HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 05/13/2014 - TIME OF USE PILOT PROJECT FOR ELECTRIC RATESDATE:
STAFF:
May 13, 2014
Lance Smith, Strategic Financial Planning Manager
WORK SESSION ITEM
City Council
SUBJECT FOR DISCUSSION
Time of Use Pilot Project for Electric Rates.
EXECUTIVE SUMMARY
The purpose of this work session is to provide City Council with several rate structures that are now possible for
implementation from a metering and billing perspective (note - the tiered time-of-use (TOU), the TOU with
surcharge rate, and Coincident Peak rate structures are not currently supported by Web Portal) given the
successful deployment of advanced metering infrastructure for all residential electric customers. In December
2013, City Council held a work session discussing the impacts and effectiveness of the seasonal, tiered rate
structure that was implemented in February 2012. Based on the Council discussion at that meeting, and previous
interest expressed by some Councilmembers to consider a time-of-use (TOU) rate structure, this work session
discussion is intended to understand the current level of interest by the City Council to consider alternative rate
structures in the near future. Based on the direction given here, a pilot program could be presented for City
Council consideration some time later in 2014, with the intention of evaluating the pilot through the summer of
2015, and possible full-scale residential implementation for 2016.
If the City Council is interested in considering any of these rate structures, staff recommends that a pilot study be
completed before any full-scale implementation. The pilot study is intended to resolve any unforeseen technical
issues around the new rate structure, to quantify the customer response to the new rate structure and to assess
customer interest in a different rate structure over the current tiered, inclining block rate structure.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
1. Does the Council want to consider any of the rate structures presented here for future deployment?
2. If so, does the Council support implementing a pilot study to assess the proposed rate structure?
BACKGROUND / DISCUSSION
Prior to the deployment of the advanced metering infrastructure (AMI), there were limitations on the types of rate
structures that could be implemented due to the restrictions of the existing electro-mechanical meters. In
December 2011, Council adopted a three-tiered inclining block rate structure as a means of providing a
conservation price signal to residential customers. This was approved by Council with the understanding that the
AMI would allow additional rate structures to be considered in the future. Discussion at the December 10, 2013
City Council Work Session on the Impacts of Tiered Rates reinforced this understanding that Council would like to
consider alternative rate structures. The purpose of the May 13, 2014 City Council Work Session is to suggest
alternative rate structures that may be appropriate for residential customers and to seek direction from the City
Council on pursuing any of these rate structures for a pilot study in 2015.
Before discussing the potential rate structures, it may be helpful to outline the components of the residential rates
and the wholesale costs charged by Platte River Power Authority (PRPA) for the electricity generation and
transmission. The residential rates include a base charge, which is designed to cover the cost of metering, billing
and payment processing only. In addition to the fixed base charge, there are variable charges for the cost of
providing the distribution system infrastructure, called the distribution facilities charge, and an energy charge
which recovers the wholesale charges from PRPA for the electricity generation and transmission. The base
charge and the distribution facilities charges would be the same for all of the rate structures outlined below and
May 13, 2014 Page 2
are not discussed further here.
The wholesale charges from PRPA consist of a demand charge and an energy charge. Both of these charges
are variable, with the demand charge being based on each City’s contribution to the PRPA system coincident
peak hour and the energy charge being a flat charge per kilowatt-hour of energy consumed. The demand charge
represents 30% of the monthly charges and the energy charge the remaining 70%. For the residential rate class
these two charges are combined and covered through the energy charge. It is this energy charge that is being
considered in the rate structures below.
It should also be noted that beginning in 2012, PRPA began adjusting its wholesale energy and demand charges
seasonally. This seasonality is continued through to the retail rates and would apply to all of the rate structures
below.
Possible Rate Structures
See Attachment 2, slide 1 - Graphs - Potential Rate Structures
The following six rate structures will be presented for consideration:
1. Flat rate structure - This rate structure is similar to the rate structure that had been in place for residential
customers prior to the adoption of the tiered rates in 2012. In this rate structure the energy charge is flat
regardless of how much energy is consumed each month.
