater controllers in place. Custome rs can choose between three options: basic, default or aggressive settings, depending on how many hours within the on-peak period they want their water heater to be scaled back. On an annual basis, these customers shifted ~400 MWh of energy from the on -peak hours to the off- peak hours, with an estimated annual average savings of $48 per customer. The following graphs show the distribution of bill impacts based on customer type (e.g., gas vs. all-electric heat; solar installation; or participant in the In come-Qualified Assistance Program (IQAP) or Medical Assistance Program (MAP). COPY February 11, 2020 Page 5 Note – this analysis only includes customers who lived at the same premise for the full 12-month period. This first graph shows residential customers living in gas-heated homes. This group is subject to am additional tiered charge for electric use 700 kWh/month. • Roughly 2/3 saved on TOD, while the other 1/3 paid more. The overall average savings equated to $1.26/month. The following graph shows residential customers who live in all-electric heated homes. These customers do not have an additional tiered charge for use over 700 kWh. • Roughly 2/3 of these customers saved on TOD, while the other 1/3 paid more. The overall average savings equated to $3.51/month. Note, the below represents two types of customers: those previously on the residential demand (RD) rate, who paid $2.21/month more (on average) and those previously on a tiered rate, who paid $4.60/month less (on average). COPY February 11, 2020 Page 6 The following graph shows residential customers who have gas heat and solar installed on their rooftop. • Roughly 24% saved on TOD, while the other 76% paid more. • The overall average bill difference equated to $2.94/month more per customer, largely due to solar generation not directly aligning with when customers use electricity (especially during the non -summer months when it is dark during the on-peak hours of 5-9 p.m.). Because TOD aligns with the time-based costs more accurately than the previous rate, customers do not receive as much in credits for their solar generation during the non - summer months. • Additional analysis is pending that will enable separating the behavioral impacts of the TOD pricing from the changes in solar generation value from the TOD structure. The following graph shows residential customers with all-electric homes and solar installed on their rooftop. COPY February 11, 2020 Page 7 • Roughly 86% of customers saved on TOD, while the other 14% paid more. • The overall average bill difference equated to $6.31/month less per customer. Most of these customers were on the tiered rate prior to TOD and are now seeing bill reductions by avoiding the higher tier 3 charges traditionally associated with all-electric homes. The following graph pertains to customer who are part of the Income-Qualified Assistance Program (IQAP), which also rolled out in October 2018 in conjunction with TOD. • There are over 620 customers enrolled, and with the IQAP discount, they saved an average of 21.7% on their electricity bill. By isolating only the change in rate structure to TOD, and not including the 23% IQAP discount on components of their electric bill, these customers saved $1.09/month. By adding in the 23% IQAP discount, the following graph shows the total benefit received per month is $14.05/month per customer, with 100% of customers seeing a reduction in their overall bill. COPY February 11, 2020 Page 8 There are three separate medical rates offered to customers through the Medical Assistance Program (MAP). These include a rate for customers w ith durable medical equipment (DME), those with specific medical needs requiring air conditioning (AC) and a combination of the DME and AC rates. These rates have been in place since 2012, with revisions to a TOD rate structure in October 2018, and have d iscounts applied to varying components/seasons, depending on the MAP rate. • There are approximately 200 customers on all three rates combined, and the graph below shows a nearly 50/50 split between those who saved on TOD vs. those who paid more, with an overall average savings of $1.40/month per customer. Energy Conservation The 2015-2016 pilot study showed a reduction in energy consumption by 2.5% for both TOD rate structures. One of the challenges with having all residential customers on TOD i s there is no longer a separate control group to measure conservation results against, which the pilot study provided. COPY February 11, 2020 Page 9 There are various measures to look at to help understand if conservation occurred. At the highest level, total consumption for the 12-month period on TOD can be compared to the prior 12 -month period on the previous rate structures. These results showed a 1.9% decrease in overall residential consumption. More importantly, weather-normalizing