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Home My WebLink AboutMemo - Mail Packet - 11/24/2020 - Memorandum From Gretchen Stanford And Lance Smith Re: Customers Engagement With Utilities Is The Future Of Utilities And Depends On And Includes Dynamic Pricing Like Time-Of-Day Utilities electric · stormwater · wastewater · water 222 Laporte Ave. PO Box 580 Fort Collins, CO 80522-0580 970.212.2900 V/TDD: 711 utilities@fcgov.com fcgov.com/utilities M E M O R A N D U M DATE: November 19, 2020 TO: Mayor Troxell and Councilmembers FROM: Gretchen Stanford, Interim Customer Connections Deputy Director Lance Smith, Utilities Strategic Finance Director THROUGH: Darin Atteberry, City Manager Theresa Connor, Interim Utilities Executive Director RE: Customers’ Engagement with Utilities is the Future of Utilities and depends on and includes dynamic pricing like Time-of-Day. Bottom Line: Fort Collins Utilities uses Time-of-Day (TOD) pricing because it aligns with the wholesale costs for the community. As a community-owned utility, one of our main goals is to be fair and equitable in distributing the cost of electricity to customers. Customers can manage their bills by how much they use and when they use electricity. Background: TOD dynamic pricing aligns with the City’s values of equity, sustainability, customer choice and self-service. But more importantly, TOD supports the future utility model where customers engage with us as part of the complete utility system. They do this by managing their usage for their own benefit and to support the integration of more renewable sources and reduce carbon emissions. TOD has established the understanding that the price and value of electricity varies by the time of day, day of the week and season of the year. As the utility system evolves, so will the hours and pricing of future dynamic rates. Electric Heat Customers Fort Collins Utilities has verified rate assignments based on whether a residence is heated entirely by non-electric heat sources (gas furnaces or gas boilers) or all-electric heat sources (electric baseboards or electric heat pumps). Residential customers with electric baseboards or electric heat pumps (homes without gas heating) are on the Electric Heat TOD Rate without the additional tier charge for use over 700 kWh. Extensive rate information can be found in the TOD Pricing – Electric Heat Customers on our website at www.fcgov.com/TOD. Two sections can be expanded, one for ‘TOD Pricing’, which is for gas-heated homes, and one for ‘TOD Pricing – Electric Heat Customers,’ which is for all- electric homes. Roughly 6,500 homes out of 68,000 residential customers, or just under 10%, are on the all-electric rate. Extensive outreach was done prior to the launch of TOD to customers who identified as living in all-electric homes. If a customer is in an all-electric home and for any DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B reason is not on the associated rate structure, a request form can be submitted to Utilities to change the rate. Time-of-Day Education and Resources Educating customers about TOD is a multi-faceted approach that includes virtual education tools and in-person events and programs. Utilities created an appliance handout that compares the average cost to run common household appliances and electronics. It provides pricing of how much it will cost a customer to run an appliance for an hour during on- and off-peak hours. This handout is frequently given out at Utilities events and programs. In addition to the handout, the TOD website provides resources and education about electric pricing. A notable change due to COVID is the section ‘Make the Most of TOD While at Home.’ This provides education for people who are spending more time at home and how they can financially benefit from shifting their electric use. Additionally, a Frequently Asked Questions section was added to the Utilities TOD website to assist with customer education and highlights why Fort Collins Utilities switched to TOD. The MyEnergy web portal was recently added as a resource for customers. MyEnergy offers the ability to see electricity usage in 15-minute intervals, to complete an on-line energy assessment and receive specific customized tips for savings energy and money. Events and programs are another approach used to educate customers. Prior to COVID-related event cancellations, Utilities staff organized two TOD booth events to be held at the Northside Aztlan Community Center and the Senior Center, with an anticipated reach of 100-200 residents. Utilities staff also trained Larimer County Conservation Corps (LCCC) members about TOD so they could share information directly with 362 customers during in-person home efficiency assessments. During the assessments, they educated customers about TOD and how they can save on their utility bills. A major message shared with customers is how they can now save on their utility bill in two ways: reducing and shifting their use. Before TOD, their only option to save money on their bill was by using less electricity. The American Public Power Association (APPA) recently published an article highlighting Fort Collins TOD pricing model. This article, Moving Ahead with Time of Use Rates, is part of a national conversation about other community-owned utilities that also are switching to TOD rates. The article on Fort Collins’ transition to TOD, pages 6-13, focuses on equity, education and outreach efforts to our community, results of the change so far and what the future may hold. Information about rates and rate increases for all utilities is provided annually to customers in several ways. One of the most popular tactics for residential customers who receive paper bills is the December bill insert. The insert clearly explains and highlights changes in rates and costs and offers reminders about conservation and bill payment assistance programs. Special rates, such as medical assistance or all-electric TOD rates, are included and the website URLs are provided. DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B Since TOD was implemented, Utilities web pages that focus on rates, especially TOD, have been visited over 24,000 times. This demonstrates engagement of customers who are finding the tools and information they need to learn how to manage their electric costs. FAQs are updated often as questions arise, generally around the seasonal change periods. Lastly, Fort Collins Utilities implemented Time-of-Day pricing in October 2018, after a 12- month pilot study that was reviewed and implemented extensive customer outreach prior to launch. A report was given to Council at a Feb. 11, 2020 Work Session to confirm that the energy and monetary savings that were realized in the first year of the rate structure were consistent with the findings of the pilot study. A report on the second year of TOD will be provided to City Council at a Work Session in March 2021. Utilities staff is always available to support City Council listening sessions on utility rates, or for discussions about utility rates or operations in general. CC: Taylor Blomquist, Education Specialist Randy Reuscher, Rate Analyst Diana Royval, Manager, Marketing Attachments: Appliance Handout American Public Power’s Article, Moving Ahead with Time of Use Rates Draft 2021 Rates Bill Insert DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B Contact • fcgov.com/utilities • utilities@fcgov.com • 970-212-2900, V/TDD 711 Aids and services are available for persons with disabilities. Esta información puede ser traducida, sin costo para usted. 