A flat rate is very easy for customers to understand and intuitively estimate their monthly electric bill, but
provides less of a conservation price signal than tiered rates.
2. Tiered rate structure - This is the current rate structure for most residential customers. This rate structure is
characterized by the increasing energy charge as monthly energy consumption increases in a stepped or
tiered fashion.
Because the rates are designed so that each rate class covers the full cost of serving that rate class, this rate
structure results in customers who use less than 750 kWh paying less than the full cost of serving them and
those that use more than 750 kWh to pay more than the cost of serving them.
The analysis presented at the December 2013 Work Session did show this structure to be modestly effective
at reducing electric consumption amongst the fourth quartile of customers who use the most electricity during
the 3 months of summer. However, it appeared to be ineffective at reducing consumption amongst the other
75% of the residential customers, which is where most of system-wide energy is consumed. Because
customers have not had a means of determining where their use has been month-to-date before the web
portal is launched, this rate structure has created some bill anxiety.
3. Time-of-use rate structure - This rate structure would consist of an energy charge with each hour of the day
being considered either on-peak or off-peak. The energy charge for all energy consumed during the off-peak
hours would be considerably less than the energy charge during the on-peak hours. On-peak hours would be
from 2 pm until 7 pm Monday through Friday (excluding the major national holidays) for the months of May
through September and from 5 pm until 9 pm Monday through Friday for the remaining months of the year.
Because PRPA collects almost one-third of its operating revenue through the demand charge, which is
determined by a single coincident peak hour for the month for the whole PRPA system, and the on-peak
hours have been chosen to contain almost all hours where demand is within 5% of the coincident peak
demand, it is appropriate to collect the entire demand charge for the residential rate class during the on-peak
hours of a TOU rate. By doing so, the ratio of the on-peak to off-peak energy charges will be approximately
3.3 to 1 for both seasons.
This rate structure is commonly used to encourage load shifting from peak hours to off-peak hours at electric
utilities with little excess capacity as a cost-effective way to defer the large capital investment of adding
peaking generation capacity. However, PRPA currently has such sufficient excess capacity that there is little
direct benefit from deferred capital investment for additional plant capacity. Given that Fort Collins Light &
May 13, 2014 Page 3
Power acquires all of its non-distributed generation energy from PRPA and PRPA has a rate structure with a
coincident peak demand component, the TOU rate structure does provide a more accurate and directly
connected price signal to residential customers than a flat or tiered rate structure provides.
Unlike the tiered rate structure, this rate structure provides a price signal with a potential conservation
incentive applied to all customers equally for several hours each weekday throughout the month.
4. Tiered time-of-use rate structure - This rate structure is a combination of the two previous rate structures. It
consists of on-peak and off-peak defined periods just as the TOU rate, and has an additional dimension of
having each period’s rate being tiered based on the total monthly energy consumption.
While being a combination of the two previous rate structures could be a good compromise, this rate structure
will negatively affect those customers who are not able to shift their load from on-peak to off-peak as easily as
other customers. Additionally, the complexity of this rate and uncertainty for customers to understand where
their monthly use falls within the tiers will impact their ability respond to effectively to the price signals, and
significantly expand the numbers of lines on the customer’s bill, where space is already becoming an issue,
as well as .
The web portal cannot fully support this rate structure at this time.
5. Coincident peak rate structure - This rate structure most closely aligns with the wholesale rate structure of
PRPA with the demand charge being collected based on household demand for the single coincident peak
hour of each month. For all other hours of the month the rate structure would be a flat rate structure.