the data is necessary to fully understand the impacts of the transition to TOD. Temperatures largely drive customer behavior (e.g., energy consumption), which can result in significant variations from year-to-year due to a customer’s heating and cooling requirements within their home. These weather impacts are isolated to further understand how much conservation is related to the rate structure itself and how much is related to changing temperatures. Heating and cooling degree days by month are shown in the following graph, with a baseline of 65 - degrees. The month of May is called out as an example because May 2019 had a total of 421 degree days, more than twice that of May 2018, which had a total of 200 degree days. The cooler month in 2019 meant more heating needs within the home, and little to no air conditioning needs, which not typical for May. To isolate the impact of weather from the impact of the change in rate structure, Utilities’ staff examined several methodologies. • One process that is traditionally used for this purpose iden tifies the minimum month of each year for each premise. It then calculates the use above that minimum (base), and only applies the weather normalization to that portion, before adding it back to the base. The theory is that taking the monthly total for the minimum month (typically a shoulder month), gives you their non -seasonal use. By only applying the weather-normalization to the usage above that minimum, only the seasonal usage is being normalized (the portion that is dependent on weather). Shoulder mont hs typically include both some heating & cooling, and the seasonal use includes other things (like increased lighting hours in winter), but in general, it’s more accurate than just normalizing the total. After weather-normalizing the annual data using this method, the results showed a 5.1% decrease in overall residential consumption. COPY February 11, 2020 Page 10 Additionally, the average daily load curve for a summer peak day is represented in the graph below, comparing the peak day in 2018 to the peak day in 2019, which represent s a reduction in consumption during on-peak hours. • Alternatively, staff collaborated with the Energy Institute at Colorado State University (CSU) to analyze the impacts of TOD and how weather impacts customer behavior and consumption. A model was developed which uses an hourly time-matching methodology to compare consumption before and after TOD rates were implemented in October 2018. This method showed a 3.7% reduction in overall residential consumption over the course of the 12 months, with some seasonal differences where the summer months showed a greater reduction than the non-summer months, as shown in the graph below. This data is based on roughly 1/3 of all residential customers, who had electric history going back nearly five years, in order to establish the algorithm used to produce statistically significant results. The graph below highlights the seasonal energy reductions measured with this method, as well as the combined annual reduction. COPY February 11, 2020 Page 11 Electric Vehicles (EV) One of the benefits of a TOD rate is that it encourages the charging of EVs during off -peak hours, when the price for electricity is lower. In doing so, electric vehicles can help increase load factors on the system and use resources in a more efficient manner by drawing energy from the grid during the overnight hours. EV consumption can be easily shifted away from on-peak hours by programming vehicles to charge during the lower - priced, off-peak hours. The graphs below show data from a Platte River Power Authority (PRPA) pilot related to EV charging within Fort Collins, as well as Loveland and Longmont. Highlighted are the summer on-peak hours of 2-7 pm. From these graphs one can conclude that having a time-based TOD rate in place encourages customers to charge during off- peak hours, with the benefit of a lower rate, as consumption during these hours is minimal in Fort Collins compared with the other cities.     COPY February 11, 2020 Page 12 CITY FINANCIAL IMPACTS The TOD rate structure was designed to be revenue neutral and any reduc tions due to conservation efforts or demand shifting would be offset by lower wholesale expenses. PUBLIC OUTREACH Fort Collins Utilities transitioned to mandatory TOD pricing for all residential customers in October 2018. The transition to TOD was not a rate increase, but rather a rate structure change, which staff knew would require a thorough outreach campaign that would resonate with customers from diverse sectors and demographics, including low-income and Spanish-speaking residents. Prior to the launch of TOD and throughout 2019, we developed and implemented a community -wide communication, outreach and engagement campaign to inform and educate residents about the new rate structure, when it was going to occur and