12/20 17-17795 Ways to Save With Time-of-Day (TOD) electric pricing, when you use electricity is as important as how much you use. Shift your use to the lower-priced, off-peak hours or reduce your overall use to save. • To save money, homes without gas heating may be eligible for all-electric TOD pricing. • Use a programmable or smart thermostat to control heating and cooling costs. • Save approximately 50¢ per load by drying your laundry during off-peak hours. Details: fcgov.com/TOD Utilities Affordability Programs Learn how to make your utilities more affordable at fcgov.com/UAP. Payment Assistance Fund Receive financial assistance once per 12-month cycle on your past-due electric and/or water bill. Details: fcgov.com/payment-assistance Medical Assistance Program Discounted electric rate for medically necessary equipment. Details: fcgov.com/MAP Income-Qualified Assistance Program A reduced electric, water and/or wastewater rate that provides 23% off certain elements of these services. Details: fcgov.com/IQAP WATERWASTEWATERSTORMWATERLIGHT & POWER2021 RATES fcgov.com/utility-rates & Tips to Manage Utility Costs Fort Collins Utilities Sign up for a home efficiency assessment. Reduce utility costs and increase the comfort of your home with a $60 assessment. Details: fcgov.com/home-efficiency Receive a rebate. Rebates are available for energy and water efficiency products. Details: fcgov.com/rebates-programs Fix drips and leaks. It’s the fastest way to conserve. Details: fcgov.com/high-water-use Pay less for wastewater. Your winter quarter average (WQA) is based on water use billed January - March. Using less water December - March (depending on billing cycle) may help save on your wastewater costs year-round. Details: fcgov.com/wastewater-rates Track your use. View detailed electricity and water use wtih MyEnergy and MyWater. Details: fcgov.com/portalsDRAFT DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B 2020 RATES 2021RATES % CHANGE $ CHANGE Electric 700 kilowatt-hours/month $78.52 $80.56 2.6%$2.04 Water 10,000 gallons/month $48.07 $49.03 2%$0.96 Wastewater 4,800 gallons/month WQA $34.24 $34.24 0%$0 Stormwater 8,600 sq. ft. lot, light runoff $16.04 $16.04 0%$0 Avg. Utility Bill Total $176.87 $179.87 1.7%$3 Electric, Water, Wastewater and Stormwater Rates As a locally owned, not-for-profit utility, Fort Collins Utilities is committed to delivering safe, reliable and competitively priced electric, water, wastewater and stormwater services. Our prices are based on the costs associated with serving our customers and are adjusted through bi-annual, cost-of-service studies. We do not profit on the services we provide. Funds received are invested into our infrastructure and operations to maintain and continually improve our systems. Many factors, including fuel costs, environmental regulations, watershed health, infrastructure improvements, and changing energy and water demands, affect the costs of producing and providing utility services. When setting rates, we balance these factors to ensure safety, reliability and the best price possible for our customers. Learn more: fcgov.com/utility-rates Commercial Rates Learn about commercial rates and how to manage costs at fcgov.com/commercial-rates. Ways to Pay Your Bill Payments can be made 0nline, by phone, via mail or drop box and in person. Details: fcgov.com/payment-options Residential Bill Comparisons from 2020 to 2021 A typical residential customer, based on average annual use, could expect to see an overall increase of $3 per month (see chart). Additional information: fcgov.com/residential-rates $ Did You Know? • Utilities’ electric system is reliable over 99% of the time, resulting in few power outages. • Utilities won best tasting water in the Rocky Mountains. • It takes 8-12 hours to treat 1 gallon of wastewater before discharging back to the environment. • There are more than 178 miles of stormwater drainage pipes throughout the city. ? 2021 Rate Changes It is Fort Collins Utilities’ rate philosophy that adjustments should be gradual and modest to avoid large increases in any given year. Small, steady rate increases cover the costs of delivering reliable electric, water, wastewater and stormwater services to our customers now and into the future. Rates provide the funding needed for ongoing maintenance, infrastructure improvements and construction projects throughout our community. Electric: 2.3%-3.9% increase based on cost-of-service model updates (varies by rate class). Water: 2% increase to help with fire-related water quality impacts and watershed health costs. Wastewater: No rate increase. Stormwater: No rate increase. Learn More • fcgov.com/utility-rates • utilities@fcgov.com • 970-212-2900, V/TDD 711 DRAFT DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B Moving Ahead with Time of Use Rates DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B Table of Contents 6 14 1 MOVING AHEAD WITH TIME OF USE RATES Paul Zummo, Director Policy Research and Analysis, American Public Power Association 14 REDUCING CARBON, GIVING CUSTOMERS CONTROL Alcides Hernandez Melissa Kwong Karen McCord Jennifer Restivo Sacramento Municipal Utility District (SMUD) 6 PROMOTING EQUITY THROUGH TIME OF DAY PRICING Randy Reuscher Diana Royval Fort Collins Utilities 1 DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B 1 MOVING AHEAD WITH TIME OF USE RATES E lectric utilities continue to experiment with new rate designs, moving past the traditional rate paradigm. These rates are enabled by new technologies, particularly advanced metering infrastructure. These designs mean to better align rates with utility costs, incent customers to spread out their electric usage and reduce peaks, and in some cases help the utility meet environmental goals. DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B 2 MOVING AHEAD WITH TIME OF USE RATES Time-Varying Rates Explained The most widely used new rate design is time-varying rates (TVR). According to the Energy Information Administration, more than 300 utilities offer some type of TVR and approximately 5.5 million customers, or 5% of residential custom- ers, are enrolled in a TVR.1 Most of the customers are enrolled in pilot, or opt-in rates, though several utilities have now instituted default, or op-out TVR rates. There are several categories of TVR:2 l Real-time pricing (RTP) — Prices vary over short intervals, such as an hour. The price is intended to reflect the real-time wholesale cost of elec- tricity, although sometimes is set by the day-ahead price of electricity. l Time-of-use pricing (TOU) (also called time-of-day (TOD) rates) — Prices are fixed seasonally and within two to four broad intervals that reflect the utility’s typical peak and off-peak times. The peak price usu- ally occurs in the late afternoon and early evening. Off-peak hours are generally in the early morning and at night. There may be an intermediate or interim interval occurring between the off-peak and peak hours. l Variable peak pricing (VPP) — Off-peak and interim prices are the same as TOU, but the peak price var- ies according to system conditions. l Critical peak pricing (CPP) — Util- ities set a high peak price on certain “critical” days. Utilities usually notify customers in advance of critical days and hours, and the amount of such events is often limited. Benefits of TVR The overwhelming majority of TVR offerings are TOU rates. These are generally simpler to implement and for customers to understand. The proliferation of TOU rates has enabled researchers to study the ef- fects of these rates, particularly on load shapes and on customer bills. With re- gards to load shape, studies continually show that TOU rates lead to decreased electric usage, both at peak periods and overall. An ACEE report summariz- es these findings: These studies provide overwhelm- ing evidence that customers respond to changes in volumetric energy rates. Many of the studies document signif- icant peak demand reductions, espe- cially when customers are equipped with technology such as programmable or learning thermostats. Our review of these studies also shows small reduc- tions in overall consumption. Not all estimates were statistically significant at the 90% level, but the results for each treatment group show a consistent trend in reduced overall consumption, with very few showing increased con- sumption.3 1 Nova Scotia Utility and Review Board. Time-Varying Pricing Project Submission. June 30, 2020, Appendix 2, p. 5. 