Although a coincident peak rate is already used by Fort Collins Utilities for large commercial customers, which
is frequently seen in the electric industry because of more consistent use patterns, this is not a rate that is
usually applied to the residential class. Even though this would tie exactly to how PRPA bills on the
wholesale side, this would create extremely volatile charges month-to-month for a residential customer
depending on their energy consumption during a single hour each month. While it may help reduce the peak,
it provides a weak energy conservation signal.
The web portal cannot fully support this rate structure at this time.
6. Time-of-use with tiered surcharge rate structure - This rate structure is similar to the time-of-use rate
structure, with an additional surcharge based on the customer’s total monthly consumption. Low energy
users would see no additional monthly charge beyond the TOU rate, while the larger consumers of energy
would incur a surcharge per kWh based on their total consumption. The TOU on-peak/off-peak rate structure
would be designed to cover all operating costs and the tiered surcharge could be used to fund energy
conservation and efficiency programs and projects.
The TOU portion of this rate is considered equitable for customers and the surcharge may be justifiable in that
higher consumption customers could benefit more from the energy conservation and efficiency programs
provided by the Utility than lower consumption customers. But, like the standard tiered rate, higher
consumption in a household in this case still does not take in to account the number of people in a house and
how efficiently they may be using energy on a per person basis. It does provide a more consistent
conservation signal to all customers throughout the month with an additional incentive to conserve for those
with higher monthly use.
The web portal cannot fully support this rate structure at this time.
Summary of Pros and Cons of each Rate Structure
See Attachment 2, slide 2 - Pros and Cons - for a table with pros and cons of each rate structure outlined.
In evaluating different rate structures there are a number of objectives to consider. Objectives like equity,
simplicity, revenue stability, customer agility, ease of implementation, conservation incentive, affordability, and bill
stability should all be considered in developing a new rate structure. Any new rate structure then needs to be
May 13, 2014 Page 4
compared to the existing rate structure along with other rate structures to determine which rate structure most
closely aligns with the community objectives for rates.
Staff Recommendation of Rate Structure
Considering all information provided, Staff recommends implementing a time-of-use rate structure (option 3,
above), which is believed to be the most cost-of-service based rate among the options. It provides fairness and
cost equity within the residential customer class that ties to wholesale costs. While Staff does consider the
primary reason to move to a TOU rate to be rate equity, and not driven by expected peak reductions and energy
conservation, it is believed that peak reductions and energy conservation will occur to some degree. This takes in
to consideration that 100% of customers will be impacted by the higher on-peak charge on TOU, while less than
18% of customers are impacted by a higher Tier 3 charge on tiered rates. A TOU rate will also allow customers to
reduce their bill in two ways - by reducing consumption and adjusting when they consume, which will contribute to
a more efficient use of electricity system-wide.
Staff Proposal of Pilot Study
Staff recommends a pilot study be done beginning in late 2014 or early 2015 and continue throughout 2015 on a
TOU rate structure. The design of the pilot study is intended to be an “opt-out” study where 1000-1500 residential
customers are randomly selected to participate in the program. The pilot study is necessary to ensure that
customer response to the new rate structure is understood so that sufficient revenue is collected even with some
anticipated additional energy conservation. These customers would have to respond in writing if they did not
want to participate in the study. An opt-out approach would more appropriately represent potentially moving to a
new default rate in the future, help ensure greater participation during the pilot study period, and has a
significantly smaller outreach and customer impact for the pilot study sample selection.
Alternatively, an “opt-in” pilot study could be done but this could involve a selection bias as those consuming the
most energy may decide to “opt-in” and others may not.
Staff is considering revenue protection provided to the participating customers in the pilot study in the form of a
“best bill guarantee”. If the customer remains in the study for the entire predefined time period, the customer
would be refunded at the end of the study period any overage they paid on the pilot study rate as compared to the
current tiered rate.
Could we give residential customers the option of being on a tiered or a time-of-use rate structure?
