Here’s how much it costs to use common electric appliances for an hour, according to estimates from Fort Collins Utilities. The Coloradoan
Fort Collins Utilities’ time-of-day electricity rates are here to stay, and they appear to be saving most people a little money.
Utilities reported a host of mostly positive statistics from the first year of the new rate structure to Fort Collins City Council on Tuesday. About two-thirds of residential customers saved money in the first year of time-of-day pricing, and overall residential use declined about 2%. Reduced electricity use avoided more than 15,800 metric tons of carbon dioxide emissions, or about 0.8% of 2018 emissions.
Time-of-day pricing means Utilities charges higher rates for electricity used during peak hours: 5-9 p.m. on weekdays from October to April, and 2-7 p.m. on weekdays from May to September. Holidays are exempt from peak-use rates. The peak-hour electricity rate is about three times higher than the off-peak rate.
Utilities implemented time-of-day pricing in October 2018 in an effort to spread the “coincident peak” charge — leveled during the one hour of each month when electricity use is highest — across the range of times when that peak tends to happen. The charge used to be spread across the entire day.
The intention of the new pricing system wasn’t to make more money for Utilities, staff said. They predicted that the city’s lower costs for wholesale power would offset reduced revenue from customers who used less electricity or changed the timing of their use, which proved true in the first year of implementation.
Utilities staff studied residential electricity bills and usage from November 2018 to October 2019 and found the average customer saved about $1.54 a month (about 2.3%) under the time-of-day rate structure. They calculated the savings by comparing customers’ monthly bills to what they would’ve been charged for electricity use under the previous rate structure, taking into account the 5% electricity rate increase between 2018 and 2019. About 65% of people had lower bills on average, 33% paid up to $5 more a month on average, and 2% paid more than $5 more a month on average.
Customers with electric heating, who make up about 9% of residential customers, saved the most on average: $3.51 a month. Gas-heated homes saved about $1.26 a month. Customers with solar panels, who make up about 2% of the residential base, were the only group that saw higher bills on average. Their bills increased by an average of $2.94 a month.
The decrease in overall electricity use held up after staff adjusted the numbers to account for weather differences, staff said. For example, customers would probably use less electricity during a cooler summer compared with a hotter summer because they wouldn’t use as much air conditioning.
When staff adjusted the usage data for weather, they found residential use declined between 3.5% and 5%. Electricity use during peak hours decreased by 7.5%, or 10% when the data was adjusted for weather variance.
The average dip in electricity bills reflects an important but often misunderstood distinction about electricity use: Although the community’s overall electricity use is higher during the more expensive peak hours, the average household uses most of their electricity (about 80%) during the cheaper off-peak hours. That makes sense when you remember the off-peak hours are in effect over 88% of the time during the average week between October and April and about 85% of the time between May and September.
Council’s reaction to time-of-day rates
Council members offered mostly positive feedback about time-of-day rates. Several said they haven’t heard many or any complaints about it from their constituents, and they praised the pricing structure for giving residents more control over their electricity bills.
Council member Julie Pignataro disagreed on some of those points. She said she hasn’t heard “one positive thing” about the rate structure from her east-central Fort Collins constituents, and she asked Utilities staff to consider an “opt-out” avenue for the pricing structure.
“I’m impressed by the environmental benefits, but for a third of the customers, they’re having to pay for it,” Pignataro said, taking issue in particular with the average bill increase for customers with solar panels. “It’s on their backs.”
Utility rate analyst Randy Reuscher said Utilities staff runs bill comparisons for customers who call in with concerns about the rate structure. Customers’ suspicions that time-of-day pricing significantly increased their bills usually aren’t founded, he said.
“A lot of the time, they think they’re paying more and they’re actually paying less,” he said.
Customers with solar panels “start with a very low bill to begin with,” energy services manager John Phelan said, “so the dollar impact can be deceiving.”
Other council members asked Utilities to explore ways to blunt the rate structure’s impact on middle-income and lower-income households, whether through targeted outreach or assistance programs. Council member Emily Gorgol suggested Utilities make a geographic heat map to see whether certain areas of the city have faced more bill increases. The city could help those households improve their energy efficiency.
Utilities rolled out the Income-Qualified Assistance Program in unison with time-of-day pricing. The program offers 23% rate savings to households that make 60% or less of the state median income level. Gorgol asked whether Utilities could shift the program from opt-in to opt-out so more qualified people can get financial assistance.
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She pointed out that most people who saw bill increases after time-of-day pricing took effect paid less than $2 more per month on average.
“To me it’s like, yes, people are paying more, but if $2 is breaking the bank, then we need to get those people enrolled in the (income-qualified assistance program),” she said.
Some council members wondered whether negative customer feedback is a perception issue.
Utilities altered their messaging about time-of-day rates after a rush of customer frustration, particularly in response to a clock graphic that emphasized the three-times-more expensive electricity rates during peak hours.
“What we heard back from (customers) was, ‘You’re trying to collect more revenue, it’s a rate increase, and you’re telling me when I can cook and do my laundry, and that just is not right,’’ said Lisa Rosintoski, Utilities deputy director.
Since then, Utilities has pivoted to highlighting the fact that households generally use most of their electricity during off-peak hours and that small changes in behavior can reduce their bills.
Mayor Wade Troxell, who also sits on the Platte River Power Authority board, said he’s impressed by the lower electricity use during peak hours. One benefit of time-of-day pricing is that it alleviates pressure on power production systems, which are built with the community’s “coincident peak” in mind.
If the coincident peak is lower and electricity use is better distributed throughout the day, renewable electricity sources and distributed electricity (electric vehicles, batteries, solar panels and the like) can be integrated more smoothly into Platte River’s power portfolio. Platte River is working toward a goal of 100% noncarbon electricity by 2030. Troxell’s goal is for electricity users to be more active participants in the grid.
“Now you’re actually making it more predictable and transparent to end users so they can make rational decisions,” Troxell said. “We’re moving in that direction, and Platte River’s rate structure is aligned with the outcomes we want as a community.
Jacy Marmaduke covers government accountability for the Coloradoan. Follow her on Twitter @jacymarmaduke. Support stories like this one by purchasing a digital subscription to the Coloradoan.
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