2 Mina Badtke-Berkow, et al. A Primer on Time-Variant Electricity Pricing. (Environmental Defense Fund, 2015), pp. 2-4 3 Brendon Baatz, Rate Design Matters: The Intersection of Residential Rate Design and Energy Efficiency, ACEE, March 2017, p. v. Available at https://www.aceee.org/sites/default/files/publications/researchreports/u1703. pdf DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B 3 MOVING AHEAD WITH TIME OF USE RATES A Brattle Group analysis came to a similar conclusion. We have shown beyond the shadow of a doubt that cus- tomers do reduce their peak load in response to higher peak to off-peak price ratios. Price-based demand response is real and predictable. It can be relied upon by utilities, reg- ulators, independent system operators and other market participants to plan their activi- ties. The magnitude of demand response is even stronger when the customer is provided with enabling technology such as smart thermostats and in- home displays.4 Figure 1 from Brattle’s filing on behalf of Nova Scotia Power demonstrates peak reductions across different TVR offerings. CPP rates generally produce greater peak shavings than TOU rates because they have sharper price differentials. But TOU rates nonetheless consistently incent at least moderately decreased consumption. Studies for California’s three major in- vestor-owned utilities also showed that TOU pilot rates produced load reduc- tions and peak shaving. For example, in the summer of 2016, load reductions for Southern California Edison’s participants measured 2.7%, and were 6.1% for cus- tomers of Pacific Gas & Electric. Winter load reductions were slightly lower, though still significant, ranging between 1.4% and 3.6%.5 4 Ahmad Faruqui, Sanem Sergici, Cody Warner, Arcturus 2.0: A meta-analysis of time-varying rates for electricity. Electricity Journal 30 (2017) 64-72 5 Stephen S. George and Eric Bell, Key findings from California’s recent statewide TOU pricing pilots. Electricity Journal 31 (2018) 52-56. Time-of-UsePeak ReductionTime-of-Use w/Tech Peak Time Rebate Peak Time Rebate w/ Tech CPPCritical Peak Pricing w/ Tech VPP w/ Tech VPP Source: Ahmad Faruqui and Sanem Sergici, The Brattle Group, 2020. Source data is 365 individual pilot treatments from Brattle's Arcturus database. 70% 60% 50% 40% 30% 20% 10% FIGURE 1. PEAK LOAD REDUCTION, BY TYPE OF TIME-VARYING RATE DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B 4 MOVING AHEAD WITH TIME OF USE RATES Results from Pennsylvania IOU PECO’s TOU pilot also demonstrated significant load reductions. The aver- age demand reduction between 2 p.m. and 6 p.m. was 6% during the summer months.6 Moreover, pilot programs have resulted in bill savings for most cus- tomers. Customers in the PECO pilot had 5% lower costs, on average, which was a result of altering the use of large appliances and HVAC systems.7 Cali- fornia utilities had similar results. The average cost reduction on the monthly bill was between no savings and 2%, although some SCE customers saw increases, including some low-income customers who had the most increased costs. Also, summer bills were generally higher for all classes of pilot custom- ers compared to their usual bills, while winter bills were generally lower.8 Although some low-income SCE customers had higher than average bill increases, reports show that the pilot programs generally did not lead to rate increases for low-income customers. As the ACEE report specifies: Low-income customers often have a flatter usage profile, imply- ing that any rate design structure with higher rates during peak hours could benefit them, even in the absence of behavioral or technological changes. Although most of the rate design pilots we reviewed did not specifically evaluate impacts on low- or limit- ed-income customers, several did consider this issue.9 The results were similar for PECO. As one consultant noted, “the house- holds that reduced their usage the most were ones that held at least one senior citizen, or one resident covered by the Americans with Disabilities Act.”10 TOU rates can also encourage investment in electric vehicles. Many utilities offer TOU to customers with EVs — sometimes as a rate specific to EV charging, but normally for the entire household. These rates provide customers the opportunity to achieve significant bill savings by charging their vehicles overnight at a lower rate. When customers with EVs shift their charging to off-peak periods, this reduces potential strains on the utilities at system peak. This is especially im- portant if EVs are clustered in a certain neighborhood — as is often the case — because multiple EVs charging at once can overload a feeder. Conversely, one concern with TOU rates is that they can create a new peak when many cars be- gin charging all at the same time once the peak period ends.11 The rates do motivate behavior, as customers with EVs on a TOU rate are much more likely to charge during non- peak hours compared to customers with EVs who are not on a TOU rate.12 Salt River Project, a public power utility in Arizona, conducted a study along with the Electric Power Research Institute that demonstrated that TOU rates were “very effective” at shifting charging times for customers with EVs, thereby shaving peak load.13 6 Gavin Bade, “Inside the surprising lessons from PECO’s time-of-use rate pilot,” Utility Dive, May 22, 2015. Available at https://www.utilitydive.com/news/inside-the-surprising-lessons-from-pecos-time-of-use-rate- pilot/399629/ 7 Ibid. 8 Key findings from California’s recent statewide PILOT pricing pilots. 9 Rate design matters, p. 31. 10 Inside the surprising lessons from PECO’s time-of-use rate pilot. 11 Erika Myers,et al, Residential Electric Vehicle Rates That Work: Attributes that Increase Enrollment, SEPA, November 2019, p. 12. The rates do motivate behavior, as customers with EVs on a TOU rate are much more likely to charge during non-peak hours compared to customers with EVs who are not on a TOU rate. DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B 5 MOVING AHEAD WITH TIME OF USE RATES TOU rates are also an attractive option in the context of distributed energy resources (DER), because they can align utility costs and revenues more equitably between customers with and without DERs.14 In other words, TOU rates could mitigate the need to apply special rates to DER customers. A customer using electricity from the grid when supply is constrained, when cost is higher, would be paying a higher rate that better aligns with that cost. Further- more, because it is widely applicable beyond DER, it could reduce the need to continually refine rates and rate structures. Potential Concerns Though these pilots have shown the potential benefits of TOU, there are a couple of shortcomings and drawbacks. Most customers participating in a pilot or who are otherwise on an optional TOU rate have opted-in, meaning cus- tomers must voluntarily choose these rates. Customers who choose to adopt TOU rates tend to have higher house- hold income or might be more aware of how electric usage at different times of the day corresponds to costs. As men- tioned above, low-income and elderly customers have shown in some studies to be just as adept at altering usage as others. Nonetheless, studies of opt-in customers might not be as represen- tative, and thus might not reflect the same outcomes as if all customers participated. Customers who opt-in to TOU rates might also predominately include those who can most benefit from TOU rates. In other words, customers who calculate that they can reduce their bill by adopting TOU rates will opt in, whereas those who project a potential bill increase will remain on a traditional flat charge. Not only can this alter the population of the survey sample, it can also lead to revenue reductions. If only “winners” adopt TOU rates, while high peak-use customers remain on standard rates, then revenues could fall short of utility costs. Some utilities have now adopt- ed opt-out, or default TOU rates for residential customers. This means that a customer is automatically enrolled in a TOU rate unless that customer takes action to enroll or remain in another rate. Whereas opt-in programs with enrollments in excess of 10% can be considered successful, enrollment rates for opt-out rates often exceed 98%. Moving to Mainstream The three major California IOUs have now adopted default TOU rates, and several public power utilities in different states have as well. This series features two of these public power utilities in case studies. Fort Collins Utilities in Colorado was one of the first to adopt a default or standard TOU (or TOD) rate, and Sacramento Municipal Utilities Dis- trict (SMUD) in California rolled out their opt-out TOU starting in 2018. Each case offers an overview of the utility’s experience with conducting a pi- lot and then implementing opt-out TOU rates. These initial insights and analysis show how an entire rate class — and not just a certain subset of it — adapts to TOU rates. Each case details if and how custom- ers have shifted usage, how customers have been affected by the rate changes, and how well these rates help utilities recover their costs of service. The two utilities also share valuable lessons learned and key insights into customer education and communication to ease the implementation process. These two utilities’ experiences offer unique insight into how TOU rates im- pact an entire rate class. Public power utilities considering a move to TOU rates can learn from these two positive experiences, and take the advice and lessons learned to guide their explo- ration of whether and how such rates could be a fit for their community. 