how they could find more inform ation. One of our goals was to provide tips and tools to help customers learn ways to better control their electric bills by shifting their electric use to the lower-priced, off-peak hours or by reducing their overall use. It was also important to us to provide opportunities for questions to be answered regarding individual bill impacts and for those interested in learning more about why we were moving to a time-based rate. Staff encouraged customer feedback, questions, and two-way conversations via social media, website interaction, printed material, phone calls and in-person discussions. We worked with our Customer Service Representatives to ensure they were equipped to field customer questions, provide rate comparison reports and transfer calls to subject matter experts within Utilities who could assist with more in -depth questions. Our Community Engagement team provided presentations and staffed booths at as many events as we could fit in, as well as to HOAs and other organizations (e.g., EV groups, bo ards, etc.) upon request – which we will continue throughout 2020 and beyond. Staff also recognized the importance of educating internal employees, many of whom receive their electric service from Utilities, as another important strategy to help them be better equipped to answer questions from friends and neighbors. We hosted internal Lunch and Learn sessions, utilized our internal newsletters and email systems to keep employees as up to date as possible. Staff provided a variety of tools and methods to increase awareness about on-peak hours and prices and savings opportunities. We used icons to demonstrate the variety of appliances and electronics that customers use daily, with an emphasis on those that use the most electricity and tips for shifting use to off-peak times. Specific tools included clings to place on household appliances and electronics as reminders of the on -peak hours and savings opportunities; 12-month bill comparisons of TOD to their previous tiered rate; 1-month bill estimates on TOD pricing; and handouts with cost-specific details regarding the electric use of household appliances and electronics (more detail is included below). Staff also provided a variety of visuals showing the on-peak and off-peak hours and associated costs, including clocks and bar charts featured below. COPY February 11, 2020 Page 13 Staff learned many residents preferred the bar charts (shown above), which show the full 24 hours of the day and not just 12 hours as shown in a clock. The bar charts helped customers un derstand the cost differences and better see the off-peak hours during which they could save. In addition to the graphics above, the following tools, resources and programs were available to customers: • 1-month online estimator (plug and play online estimator for customers to see their monthly use and related costs for a particular month – still online) • 12-month bill comparison report (compared 12 months of the previous tiered rate to what that same electric use would cost with TOD pricing – was phased out in January 2020) o This tool helped remove some uncertainty and fear customers may have had and also demonstrated how TOD pricing would impact them using their own electric use and data. • Take Control of Your Electric Bill: Know What it Costs to Use an Appliance for One Hour (cost comparison handout) o This was our most well-received tool for helping customers learn which appliances use the most electricity, where they could prioritize shifting their use, and most importantly, helped combat the myth that they could not prepare dinner after work or watch TV. o This piece shows the biggest users/savers and has been shared with numerous other communities as a positive tool. • In-depth, room-by-room spreadsheet (electric use for those who want more detail) • Non-adhesive clings highlighting the various seasonal on-peak hours that can be placed near higher energy- using appliances. • Numerous printed and direct mail pieces, including letters, bill inserts and postcards. • Interactive presentations and activities were developed by our education team and serve as a helpful tool at community meetings throughout the city. Residents can request a presentation at fcgov.com/utilities/presentations/. COPY February 11, 2020 Page 14 • Seasonal video clips, like the below screenshot that were used online and via social media. • Citywide SHIFT Campaign partnership (ongoing). Also a priority was reaching underserved audiences. The Income-Qualified Assistance Program (IQAP) was created to provide direct assistance and education to low -income residents. Through IQAP, participants receive 23% off their monthly utility bill. Enro lled participants (~700) receive a newsletter each month to learn about utility topics and easy tips to save money, energy and water. The average open rate for the newsletter