Thursday, October 30, 2008

What Ever Happened to Off-Peak Electric Rates?

In the 1970's, PSCO introduced off peak electric rates, which were designed to flatten their demand profile. At the time, a kwh used between 10pm and 6am was priced at less than a third of the cost of an on-peak kwh. If utilities can just tweak their customers usage habits thru rate schedules, they can really drop their capital costs. That is, they won't have to build that new power plant just to cover three week long spikes in demand.

Over the years, the PUC added many "cost adjustments" to the electric bill, which watered down the off-peak savings to be had. Eventually, all customers lost interest in the whole program and it was cancelled. These cost adjustments are multiplied by the kwh usage, and now account for around 66% of a residential electric bill. It didn't matter if all the usage was off-peak, these adjustments were still there in full. So, in 1980 if you were saving 2/3 of your bill with off-peak rates, by 2008, your savings would be 2/3 of the remaining 34%, or only 22%.

2 comments:

  1. We get this question all the time on job sites. Not specifically but most people in Denver know that this used to exist and people usually just ask for certain ways to save on usage.

    Maybe there could be a proposal to bring this back.

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  2. The Smart Grid initiative brings it back with a vengeance. It will allow you to program your smart appliances and space heaters to run only during "cheap" periods.

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