12 Ibid., pp. 21-25 13 APPA, EPRI, SRP complete study tied to EV drivers’ habits, Public Power Daily, May 30, 2019. https://www.epri.com/research/products/3002015601. See Figure 6.7 for details of load shifting in the study. 14 American Public Power Association, Rate Design for Options for Distributed Energy Resources, November 2016 DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B 6 PROMOTING EQUITY THROUGH TIME OF DAY PRICING: FORT COLLINS UTILITIES Promoting Equity Through Time of Day Pricing: Fort Collins Utilities DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B 7 MOVING AHEAD WITH TIME OF USE RATES 7 SERVICE TERRITORY Fort Collins, CO CUSTOMERS 76,000 ANNUAL RETAIL LOAD 1.5 million Megawatt-hours ANNUAL PEAK (3-YR AVERAGE) 309 Megawatts GENERATION SOURCES coal, natural gas, hydro, wind, solar purchased wholesale from Platte River Power Authority SUSTAINABILITY GOALS 100% non-carbon resource mix by 2030 TOU PILOT Conducted 2015-2016 with 1,700+ customers in two tiers — time of use and TOU with energy efficiency KEY PILOT OUTCOMES 1.9% overall reduction in energy use 7.5% peak demand reduction more than $1/month average reduction in customer bill TVR USED Default time-of-day pricing began 2018 INITIAL RESULTS $1.38 average customer bill reduction 67% of income-qualified customers saw bill reduction (100% with utility discount program) 7.5% peak demand reduction 1.9% reduction in energy use — preventing 15,800 metric tons of carbon emissions DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B 8 PROMOTING EQUITY THROUGH TIME OF DAY PRICING: FORT COLLINS UTILITIES About the Utility The City of Fort Collins is in Colorado, about an hour north of Denver. Fort Collins Utilities manages four utilities (water, wastewater, stormwater and electric), and the electric utility serves 67,500 residential customers and just under 76,000 total customers. Fort Collins is governed by City Council and has an advisory Energy Board, with final approval for actions granted by the City Council. Fort Collins purchases whole- sale power from Platte River Power Authority, which has a wide range of sources, including coal, natural gas, hydropower, wind and solar. Recent projects have increased the share of non-carbon emitting resources to nearly 50% of the total energy provided, with a goal of achieving a 100% non-carbon resource mix by 2030. Pilot Structure and Results Fort Collins Utilities was part of the Smart Grid Investment Grant and installed advanced metering infrastruc- ture for all customers between 2011 and 2013. About two years after full-scale implementation of AMI, the utility began a pilot time-of-use project. The pilot placed 2,400 customers into one of two opt-out programs – TOU and TOU with energy efficiency. The study compared the TOU customers with customers in four control groups, also with 1,200 customers each, for a total of 7,200 customers. Once opt-outs and custom- er turnover were accounted for, each TOU group included more than 850 customers. The pilot program spurred a 7.5% reduction in coincident peak hour demand during the summer and a 0.4% overall shift in demand. As demonstrat- ed in the table below, most customers experienced a slight bill reduction in the pilot program, although customers in all-electric homes and customers with solar net metering saw bill increases. Transition to All TOU After the conclusion of the pilot, Utilities and its stakeholders adopted a default TOU rate structure in October 2018. The principal reason for moving to a default TOU rate structure was rate equity within the residential class. Utilities sought to be more transparent in passing on varying time-based costs for electricity to residential custom- ers, especially considering wholesale coincident peak demand charges. New rates also would give customers greater control with two ways to manage bills: reducing overall consumption and shift- ing when they use appliances and the need for electricity. Original Rate Pilot Study Rate Count Difference on Average Change TOU Rate per Month Tiered Rate TOU 880 1.6% less ($1.14) TOU w/EE tier 851 1.9% less ($1.38) All-Electric Homes TOU 18 1.8% more $2.44 TOU w/EE tier 16 7.9% more $10.27 Solar Net Metering TOU 5 12.4% more $2.82 TOU w/EE tier 9 0% $0.07 TABLE 1. PILOT STUDY RESULTS DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B 9 MOVING AHEAD WITH TIME OF USE RATES Another consideration was load management. The pilot study and the 12-month review (after implementa- tion of TOU in October 2018) showed reductions in consumption and load shifting away from peak hours. Overall energy consumption was 1.9% lower (16,775 megawatt-hours), and on-peak electricity use was 7.5% lower than the previous year. Other reasons given for shifting to TOU: l Reduces peak demands and in- creases load factors on the system, creating efficiencies and lower costs l Better aligns system costs when solar production occurs l Reduces energy consumption and greenhouse gas emissions l Encourages use of electric vehicles Fort Collins has two time-of-day rates in place (the name changed from the original time-of-use). The rate for gas-heated homes has an on-peak charge plus a tier charge for total monthly consumption that exceeds 700 kilowatt-hours. This additional tier is in place to encourage reduced consump- tion. Customers in all-electric homes have the on-peak/off-peak charges, but do not have the tier charge because of higher monthly consumption, espe- cially during the winter months when heating needs are highest. The graphic below shows the dif- ferent peak hours and corresponding rates. The hours selected as on-peak are directly tied to historical peak hours when coincident demand costs are incurred. APPX. 7¢/KWH NON-SUMMER OCTOBER – APRIL On-peak hours are weekdays only (no weekends or major holidays) 12 AM 5 PM 9 PM 12 AM O-Peak Hours On-Peak Hours APPX. 7¢/KWH APPX. 22¢/KWH APPX. 7¢/KWH SUMMER MAY – SEPTEMBER On-peak hours are weekdays only (no weekends or major holidays) 12 AM 2 PM 7 PM 12 AM O-Peak Hours On-Peak Hours APPX. 7¢/KWH APPX. 24¢/KWH DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B 10 Customer Education and Outreach Prior to the launch of TOD and through- out 2019, Utilities developed and implemented a community-wide communication, outreach and engage- ment campaign to inform and educate residents about the new rate structure. One of the goals was to provide cus- tomers with tips and tools to learn how to better control their electric bills by shifting electric use to the lower-priced, off-peak hours and by reducing overall use. It was also important to convey when the rates would go into effect, how the rate would likely change indi- vidual customers’ bills, and the reasons why the utility was moving to a time- based rate. Staff encouraged customer feed- back, questions, and two-way con- versations via social media, website interaction, printed material, phone calls and in-person discussions. Fort Collins worked with its 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 to assist with more in-depth questions. The Community Engagement Team pro- vided presentations and staffed event booths, including giving presentations to homeowners’ associations and other organizations (e.g., EV groups, boards) upon request. These