It is technically possible to do so, however, Staff does not recommend it for the following reason. Any time
customers are given a choice between two rate structures the rational choice is to go with the rate structure which
minimizes their utility costs. This selection bias reduces the effectiveness of any financial conservation incentives
by first allowing the customer to choose a rate structure which will minimize their costs without changing any
consumptive behavior.
Have any credible concerns been raised concerning the effectiveness of Inverted Block Rate (IBR) in
achieving conservation goals?
Yes, a recent proposal by Pacific Gas & Electric addressing IBRs in California, where they have been in use for
some time, raised concerns about their conservation effectiveness.
“Proponents of steeply inclining tiered rates often tout their ability, compared to flatter structures (or
even to completely flat rates with a single volumetric charge) to encourage conservation by providing
very high price signals in the upper tiers. In other words, proponents focus on the ability of the high
upper-tier rates to incent households consuming in those tiers to consume. But this ignores the fact
that setting higher than average cost upper-tier rates means that, correspondingly, the lower tier rates
are then set lower than average cost (since otherwise revenue over-collection would occur). Thus,
while upper-tier consuming households have a greater incentive to conserve, lower-tier consuming
ones have a lesser incentive to do so-and it is in the lower tiers where the vast majority of the
consumption occurs (slightly more than two-thirds for PG&E).” Pacific Gas & Electric Company (Feb
May 13, 2014 Page 5
28,2014)- Long-term Residential Electric Rate Design Reform Proposal, Phase 1, Prepared
Testimony - Rulemaking “12-06-013”
PG & E is looking at offering a non-tiered TOU rate schedule, as opposed to a tiered TOU rate because a non-
tiered TOU option provides more accurate price signals and is easier for the customers to understand, while
encouraging customers to reduce loads during peak times.
Triple Bottom Line Analysis -
See Attachment 3 - Triple Bottom line Analysis Summary
A triple bottom line analysis was completed by a team of City staff to further understand the social, economic, and
environmental impacts of a TOU pilot study. The map is attached. The focus when filling out the map was on
offering a seasonal, flat on-peak, off-peak TOU rate structure to residential customers. From a rate-making
perspective, TOU rates are believed to be a more fair and equitable rate for customers than a flat or tiered rate as
TOU rates help reduce some of the cross subsidies that occur due to a wholesale time-based demand charge.
Some of the strengths are believed to be energy conservation at some level, empowering customers in their
decision-making as to when they consume energy, and possibly promoting electric vehicles and encouraging
solar production. While TOU rates are designed to be revenue neutral, as with any rate, it will have positive and
negative impacts on individual customers. There may be pushback from customers related to how it impacts
them as well as increased education will be needed to inform customers of any new rate structure. A TOU rate
structure does incentivize customers to use electricity during off-peak times, which may reduce peak loads, and
encourage conservation each month, in particular through reductions in air conditioning load during the summer
months when PRPA’s system reaches its overall peak. Some of the potential threats of a TOU rate, although
seen as unlikely, include a significant shift in residential usage that could impact the commercial class negatively,
as well as any future wholesale rate structure changes that may occur related to the energy and demand
proportional mix of consumption and billing structure charged to the four PRPA cities.
Financial Impacts of Programs
Any new rate structure would be designed to be revenue neutral for the residential rate class. Regardless of how
the residential rate class is charged for its portion of the overall cost of service, the total revenue required from the
residential rate class is determined independent of the rate structure for the rate class. While a shift from one rate
structure to another may be designed to be revenue neutral at the rate class level there may still be costs shifted
among customers within the rate class. For example, the tiered rate structure currently in place allows those
customers who use less than the average amount of electricity each month to pay less than the full cost of
providing that electricity to them by requiring those customers who use more than the average amount of
electricity to pay more than the full cost of providing their electricity to them. Any move away from the current
tiered rate structure may shift costs away from those who use more than average to those who use less than
average depending on the design of the new rate structure.
It is the expectation of Staff that the rate structure and prices in any pilot study will be revenue neutral but this
may not prove to be the case which is one of the reasons a pilot study is recommended. The pilot study will allow
any modifications to the rate prices to be made before the new rate structure would be implemented for the
residential rate class.