in 2019 was 46% (industry average is ~29%). Translating much of the TOD material listed above, as well as the development and translation of IQAP material, also helped us reach Spanish-speaking customers. Another important tool was social media which provided the opportunity for questions to be answered and two-way conversations. • Content has been posted using three strategies: o Awareness/announcement of TOD and seasonal changes – using animations and icons COPY February 11, 2020 Page 15 2. Off-peak prices on major holidays 3. Customer profiles to highlight actual experiences through storytelling • During the introductory phase, we had to work through the initial fear of customers thinking their bill would double or triple. o Online calculators and bill estimators helped provide a tool for customers to see what their bills were estimated to be and alleviated their concerns. o Directed customers to our subject matter experts for more information, which also helped alleviate concerns. • 2019 brought more customer understanding. o Overall feedback was neutral, and all direct questions were answered with factual and educational information, even those that were negative. o Customer profiles (storytelling) approach worked well and did not receive any negative feedback Lessons Learned, Ongoing Opportunities and Benefits Rate changes are complicated. Working through the myths and rumors, especially in this era of social media, presented challenges. Public assumption was that the rate change meant a rate increase—even though this was not the case. To respond to these challenges, we developed a better policy of when to react (direct questions) and when not to engage. We’ve learned it’s important to focus on the off-peak hours that have a lower price, including weekends and major holidays, as opposed to when the price was higher, which seems to resonate b etter with customers. Staff developed the 80/20 triangle graphic to help convey this message visually and has received positive feedback from it. Knowing that most customers use over 80% of their electricity during the off -peak hours provided awareness that they may have a less expensive electric bill than with the previous tiered system. Opportunities • Utility bill education (especially as new utility bill rolls out with bar chart showing residents their on - and off- peak electric use will provide for better data) • More outreach/education regarding how customers can monitor their use (previously known as ‘Monitor My Use’, which will also be changing with the new billing system; still TBD) and utilize technology to help them save money. • Additional segmented outreach – all-electric homes, tech-savvy groups, low-income, EV drivers, etc. COPY February 11, 2020 Page 16 • Continue working with the graphics department on tools and resour ces, including an interactive energy- efficiency house, additional infographics and videos. • Continued community engagement and education through event attendance, presentations, etc. • Continue enhancing presentation to share ways to shift and reduce electr ic use and provide further understanding of the ‘why’ TOD. Since the launch of TOD, we have served as a resource to many other communities that are implementing similar rates, have spoken at various conferences and recently received the 3CMA Silver Circle Award for Communication and Marketing plans. Staff’s communication and education efforts are ongoing, continually being refined and aligned to best answer customer questions and provide tools and resources that meet their needs. As a side benefit to our outreach, more residents are now aware of their rates overall and the ongoing benefits Fort Collins Utilities provides through its reliable and high-quality services. We will continue to build on this awareness, as well. Customer Care and Technology - Customer Service Feedback Out of 70,000 electric customers, Customer Service Representatives (CSRs) received calls and emails from approximately 2% of the community (less than 1,500 calls and emails). Talking with customers provided an opportunity to better inform and educate the caller about why TOD was being implemented and help them understand how it would impact them personally. After interacting with CSRs, most customers walked away with a better understanding. Now, most inquiries are about gener al information and no longer escalated due to TOD concerns. Leading up to TOD, staff received several angry emails from customers. However, after the TOD rate went into effect, email feedback became more positive as customers realized their bills were not substantially increasing as they originally perceived. Differences between the all-electric rate and standard rate with the 700 kWh tier caused confusion and irritation from some customers, though speaking with CSR or Rate Analyst staff provided cu stomers with a better understanding of the reasoning