presentations were offered virtually in 2020 and will continue as needed. The team also recognized the importance of educating Utilities em- ployees, many of whom receive their electric service from Fort Collins Utili- ties, so that employees could answer questions from friends and neighbors about the change. Utilities hosted inter- nal Lunch and Learn sessions and used internal newsletters and email systems to update employees. Utilities developed a variety of tools and tactics to increase aware- ness about on-peak hours, prices and savings opportunities. Fort Collins used icons to demonstrate the variety of ap- pliances and electronics that customers use daily, with an emphasis on those that use the most electricity and out- lined tips for shifting use of these items to off-peak times. Utilities also created clings for customers to place on household appliances and electronics that pro- vided reminders of the on-peak hours and savings opportunities. Customers received 12-month bill comparisons of TOD to their previous tiered rate, one-month bill estimates on TOD pricing, and handouts. The most useful outreach piece was a handout with cost-specific details regarding electric use of household appliances and elec- tronics (see sample, at right). Customers had misconceptions about what they needed to turn off, and the awareness of what appliances cost during on and off-peak hours was a very valuable resource. Other tools, resources, and pro- grams available to customers are: l In-depth, room-by-room spread- sheet l Non-adhesive clings that highlight the various seasonal on-peak hours to be placed near higher energy-us- ing appliances l Printed and direct mail pieces, including letters, bill inserts and postcards l Interactive presentations and activi- ties posted on Utilities’ website l Seasonal video clips Fort Collins is also prioritizing underserved audiences through the Income-Qualified Assistance Program (IQAP). Approximately 700 participants enrolled in IQAP receive 23% off their monthly utility bill, as well as a month- ly newsletter with easy tips for saving Fort Collins 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 outlined tips for shifting use of these items to off-peak times. PROMOTING EQUITY THROUGH TIME OF DAY PRICING: FORT COLLINS UTILITIES DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B 11 MOVING AHEAD WITH TIME OF USE RATES money, energy, and water. The average open rate for the newsletter in 2019 was 46% (higher than the industry average of 29%). Fort Collins also developed Spanish versions of many of the TOD materials and IQAP material to better reach Span- ish-speaking customers. Utilities also made use of social media platforms such as Twitter and Facebook. Posted content was based on three strategies: l Using animations and icons to raise awareness of TOD and seasonal changes l Reminding customers about off-peak prices on major holidays l Highlighting actual customer experi- ences through storytelling These activities appeared to increase customer understanding in 2019. Overall feedback was neutral, and all direct questions were answered with factual and educational information. The cus- tomer profiles (storytelling) approach worked well and did not receive any negative feedback. 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 had originally supposed. LITTLE CHANGES MAKE A B I G D I F F E R E N C E MAXIMIZE YOUR SAVINGS D U R I N G O N - P E A K H O U R S Auxiliary aids and services are av a i l a b l e f o r p e r s o n s w i t h d i s a b i l i t i e s . Esta información puede ser traduc i d a , s i n c o s t o p a r a u s t e d . 1/20 18-19259 Run your dishwasher and cl o t h e s d r y e r i n the morning, later in the ev e n i n g / n i g h t o r o n weekends. Another option i s t o h a n g d r y y o u r laundry. And, remember to a l w a y s r u n f u l l l o a d s . Did you know a lot of electr o n i c s u s e electricity even when turned o f f ? Use power strips to avoid w a s t i n g ‘vampire’ power. Also, charge electronics an d E V s overnight to take advantage o f off-peak prices. For more information and t o o l s , v i s i t fcgov.com/TOD. Need help paying your bill? Visit fcgov.com/utilities-afforda b i l i t y . Take control of your electri c b i l l . • Shift use to off-peak times. • Use less during on-peak hours. • Reduce your overall electric use. Remember, with TOD pricin g , when you use electricity is as importan t a s how much you use. utilities@fcgov.com • 970-212-2900 • V/TDD 711 Adjust the setting on your th e r m o s t a t a f e w degrees lower in the winter m o n t h s a n d a few degrees higher in the su m m e r m o n t h s . (The U.S. Department of En e r g y , energy.gov, recommends the above sett i n g s . ) SUMMER NON-SUMMER Use smaller appliances like a microwave, slow cooker o r toaster oven, when possibl e . All-Electric Heat Customers Based on an average of the E l e c t r i c H e a t TOD summer and non-sum m e r p r i c e s for one hour. Additional tier c h a r g e d o e s not apply. 51¢ / 17¢ / $$$for 12 feet of all-electric bas e b o a r d h e a t i n g Enroll your electric water he a t e r i n Utilities’ Peak Partners Progr a m t o automatically shift when yo u r w a t e r is heated and save money. Details: peakpartnersfortcollins.co m / water-heater Learn about efficiency and c o n s e r v a t i o n programs at fcgov.com/residential-cons e r v e . 24¢ / 7¢ / $ to use a window/room air conditioner 2¢ / 1¢ / $ to run a fan or ceiling fan 66¢ / 20¢ / $$$ to use an electric clothes dryer <1¢ / <1¢ / $ to charge a cell phone $1.06 / 32¢ / $$$$ to use an electric water heater 10¢ / 3¢ / $ to use a dishwasher 1¢ / <1¢ / $ to use a computer 35¢ / 11¢ / $$ to use a space heater 43¢ / 13¢ / $$ to use an electric oven 2¢ / <1¢ / $ to play video games 12 ¢ / 4¢ / $ to run a furnace fan for a gas furnace26¢ / 8¢ / $$ to use a microwave 5¢ / 1¢ / $ to run a large inflatable holiday decoration <1¢ / <1¢ / $ to use an LED light bulb 71¢ / 21¢ / $$$ to use a central air conditioner 7¢ / 2¢ / $ to use a clothes washer 1¢ / <1¢ / $ to watch TV 33¢ / 10¢ / $$ (Incandescent) 5¢ / 1¢ / $ (LED) to light a string of large bulbs 78¢ / 23¢ / $$$$ to charge an electric vehicle with a Level 2 charger (3.3 kW) 5¢ / 1¢ / $ to run a slow cooker TAKE CONTROL OF YOUR EL E C T R I C B I L L KNOW WHAT IT COSTS TO U S E A N A P P L I A N C E F O R ONE HOUR Utilities 64¢ / DAY to keep a hot tub warm 16¢ / DAY to run a refrigerator 2¢ / DAY to run a router ON-PEAK HOURS (5-9 P.M., OCT-APR / 2 - 7 P . M . M A Y - S E P T / W E E K D A Y S O N L Y ) OFF-PEAK HOURS (ALL OTHER HOU R S O F T H E D A Y , W E E K E N D S A N D M A J O R H O L I D A Y S ) Additional information and to o l s a r e a v a i l a b l e a t fcgov.com/TOD . Costs are based on the estima t e d use of appliances and electron i c s u s i n g a n a v e r a g e o f 2 0 2 0 s u m m e r a n d n o n - s u m m e r p r i c i n g . APPLIANCES THAT USE ELECTRICITY 24/7 FOR ONE DAY Out of 70,000 electric customers, CSRs received calls and emails from approximately 2% of the communi- ty (less than 1,500 calls and emails). Talking with customers provided an opportunity to better inform and edu- cate them about why TOD was being implemented and help them under- stand how it would affect them person- ally. After interacting with CSRs, most customers walked away with a better understanding. Now, most inquiries are about general information and no lon- ger escalated due to TOD concerns. DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B 12 Results After over a year of default TOD rates, the results are consistent with the pilot study. l 65% of residential accounts showed a decrease in annual electric bills compared to the prior rate structure l Average monthly bill was $1.38 lower with TOD pricing l Overall revenue collected for the residential class was lower by 2.3% on TOD l Overall energy consumption was 1.9% lower, or 16,775 MWh l Decreased wholesale electricity expenditures l Reduced electricity use from TOD saved over 15,800 metric tons of carbon emissions, equivalent to 0.8% of the 2018 community carbon inventory l On-peak hour electricity use was 7.5% lower than in the previous year Most customers, including those in all-electric homes, saved on TOD compared to the traditional pricing structure. Figure 2 summarizes average bill impacts. As shown in Figure 3, two-thirds of IQAP customers had lower bills on the TOD rate. Adding the 23% IQAP discount, 100% of customers saw a reduction in their overall bill. Solar customers paid an overall aver- age of $2.94/month more, 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.