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%.
Showing posts with label PUC. Show all posts
Showing posts with label PUC. Show all posts
Thursday, October 30, 2008
Friday, May 30, 2008
Obvious Need for Smart Metering
Some sort of weird incentive program has been approved by the PUC. From the Denver Post article:
"Under a new incentive plan approved by the commission, Xcel could recover from ratepayers all costs for programs that encourage customers to use energy more efficiently. Xcel also could receive bonuses if it meets certain targets." Is it just me, but isn't this some kind of circular logic? Here's another way to say it, and it's hard to believe the Post can write this with a straight face: "Xcel will recover from ratepayers all costs for programs that encourage ratepayers to use less." Auugghhh!
How about a rate-based incentive program? That's how the rest of our economy works. You are charged the cost of a service plus a profit. The amount of profit is determined by the market price.
Since Xcel is a monopoly, the market price is set by the PUC. Therefore the market price should be the cost plus the 10% profit that Xcel is allowed by law.
The problem is that the rate structure doesn't reflect actual costs.
The smart metering initiative will solve this problem, so incentive programs like this are unnecessary because normal economic laws of the marketplace will naturally encourage conservation and alternative energy.
"Under a new incentive plan approved by the commission, Xcel could recover from ratepayers all costs for programs that encourage customers to use energy more efficiently. Xcel also could receive bonuses if it meets certain targets." Is it just me, but isn't this some kind of circular logic? Here's another way to say it, and it's hard to believe the Post can write this with a straight face: "Xcel will recover from ratepayers all costs for programs that encourage ratepayers to use less." Auugghhh!
How about a rate-based incentive program? That's how the rest of our economy works. You are charged the cost of a service plus a profit. The amount of profit is determined by the market price.
Since Xcel is a monopoly, the market price is set by the PUC. Therefore the market price should be the cost plus the 10% profit that Xcel is allowed by law.
The problem is that the rate structure doesn't reflect actual costs.
The smart metering initiative will solve this problem, so incentive programs like this are unnecessary because normal economic laws of the marketplace will naturally encourage conservation and alternative energy.
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