The pilot study would be conducted by staff without further improvements required to the metering and billing
infrastructure so no additional costs are expected at this time.
Environmental Impacts of Programs
Rate structures with positive conservation incentives have direct and indirect environmental benefits, including:
Reducing carbon and pollutant emissions from fossil fuel power plants
Improving indoor air quality by encouraging low or no-energy circulation of outdoor air rather than air
conditioning
May 13, 2014 Page 6
ATTACHMENTS
1. Triple Bottom Line (TBL) Analysis Map (PDF)
2. TOU Rate Structures (PDF)
3. Powerpoint presentation (PDF)
Im
Project/Decision: Implementing a Pilot Study to evaluate time-of-use (TOU) rates for
residential customers
Evaluated
by:
SOCIAL ECONOMIC ENVIRONMENTAL
Workforce Community
Strengths
Supports the cost-of-service (COS)
approach to provide fair and equitable
rates to customers
Opportunity to promote other programs
that may help incent customers to learn
about and / or invest in programs such
as Demand Response (DR)
Extends the functionality and benefits of
installing a system-wide AMI meter
capability
A pilot program helps staff refine
processes to implement TOU
Ability to use the Web Portal for
educating customers on TOU
Strengths
Helps eliminate cross-subsidies among customers
that use electricity at different times and in different
ways
Encourages customers to conserve
Customers may take advantage of programs to
reduce their bill such as the Demand Response
(DR) program
May promote Photovoltaic (Solar) growth
May promote use of Electric Vehicles (EV)
Customers have the opportunity to opt-out of the
pilot program if they choose
Gives customers more transparency as to how their
consumption relates to retail rates and wholesale
power costs
Empowers the customer in decision-making as there
are defined time windows for on-peak and off-peak
and associated kWh charges
An innovative and forward thinking community may
encourage acceptance of a TOU rate
Strengths
More equitable rate structure, which addresses
market costs for energy
The return on investment for energy efficient
measures may be higher for the customer
Encourages more efficient use of energy &
demand, therefore increasing load factor
As with any rate structure, TOU rates would be
designed to be revenue neutral from a Utility
revenue standpoint
May promote Photovoltaic (Solar) growth
May promote use of Electric Vehicles (EV)
The pilot program would help validate whether
revenue requirements are being met
Strengths
Possible reduction in environmental impacts
Encourages more efficient use of energy to
smooth load curve
Opportunities
Educate consumers about the actual
cost of power and when it is most
expensive from a wholesale perspective
Incentivizes customers to use electricity
at a more optimal consumption time
Opportunities
Educate consumers about the actual cost of power
Pilot program helps ensure the rate structure is
generally accepted among customers
Incentivizes customers to use electricity at a more
optimal consumption time
Opportunities
Customer responses to the rate structure may
benefit both the customer and the utility
Opportunities
TOU rates could incent the use of wind
power, which often is available during off-
peak times
TOU rates could help with PV charging and
facilitate vehicle-to-grid energy storage
solutions
Threats
Customer pushback during and after
implementation
TOU is based on wholesale rates and
would be influenced by future changes
in PRPA’s rate structures
A pilot program is encouraged to ensure
rates are set correctly before full
implementation of a TOU rate
Threats
Customer pushback during and after implementation
If customers don’t respond favorably to the pilot
program, it may impact the possibility of full