% of Residential Electric Customers89%Gas Heat 12-Month Review Pilot Study $ 1.26 $ 1.38 $ 3.51 $ 2.58 $ 0.07 $ 2.94 All-Electric Solar – Gas Heat 9% 2% $(5)$(3)$(1)$(1)$(3)$(5) PROMOTING EQUITY THROUGH TIME OF DAY PRICING: FORT COLLINS UTILITIES FIGURE 2. AVERAGE MONTHLY BILL IMPACT, BY CUSTOMER ATTRIBUTES DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B 13 MOVING AHEAD WITH TIME OF USE RATES 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, elec- tric vehicles can help increase load fac- tors on the system and use resources in a more efficient manner by drawing en- ergy 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. Looking Ahead While staff recommended only one TOU rate structure for all custom- ers, City Council approved two rates, one for gas-heated homes and one for all-electric homes. More focus would have been on the importance of a single rate structure to ease the confusion around accurately identifying the heat source of a home and the cost differences associated with having two different rates in place. There are no significant plans to change the TOD rate structure overall. Both cost and consumption patterns will be continually monitored from year- to-year to understand changes over time.Peak Reduction11 0022 2 5 10 21 34 25 57 82 101 78 44 20 5 6 8 2 3 000 1 1 0 00 120 100 80 60 40 20 $ per Month $ (15)$ (13)$ (11)$ (9)$ (7)$ (5)$ (3)$ (1)$ (1)$ (3)$ (5)$ (7)$ (9)$ (11)$ (13)$ (15) 67% Saved on TOD $2.45 avg / $1.72 median 33% Paid more on TOD $1.72 avg / $1.12 median FIGURE 3. AVERAGE MONTHLY SAVINGS, IQAP CUSTOMERS (WITHOUT DISCOUNT) DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B 14 REDUCING CARBON, GIVING CUSTOMERS CONTROL: TOD IN SACRAMENTO Reducing Carbon, Giving Customers Control: TOD in Sacramento DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B SERVICE TERRITORY Sacramento, CA and surrounding areas CUSTOMERS Approx. 640,000 ANNUAL RETAIL LOAD 10,116 Gigawatt-hours ANNUAL PEAK (3-YR AVERAGE) 3,009 Megawatts GENERATION SOURCES hydro, natural gas, wind, solar and other purchased power SUSTAINABILITY GOALS Carbon-neutral generation by 2030 TOU PILOT 6,700+ customers in four categories — default time of use, default TOU with critical peak pricing (CPP), opt-in TOU, opt-in TOU with CPP in summer 2012 and 2013 33% of participants were customers with low incomes. The pilot also tested the use of in-home-displays KEY PILOT OUTCOMES Weekday peak load reduction between 5.8%-11.9% total energy savings between 1.3%-3.5% TIME VARYING RATE USED Default residential time-of- day pricing began 2018, fully implemented by end of 2019 INITIAL RESULTS 8% peak load reduction annual equivalent 12,800 tons of carbon emissions avoided $5 million annual savings in commodity costs 2% customer opt-out $3 average reduction in customers’ summer bill 15 DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B 16 REDUCING CARBON, GIVING CUSTOMERS CONTROL: TOD IN SACRAMENTO About the Utility The Sacramento Municipal Utility District (SMUD) is a public power utility serving approximately 640,000 cus- tomers within an area of approximately 900 square miles in northern California. The service area includes the city of Sacramento, the populous areas princi- pally to the northeast and south of the city, and the agricultural areas to the north and south. The city is located 85 miles northeast of San Francisco. SMUD’s electric system supplies power to a population of approximately 1.5 million people with a total annual re- tail load of approximately 10,166 million kilowatt-hours for the year ended De- cember 31, 2019. SMUD’s annual peak load has averaged 3,009 Megawatts over the past three years, with a record peak load of 3,299 MW occurring on July 24, 2006. In 2017, SMUD recorded its second-highest peak load of 3,157 MW. As the capital of the nation’s most populous state, Sacramento benefits from the historically stabilizing influence of a large government sector. Sacra- mento is home to the state government headquarters, the Sacramento County seat, the city government and various special districts that combine to make government the largest single employ- ment sector in the Sacramento area. Information technology, transportation, education and health services, leisure and hospitality, and construction round out the other major sectors of employ- ment and industry in the area. SMUD uses a combination of gen- eration sources including hydro, natural gas, wind, solar and unspecified pur- chases. The California Legislature has enacted a number of bills affecting the electric utility industry. In general, these bills regulate greenhouse gas emis- sions and encourage greater invest- ment in energy efficiency and sustain- able generation alternatives, principally through more stringent renewable portfolio standards. SMUD is governed by a seven-mem- ber, independent board of directors. In 2018, the board adopted a new integrated resource plan (IRP), a long- term carbon reduction plan, through a comprehensive public process and filed the approved IRP with the California Energy Commission on April 29, 2019. The approved IRP calls for a reduction in GHG emissions from SMUD’s ener- gy supply by more than 60% by 2030 relative to 1990 levels and a goal of net zero emissions by 2040 due, in part, to a significant investment in electrification of the local building and transportation sectors. The IRP is expected to reduce Sacramento’s economy-wide GHG emissions by 70% relative to current levels. In July 2020, the board adopted a climate emergency declaration that commits to working toward an even more ambitious goal of delivering car- bon neutral electricity by 2030. Pilot Study and Results In 2012, SMUD completed the instal- lation of smart technology, including approximately 617,000 digital com- municating smart meters, distribution automation systems and equipment to facilitate load management. After the successful deployment of smart meters, during the summers of 2012 and 2013, SMUD conducted the SmartPricing Options (SPO) pilot program to test experimental time differentiated rate plans for residential customers. These plans were designed to encourage customers to reduce or shift the timing of their energy use. SMUD implemented the SPO pilot program with four basic rate structures: l Default TOU l Default TOU with a critical peak pricing (CPP) component l Optional TOU l Optional TOU with a CPP component DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B 17 MOVING AHEAD WITH TIME OF USE RATES The purpose of the pilot was to determine: l How various types of rates affected electric energy and demand l Customer characteristics related to energy usage behaviors l How TOU rates effect customer bills and satisfaction l Expected market penetration for rate and enabling technology programs l Which educational and marketing strategies were effective with cus- tomers In marketing the SPO pilot program to customers, SMUD focused on several key messages. Specifically, materials noted that customers could receive discounts on electricity during off-peak hours, would be able to take more control of their summer electricity costs, would be able to better manage their energy usage, and could contribute to a cleaner environment. After two years of engagement through the pilot, SMUD learned several marketing lessons: l Messaging for CPP events was more complex than anticipated and re- quired more resources than originally planned l Customers were interested not only in their own savings, but also in how much everyone in the group saved l Using pricing plan specific recruit- ment marketing materials rather than mass marketing materials cost less and resulted in higher than expected enrollment rates The study also discovered that cus- tomers who opted into the TOU rates reduced load at much higher rates than customers who were defaulted onto the rates, especially when