How very European of Connecticut Light & Power.
The utility recently asked the state's Department of Public Utility Control to change its pricing structure starting in 2012, and boy will it be a change from a flat rate.
The proposal, based on their Plan-it Wise Energy pilot program, calls for a 10 to one ratio in off-peak to critical peak pricing. In the pilot, participants were paying up to $1.60 per kilowatt hour (kwh) during critical peak time, which totaled 40 hours over 10 different days.
Customers would be able to opt in to either peak-time pricing or four-hour time of use rates. Rebates will be provided for low-income customers who reduce their energy during peak hours.
Wait, let's back up a second. $1.60 per kwh. Yes, that's right. According to the Hartford Courant, the rates are not likely to be exactly the same, but CL&P is still gunning for a 10 to one ratio in critical to off-peak pricing. Pacific Gas & Electric, by comparison has a peak day pricing of $1.20 per kwh. Tack on another potential 40 cents to PG&E's rate and the Mystic River will feel more like the Italian Riviera when it comes to what people are paying for energy during the hottest days of summer. The national average in December was around 9.44 cents per kwh, according to the Energy Information Administration. Connecticut's average retail price at that time was 17.94 cents.
High prices for peak power, however, are in some ways the point, because steep price signals can encourage conservation and an expansion of demand response services. Connecticut is already a leader in demand response, with approximately 12 percent of peak megawatts under demand response management, according to Gregg Dixon, the senior vice president of marketing at EnerNoc, one of the demand response providers in Connecticut.
Currently, most customers that opt into demand response services are financially rewarded to cut their use during critical peak periods. Demand response companies give them a check for conserving (and the utility gives even a bigger check to the demand response provider for relieving congestion on the grid). Demand response has been particularly popular with businesses, which have larger, more predictable daytime power loads. The rates for CL&P's proposed peak-time pricing effectively adds some stick to the carrot approach of demand response.
Perhaps more importantly, the proposal by CL&P will help recoup a substantial portion of the cost of installing some 1.2 million smart meters starting in 2012, which is estimated to be nearly $500 million.
"There is still plenty that needs to be done to get ready for all of this, beginning, of course, with DPUC approval," Jessica Brahaney Cain, director of customer solutions at CL&P, said in a statement. "By 2017, we believe 25 percent of our residential and 50 percent of commercial and industrial customers will be participating in the program. Hopefully, the numbers will be even higher."
In the past few months, consumers in Texas and California have complained that smart meters have unfairly raised their bills, a charge denied by utilities. But in a trial in Oklahoma, consumers were surprised to learn about peak power and ways they could save.
CL&P admits that nothing is finalized yet. The DPUC is not expected to make a decision on the proposal until later this year.