implementation of this rate structure
Without a pilot program, rates could be set
incorrectly in the short-term and customers could be
over or undercharged
Threats
Residential load shift could impact commercial
customers negatively
TOU is based on wholesale rates and would be
influenced by future changes in PRPA’s rate
structures
Significantly expanding photovoltaic (PV) and
electric vehicle (EV) usage could cause a shift in
the peak time to different times in the day than
have been experienced historically
Threats
Significantly expanding electric vehicle (EV)
charging during off-peak could increase
Green House Gas (GHG) emissions
Notes:
Adapted from the City of Olympia and Evergreen State College Sustainable Action Map (SAM)
1
Potential Rate Structures
ATTACHMENT 2
2
Pros and Cons
1
Time-of-Use Pilot Study
Presented to City Council
May 13, 2014
ATTACHMENT 3
2
Purpose
• Present new possibilities for residential rate structures
• Propose a pilot study before proceeding with full
deployment
3
Background
• 2012 – Adopted seasonal, tiered residential rate
structure
• 2013-14 – Deployed Advanced Metering Infrastructure
to all residential customers
• December 2013 – City Council Work Session on the
impacts of the seasonal, tiered rate structure on
residential energy use
4
December 2013 Work Session
• Reviewed impacts of tiered rates on Residential
energy use
– Quartiles 1, 2, and 3 were essentially flat
– Quartile 4 showed some reduction from 2011
0
500
1,000
1,500
2,000
2,500
3,000
Average 1st Quartile 2nd Quartile 3rd Quartile 4th Quartile
kWh / Month
Summer Monthly Residential Use (kWh)
Weather Normalized
2011
2012
2013
5
Rate Design Objectives
• Cost-of-Service Based Equity
• Revenue Stability for Utility
• Bill Stability for Customer
• Customer Affordability
• Simplicity for Customer to Understand Price Signals
• Customer Ability to Respond to Price Signals
• Feasibility of Implementation
• Conservation Incentive through Price Signals
6
Seasonal Rate Structure Options
7
8.24 8.64
9.52
0
5
10
15
20
0 500 1000
Cents
Monthly kWh Use
Tiered Rate (Non summer)
8.96
10.63
13.98
0
5
10
15
20
0 500 1000
Cents
Monthly kWh Use
Tiered Rate (Summer)
6.91
18.36
0
5
10
15
20
TOU off peak TOU on peak
Cents
Monthly kWh Use
TOU (Non summer)
7.07
22.09
0
5
10
15
20
TOU off peak TOU on peak
Cents
Monthly kWh Use
TOU (Summer)
Tiered Rates compared to TOU
20
hours
/day
19
hours
/day
4
hours
/ day
5
hours
/ day
8
Conservation Signal of
Tiered Rate & TOU Rate
Rate Structure
Tier 3 of Tiered Rate Time-of-Use
Summer Non-summer Summer Non-summer
Price per kWh $0.1400 $0.0950 $0.2333 $0.1836
% Total Energy 14.00% 14.00% 18.00% 12.00%
Target Customer Highest monthly use All customers
% of Customers Impacted 21.0% 18.0% 100.0% 100.0%
9
Why a TOU rate structure?
• Considered to be an equitable rate structure
§ Electricity costs more during peak hours all month
§ 30% of wholesale costs are peak demand costs
• Relatively easy rate for customers to understand and adjust to
price signals for pre-defined time windows
• Encourages peak reductions and energy conservation equally for
all customers
• Allows customers to reduce their bill in two ways
§ By reducing total consumption
§ By adjusting when they consume
10
Proposed Rate Scenario
(weekends & 6 major holidays are all off-peak)
12:00 1:00 2:00 3:00 4:00 5:00 6:00 7:00 8:00 9:00 10:00 11:00 12:00 1:00 2:00 3:00 4:00 5:00 6:00 7:00 8:00 9:00 10:00 11:00
January
February
March
April
May
June
July
August
September
October
November
December
A.M. P.M.
Off Peak - 6 Cents On Peak - 20 Cents Off Peak - 6 Cents
Non Summer Off Peak - 6 Cents
Summer
Non Summer
OffCents Peak - 7 Cents On Peak - 23
Off Peak - 7 Cents On Peak - 23 Cents Off Peak - 7 Cents
11
TOU - Energy Conservation
• Could TOU rates help with Energy Conservation?