offered the in-home displays, and that customers react to price signals and reduce peak and usage during peak periods. More details about these differences can be found in Section 1.2 of the SPO study. The SPO study was recognized as one of the best studies available in the industry at the time. The investor-owned utilities in California and the California Public Utilities Commission (CPUC) made references to the SPO study findings in subsequent rate proceed- ings, which guided their policy decision making. Eventually, the CPUC adopted pilot studies for the IOUs. Following SMUD’s steps, PG&E, the largest IOU in the state, began the roll out of its time- based pricing plans in the fall of 2020. Implementing Default TOD Rates On June 15, 2017, the board approved TOD as the standard rate for residential customers. The residential rate transition began in the fourth quarter of 2018 and was completed in the fourth quarter of 2019. The TOD rate design was based on the successful SPO pilot study, as well as extensive customer insight and feedback and changes in the energy markets since the study. Using this foundation, SMUD created the TOD rate that was designed to achieve positive results for the environment and support SMUD’s carbon reduction goals, in- creased ability for customers to manage their energy bills and SMUD’s ability to reduce commodity costs. The TOD rates support the board’s carbon reduction goals in the following ways: l Aligns with SMUD’s commitment to renewable energy and the environ- ment l Supports the IRP l Promotes electrification with lower off-peak prices l Reflects lower energy prices when clean power is abundant and higher prices when energy is more carbon intensive DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B 18 All hours, every day except from 5 p.m. to 8 p.m. weekdays All hours, every day except from 5 p.m. to 8 p.m. weekdays For all use for EV owners $0.0969 kWH $0.0969 kWH 12 Noon 5 10 15 20 25 30 5 PM 8 PM 12 Midnight 12 Noon 6 AM O-Peak Hours O-Peak Hours On-Peak Hours $0.1338 kWH $0.0819 kWHcents / per kWhMon. – Fri. only 5 p.m. – 8 p.m. FIGURE 4. NON-SUMMER MONTHS (OCTOBER 1 – MAY 1) Residential Time-of-Day Rates, 2019 Mon. – Fri. Midnight – Noon All hours on weekends and holidays For all use for EV owners $0.1611 kWH $0.1611 kWH $0.1166 kWH 12 Noon 5 10 15 20 25 30 5 PM 8 PM 12 Midnight 12 Noon 6 AM Mid-Peak Hours O-Peak Hours On-Peak Hours $0.2835 kWH $0.1016 kWHcents / per kWhAll hours, every day except from 5 p.m. to 8 p.m. weekdays Mon. – Fri. only 5 p.m. – 8 p.m. Mid-Peak Hours All hours, every day except from 5 p.m. to 8 p.m. weekdays FIGURE 5. SUMMER (JUNE 1-SEPTEMBER 30) Residential Time-of-Day Rates, 2019 REDUCING CARBON, GIVING CUSTOMERS CONTROL: TOD IN SACRAMENTO DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B 19 MOVING AHEAD WITH TIME OF USE RATES To support the board’s direction on rates, the TOD rates must: l Reflect the cost of energy when it is used l Reduce use on peak l Encourage energy efficiency and conservation l Offer flexibility and options –custom- ers who don’t want to participate in TOD rates have the choice to be on an alternate fixed rate l Be simple and easy to understand l Equitably allocate costs across and within customer classes Figures 4 and 5 show the parame- ters and prices for the residential TOD in 2019. This rate design was meant to bal- ance simplicity and matching the cost of energy. Hours were chosen to make them easy for residential customers to remember and took into account feedback from customers and findings from the SPO study. For example, the three-hour peak period was influenced by feedback from customers. In addition to the parameters for peak hours, customers with electric ve- hicles receive a discount of 1.5 cents per kWh on all consumption from midnight to 6 a.m. Customers were offered an alter- native fixed rate option if they felt TOD wouldn’t work for them. The price re- flects the cost of those users with high on-peak usage and is about 4% higher than the standard TOD rate. Currently 2% of customers have elected the Fixed Rate. Table 2 displays the prices effec- tive in 2020. TOD offers lower prices for most of the year as 82% of the hours in a year are off-peak, which includes weekdays, all weekend and holiday hours. Summer peak hours represent only 3% of the to- tal hours in a year. The cumulative effect of the changes is that customers will see lower bills eight months of the year and higher bills four months out of the year. TOD was designed to be revenue neutral and was not a rate increase. Business customers have been on time-based rates for years. On June 24, 2019, the board approved an update and glidepath to the commercial time- of-day rates to improve consistency and better align commercial rates with energy market prices. This commercial restructure rate transition will be imple- mented in 2022 and will take several years to complete the full transition. The 2019 General Manager’s Report on Rates and Services offers more details on this transition. TABLE 2. 2020 RESIDENTIAL TIME-OF-DAY RATE NON-SUMMER MONTHS Percentage of Time periods (Oct.1 – May 31) Price per kWh the total year Off-Peak (All hours except 5 – 8 p.m., Mon.-Fri.) $0.1035 61% Peak (5 – 8 p.m., Mon.-Fri.) $0.1430 6% Total hours per year 67% SUMMER Percentage of Time periods (June 1 – Sept. 30 Price per kWh the total year Off-Peak (midnight – noon) $0.1209 21% Peak (5 – 8 p.m., Mon.-Fri.) $0.2941 3% Mid-Peak (noon-midnight, except 5 – 8 p.m., Mon.-Fri.) $0.1671 9% Total hours per year 33% Total Non-summer months + summer months 100% DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B 20 Customer Education Customer education was a key compo- nent of both the pilot program and the full-scale implementation of residential TOD rates. The objectives of providing customers with tools and information were to: 1) help them make informed choices, and 2) ensure the best cus- tomer experience possible. SMUD learned some lessons from the SPO pilot, including that customers want specifics. For example, stating “5 p.m. to 8 p.m.” vs “peak hours” in mate- rials. Explaining the “why” behind the change is also important. SMUD initiated three major cam- paigns and messages in 2019: l Introducing time-of-day (3 months prior to start of transition) l Time-of-day is here (during the 4 months of the transition) l Summer rates are here (June through September — everyone is on TOD at this point). In September, messaging changed to Summer rates end September 30. SMUD used many different commu- nication channels to inform customers: l Digital search and display l Print publications l Billboards & buses l Social media l TV l Door hangers l Radio l smud.org l Direct mail These channels provided 60+ opportunities for customers to hear about TOD. Every customer received a welcome kit, rates report and instruc- tions on how to choose the rate that was most convenient for them; even- tually customers were enrolled on the standard TOD rate or they opted out onto the fixed rate. REDUCING CARBON, GIVING CUSTOMERS CONTROL: TOD IN SACRAMENTO DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B 21 MOVING AHEAD WITH TIME OF USE RATES The SMUD website also featured tools to help customers. A landing page provides information, tips, videos on how customers can reduce their bill, as well as information on programs and services. A TOD Cost Estimator helps customers determine how much their appliances and equipment cost to run at different times of the day, and the in- teractive Energy Efficiency Home allows customers to explore how to control costs and energy use. SMUD offers a mobile app providing easy access to customer information. Bill alerts offer options for staying on track with energy use and budget. Results SMUD’s assumptions and hypothesis were that TOD would be good for com- modity costs, its customers and for the environment. Benefits Estimated Actual Carbon Reduction 3,000-5,000 metric tons 12,800 metric tons (estimated) Residential peak load reduction 75MW, or 5.8% ~130MW, or ~8% Financial benefit $3.7M annually $5M estimated in commodity costs Selection of TOD 96% 98% (to date) TABLE 3. RESULTS FROM TOD SHIFT IN 2019 Table 3 provides an overview of the assumptions and TOD results from