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GELD Proposes Tripling Rate For 4 Hrs Per Day; Cutting It In Half For 20

by Russell Harris
As our town and our economy become increasingly dependent on electricity, Groton Electric Light Department is not resting on its sterling reputation for low prices, short, infrequent power outages and supplying low-carbon electricity.
     Instead, the three-person Board of Electric Light Commissioners is boldly introducing a rate plan tailored for 21st century realities.
     The new rate plan varies the price of electricity by time of day, thus incentivizing all ratepayers to reduce their electric bills by shifting some of their power consumption to lower-cost time periods. The new rate plan could also lower the whole town’s dependance on electricity generated by global-heating gasses.
The Problem
     Currently GELD charges a flat rate for all electricity, as do most electric utilities. But electric power costs [for utilities] vary widely by time of day and season. Groton Electric pays many times more for power between the peak hours of 4 pm and 8 pm. In consequence, low-volume users of electricity end up subsidizing heavy users of electricity during these hours.
     For example, when a resident uses electricity for such power-hungry uses as charging electric vehicles, running high-capacity pool pumps and air conditioning large homes between 4:00 pm and 8:00 pm, they pay the flat rate for power that costs GELD much, much more.
     In a letter to the high-volume users GELD Manager Kevin Kelly wrote, “This year, we are testing rates that will encourage customers to shift electric load out of this time period.” Describing the new rate structure, he wrote that the new rates would be almost half the current flat rate for 20 hours a day and more than triple the current flat residential rate during the four peak hours from 4 pm. to 8 pm.
     “The rate that is currently looking like our best path forward is called the 4/40 time-of-use rate,” he wrote. By moving intensive electric consumption from the high cost to the low cost time period, residents can reduce their bills or at least see no increase. For those customers who don’t want to take the trouble, at least they will be paying the true cost and will not receive an unintended subsidy.
     In addition, the incentive to reduce power consumption during this high-cost peak period will reduce green house gas emissions because it is during the hours of peak demand that diesel, coal and additional natural gas generation must be brought on line.
Education Key to New Rate Structure
     The biggest challenge to adopting the new rate structure is educating rate payers. Manager Kevin Kelly said that – understandably - most people do not consider the varying price of electric power when they use it. He said, “If GELD can educate as many as possible and we can work out this test program this summer, we'll probably make the rates mandatory next year.”
     “Everybody's going to love it if their bill goes down. But, the people who use more power in the evening, of course, their bill would go up. So we want to work with them to offer them ways to shift their load so their bill either doesn't go up as much or it doesn't even go up at all,” Kelly wrote.
     If GELD can make progress in educating ratepayers this summer, the single flat rate could be eliminated next year and the 4-40 plan would be adopted for all ratepayers.
GELD At The Cutting Edge
     A lot of electric utility companies don’t realize they have a problem because they don’t know their hourly costs by individual household. GELD is fortunate to have many years of hourly cost data by household, thanks to the decision to install so-called "smart meters" about fifteen years ago.
     But even with this vast trove of data, it takes expertise and data-mining technology to fully grasp the patterns and opportunities. Fortunately Kelly was able to lure a group of MIT consultants to create the software and do the analysis in exchange for making the data available. He said that the consultants used GELD data to develop a product to sell to other electric utilities. “Basically, they're just mining our data and making algorithms with our data.”
Shadow Billing Option For High-Use Customers
     Kelly explained that this summer GELD is reaching out to high-use customers and doing everything they can to get these customers to lower their load to the lower cost period. “We want to work with them to provide them ways to shift their load so their bill either doesn't go up as much or it doesn't even go up at all,” he said.
     To see how the new rate would affect customers with high-use profiles GELD is offering these users the option of receiving a “shadow” bill using the new 4/40 rate. This “shadow” bill would not be a real bill but would only be used for illustrative purposes.
     Kelly suggests that these users might spend the summer focusing on ways “you can lower your electric use between 4:00 pm and 8:00 pm.” As an additional sweetener for customers who are successful in lowering their percentage of electricity during those evening hours compared to last year, GELD would reward them with credits on their next bill.
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