– Household use examples that may reduce overall
consumption AND reduce the peak
•Air conditioning use
•Heating use
•Lighting use
•Electronics (TV, etc)
12
TOU Demand Reduction
• Could TOU rates help with Demand Reduction (i.e.
Will it shift the system peak)?
– Household use examples that may shift demand
from on-peak to off-peak, therefore reducing
peak but not overall energy
•Washer / dryer use
•Electric vehicles
•Cooking (oven, microwave, etc)
13
0
2,000
4,000
6,000
8,000
10,000
12,000
($100)
($90)
($80)
($70)
($60)
($50)
($40)
($30)
($20)
($10)
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
Number of Customers
Avg $ Gain / (Loss) per Month to Customer
TOU Impacts per Month
(on average)
Customers
who would
pay more on
TOU
Customers
who would
pay less on
TOU
Bottom Line: Those who use the least
energy will probably see an increase in
their monthly bill under TOU
14
Income Data
0%- 25%- 50%- 75%- 100%- 125%- 150%- 175%- 200%+
25% 50% 75% 100% 125% 150% 175% 200%
% of 2011 Area Median Income
15
Income Data
Third quartile of use
Second quartile of use
median
0%- 25%- 50%- 75%- 100%- 125%- 150%- 175%- 200%+
25% 50% 75% 100% 125% 150% 175% 200%
% of 2011 Area Median Income
16
Income Considerations
• Tiered rates can help low income customers (less
income => less consumption)
• Was the intended purpose to encourage
conservation or to benefit low income customers?
– Assistance for low income customers could be
provided through a separate low income rate
– Low-income assistance research is being done
now and expected to wrap-up in June
– Low-income assistance options will be presented
this fall for City Council consideration
17
Time-of-Use Pilot
Rate structure and participation incentives
• Seasonal component to TOU
• 5 summer months & 7 non-summer months
• Variation from PRPA 3 summer months
• Weekends & 6 major holidays – all off-peak hours
• Incentive to maintain participation for 12 months
• Best bill guarantee at end of program
18
Why a Pilot first?
• Helps ensure revenue requirements will be met
before a default rate is implemented
• Provides feedback on customer acceptance
• Quantifies customer behavior changes, or lack
thereof
• Impacts fewer customers if unforeseen technical
issues arise
19
Suggested Framework of Pilot
Why Staff is recommending an Opt-out Pilot
• Sample selection
• Opt-out appropriately represents single rate
• Opt-in has a significantly biased representation
• Customer response
• Opt-out has greater participation (> 80%)
• Opt-in has lower participation (< 20%)
• Cost of and time for administering PILOT
• Opt-out has significantly smaller outreach for
sample selection (1,200)
• Opt-in requires total customer out-reach; will take
more time & cost for sufficient participation
20
General Direction Sought
from Council
• Does the Council want to consider any of the rate
structures presented here for possible future
deployment?
• If so, does the Council support implementing a
pilot study to assess the proposed rate structure?
May promote Photovoltaic (Solar) growth
May promote use of Electric Vehicles (EV)
Encourages customers to conserve
Limitations
Additional messaging required to inform
and educate customers on a new rate
structure
Staff time needed to implement the rate
including rate development, I.T.
programming, marketing, billing, and
customer service education & training.
Limitations
Customers may not understand how their
consumption patterns are impacted by TOU rates
Customers may feel that looking at daily usage
patterns are an intrusion of privacy
Pilot program selection is random and expected to
be limited to roughly 1,000 customers
Limitations
While rate designs are revenue neutral in total for
the Utility, it will increase electric costs for some
customers while it will decrease electric costs for
other customers
Limitations
Could shift energy from natural gas to coal
based on shifting peak load to base load
resource selection
Could shift peak loads to evening times
when it is more challenging for customers to
control demand
Triple Bottom Line Analysis Map
ATTACHMENT 1