the first summer in 2019. In terms of the environment, it is estimated that in the summer of 2019, TOD reduced carbon impact at a rate of about 12,800 metric tons per year, which is the equivalent of powering ap- proximately 4,800 houses for one year, or driving approximately 4,200 cars with internal combustion engines for one year, or planting 4,900 oak trees that would each grow for over 40 years. TOD reduced the carbon impact by approximately 12,800 metric tons per year, which is equal to one of the following ENVIRONMENTAL BENEFITS 4,800 or orElectrifying 4,800 houses for 1 year Removing 4,200 cars from the road for 1 year Planting 4,900 oak trees that each grow for 40 years 4,200 4,900 DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B 22kWh With TOD, the greatest carbon reduction was achieved on the 12 hottest days in the summer (green line) FIGURE 6. AVERAGE CUSTOMER ENERGY USE REDUCTION 3.5 2.5 1.5 0.5 (0.5) (1.5) 2018 Workday 2019 Workday 2018 12 Hottest Workdays 2019 12 Hottest Workdays 12345678910 11 Noon 1 2345678910 11 Midnight Decrease from 5 p.m. – 8 p.m. The bigger the gap, the greater the savings MWWith TOD, customers moved the system peak from 5 – 6 p.m. to 4 – 5 p.m., plus also reduced the peak FIGURE 7. SYSTEM IMAPCT TO AVERAGE SUMMER WORKDAY 3.5 2.5 1.5 0.5 (0.5) (1.5) Without TOD 2019 Summer Workday 123 456 78 91011Noon 12 345678910 11 Midnight (1.5) (1.5) (1.5) New peak from 4 p.m. – 5 p.m. Old peak from 5 p.m. – 6 p.m. REDUCING CARBON, GIVING CUSTOMERS CONTROL: TOD IN SACRAMENTO DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B 23 MOVING AHEAD WITH TIME OF USE RATES Figure 6 compares energy use and carbon reduction before and after TOD. The blue line reflects differences on a normal day, while the green line shows differences for the hottest days in Sac- ramento. The system peak used to occur be- tween 5 pm and 6 pm, per the blue line in Figure 7. During the first summer with TOD rates, in 2019, the system peak occurred between 4 pm and 5 pm, when renewables are plentiful. Prior to implementation of TOD, the peak was moving later into the evening. As for revenue and bill impacts, on average, customers realized bill savings from the first summer in 2019. Figure 8 shows a breakdown of the savings by month. The orange bar represents av- erage bills before TOD in 2018 and the blue bar is after TOD in 2019. Customers shifted and reduced their usage in all time periods and saved about 2% or $3 per month on their summer electric bill (energy only). In summary, SMUD saw better results than staff assumed based on the SPO study, seeing energy savings across all time periods and not just the peak period. Looking Ahead One year of data is not enough to make any firm conclusions. Sacramento did not have any really hot days (105ºF+) in 2019, so it is unknown how customers will respond to extreme temperatures. Having time-based pricing is helpful when utilities need customers to con- serve electricity. In August and Sep- tember of 2020, the Sacramento region, along with the entire state of California, experienced an historical heat wave. The neighboring IOU, PG&E, was forced to schedule rotating power outages due to energy shortages. In response to the heat emergency, the Governor urged residents to conserve electricity between 3 p.m. and 10 p.m. SMUD’s residential peak period falls within those hours. SMUD did not perform any rolling blackouts during that period. SMUD published information on its website advising customers to limit the use of electricity during the week’s heat wave. SMUD also does not know how customers will respond during year two when there is less marketing — they could either improve load shifting or get complacent and shift less. Plus, it’s unknown how the COVID-19 crisis will affect customer behavior in 2020 and beyond. Strong executive and board support and communication are necessary in making the shift to a TOU or TOD rate. This is a long process, taking several years to plan, perform pilots and even- tually implement the standard TOD rate. Having a pilot to refer back to is very helpful during the rate process. Imple- mentation of a TOD rate requires a lot of technology and resources to support giving customers enough data to make decisions about when to use energy (online tools, analysis of choice, etc.). Utilities should consider a rate roadmap when making this type of decision; SMUD conducted a rates roadmap plan and it was very helpful. FIGURE 8. AVERAGE BILL SAVINGS, BY MONTH June $1.10 July $4.30 August $5.20 2018 Savings $80 $100 $120 $140 $160 2019 with TOD September $1.30 Customers shifted and reduced their usage in all time periods and saved about 2% or $3 per month on their summer electric bill DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B 2451 Crystal Drive Suite 1000 Arlington, VA 22202-4804 202-467-2900 www.PublicPower.org DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B 24¢ / 7¢ / $ to use a window/room air conditioner 2¢ / 1¢ / $ to run a fan or ceiling fan 66¢ / 20¢ / $$$ to use an electric clothes dryer <1¢ / <1¢ / $ to charge a cell phone $1.06 / 32¢ / $$$$ to use an electric water heater 10¢ / 3¢ / $ to use a dishwasher 1¢ / <1¢ / $ to use a computer 35¢ / 11¢ / $$ to use a space heater 43¢ / 13¢ / $$ to use an electric oven 2¢ / <1¢ / $ to play video games 12¢ / 4¢ / $ to run a furnace fan for a gas furnace 26¢ / 8¢ / $$ to use a microwave 5¢ / 1¢ / $ to run a large inflatable holiday decoration <1¢ / <1¢ / $ to use an LED light bulb 71¢ / 21¢ / $$$ to use a central air conditioner 7¢ / 2¢ / $ to use a clothes washer 1¢ / <1¢ / $ to watch TV 33¢ / 10¢ / $$ (Incandescent) 5¢ / 1¢ / $ (LED) to light a string of large bulbs 78¢ / 23¢ / $$$$ to charge an electric vehicle with a Level 2 charger (3.3 kW) 5¢ / 1¢ / $ to run a slow cooker TAKE CONTROL OF YOUR ELECTRIC BILL KNOW WHAT IT COSTS TO USE AN APPLIANCE FOR ONE HOUR Utilities 64¢ / DAY to keep a hot tub warm 16¢ / DAY to run a refrigerator 2¢ / DAY to run a router ON-PEAK HOURS (5-9 P.M., OCT-APR / 2-7 P.M. MAY-SEPT / WEEKDAYS ONLY)OFF-PEAK HOURS (ALL OTHER HOURS OF THE DAY, WEEKENDS AND MAJOR HOLIDAYS) Additional information and tools are available at fcgov.com/TOD. Costs are based on the estimated use of appliances and electronics using an average of 2020 summer and non-summer pricing. APPLIANCES THAT USE ELECTRICITY 24/7 FOR ONE DAY DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B LITTLE CHANGES MAKE A BIG DIFFERENCE MAXIMIZE YOUR SAVINGS DURING ON-PEAK HOURS Auxiliary aids and services are available for persons with disabilities. Esta información puede ser traducida, sin costo para usted.1/20 18-19259 Run your dishwasher and clothes dryer in the morning, later in the evening/night or on weekends. Another option is to hang dry your laundry. And, remember to always run full loads. Did you know a lot of electronics use electricity even when turned off? Use power strips to avoid wasting ‘vampire’ power. Also, charge electronics and EVs overnight to take advantage of off-peak prices. For more information and tools, visit fcgov.com/TOD. Need help paying your bill? Visit fcgov.com/utilities-affordability. Take control of your electric bill. • Shift use to off-peak times. • Use less during on-peak hours. • Reduce your overall electric use. Remember, with TOD pricing, when you use electricity is as important as how much you use. utilities@fcgov.com • 970-212-2900 • V/TDD 711 Adjust the setting on your thermostat a few degrees lower in the winter months and a few degrees higher in the summer months. (The U.S. Department of Energy, energy.gov, recommends the above settings.) SUMMERNON-SUMMER Use smaller appliances like a microwave, slow cooker or toaster oven, when possible. All-Electric Heat Customers Based on an average of the Electric Heat TOD summer and non-summer prices for one hour. Additional tier charge does not apply. 51¢ / 17¢ / $$$ for 12 feet of all-electric baseboard heating Enroll your electric water heater in Utilities’ Peak Partners Program to automatically shift when your water is heated and save money. Details: peakpartnersfortcollins.com/ water-heater Learn about efficiency and conservation programs at fcgov.com/residential-conserve. DocuSign Envelope ID: E19BD1F7-386B-4E4D-BDD2-038A09503F3B