and opportunities in managing TOD based on the customers usage. Program Statistics Reaching as many of our residential community as possible meant using every outreach tactic, including ongoing community engagement and event participation. COPY February 11, 2020 Page 17 Tactic/Outreach (Appx. Results) Contacts CSR Phone Inquiries 1,313 CSR Email (Incoming) 160 In-Person 100 Marketing Email (Outgoing) 1,088 Website Visits (Overall) 50,364 1-Month Comparison Tool (Page Views) 3,367 12-Month Estimator Tool Report Requests 712 Social Media Impressions (All Platforms, Aug. 2018 - present) 26,375 Citizen Requests via Mayor/Council/City Manager 42 Presentations/Events 1,755 Media Inquiries/Stories/Requests 17 Postcards (August 2018 and April 2019) 136,000 Letters (October 2018) 136,000 Bill Inserts (September 2018 and April 2019) 98,000 ATTACHMENTS 1. Powerpoint presentation (PDF) COPY March 9, 2021Time of Day Rate Structure ReviewLance Smith, Utility Finance DirectorATTACHMENT 2 1. If and if so, how to address the price differential between the two Time of Day rate classes?2. Are there any other requests of staff at this time concerning the residential Time of Day rate?3. Would you like staff to explore a Time of Day rate for small commercial customers?2Questions for City CouncilATTACHMENT 2 Time of Day Pricing•On-peak hours:Monday-Friday•Off-peak hours: Weekends and major holidays26.24¢ / kWhATTACHMENT 2 Time of Day Timeline42014-2015Council Decision2015-2016Pilot StudyDEC. 2016Results shared with Energy Board and City CouncilNOV. 2017Adopted by City CouncilOCT. 2018TOD Launch2011-2013AMI ImplementationJAN. 20201 Year ReviewATTACHMENT 2 FAIR & EQUITABLE STRUCTUREMORE CUSTOMER CONTROLLOWER WHOLESALE COSTSELECTRIC VEHICLE FRIENDLYENERGY & CARBON SAVINGSWhy Time of Day?ATTACHMENT 2 Utility Rate Purpose and Design6Purpose of Rates:• Sufficient revenue to meet expensesPurpose of Rate Classes:• Differentiate customers into groups• More equitable cost recoveryRate Design Objectives:• Comprehensible• Empowering• Implementable$/kWhEnergy (kWh)TOD w/Tier RateATTACHMENT 2 Residential Rate Classes7Gas heated residences• 90% of residential customers• TOD with a TierElectric heated residences• 10% of residential customers• TOD all-electric$/kWhEnergy (kWh)TOD w/Tier RateATTACHMENT 2 Benefits to Customers8Are residential customers still realizing the expected benefits of the TOD rate structure?Pilot 2019 2020Customer Bill Savings *     Gas Heated (TOD w/ Tier)$1.38 $1.26 $1.43     Electric Heated (TOD only)$2.58 $3.51 $4.68* Compared to what they would have paid escalating the previous   3 tiered rate structure forward.ATTACHMENT 2 All-electric IQAP Customers9ATTACHMENT 2 10ATTACHMENT 2 Monthly Impact by Housing Type11ATTACHMENT 2 Potential Solutions12How could we address the unintended price differential between the two TOD rate structures?Allow customers not in single family housing to move off of the all-electric rate – it will benefit them if they are using less than 1050 kWh? Have the revenue from the tiered charge spread across the all-electric heated customers too?Have just one rate structure for all residential customers????ATTACHMENT 2 13Customer Outreach• Fcgov.com/TOD• Website visits per month• customer calls and emails • SARs• How to read my bill• How to save on TOD• Rate information for all-electric homes, gas heated homes, solar homes ATTACHMENT 2 1. If and if so, how to address the price differential between the two Time of Day rate classes?2. Are there any other requests of staff at this time concerning the residential Time of Day rate?3. Would you like staff to explore a Time of Day rate for small commercial customers?14Questions for City CouncilATTACHMENT 2 Thank you15ATTACHMENT 2 2020 Shift in Energy Use162020 over 2019Rate Class Energy RevenueResidential4.1%8.0%    TOD with Tier5.2%13.1%    All electric TOD‐1.2%3.4%Commercial‐7.6%‐3.9%Industrial‐3.5%‐3.3%Total‐1.8%2.5%ATTACHMENT 2 Residential Time-of-Day PricingLisa RosintoskiMarch 9, 2021ATTACHMENT 2 TOD Metrics since Launch1801,0002,0003,0004,0005,0006,0007,000Unique Webpage VisitsSEASONAL PRICE CHANGESSEASONAL PRICE CHANGESTOD LAUNCHTOD LAUNCHATTACHMENT 2 TOD Metrics since Launch19050100150200InquiriesPhone CallsEmailsSARs/Access Fort Collins RequestsTOD LAUNCHTOD LAUNCH2019 RATE INCREASE2019 RATE INCREASEATTACHMENT 2 What Have We Heard?201,300+ Calls250+ Emails68,000+ Web Visits46,600+ impressions~60 Service Area Requests (SARS)5,000+ Estimator Tool Uses25+ On-Camera or Print StoriesATTACHMENT 2 Communication Strategy: Launch21ATTACHMENT 2 Communication Strategy: Evolution22ATTACHMENT 2 Payment Assistance Fund(One-Time Assistance)Utilities Affordability Programs (UAP)23Colorado Affordable Residential Energy (Deep Retrofits)Income-Qualified AssistanceProgram (Discounted Rate)Medical Assistance Program (Discounted Rate)LCCC Water and Energy Program(Basic Retrofits)ATTACHMENT 2