Celebrating 35 Years: Real-Time Pricing. Power Smart Pricing. Energy-Smart Pricing Plan.
35 Facts for CNT’s 35 Years: Each week we’ll expand on one fun fact. Enjoy!
#19 Real-Time Pricing. Power Smart Pricing. Energy-Smart Pricing Plan.
Beginning in the late 1990s, CNT and the Community Energy Cooperative (which later became CNT Energy) embarked on a series of projects to help residents and businesses reduce electricity use through strategies like energy-efficiency programs, local power generation, and “demand response.” These innovative projects set standards in Chicago and beyond, led to the evolution of our thinking on how best to promote smart energy use, and positioned CNT Energy as a national leader in designing and administering programs and electricity rates that help households reap the benefits of emerging smart grid technology.
It all started in January 2003, when the Cooperative worked with ComEd, Chicago’s electric utility, to launch a pilot project called the Energy-Smart Pricing PlanSM (ESPP). ESPP was the first program in the nation to allow residential customers to pay hourly, market-based electricity prices. The theory behind the program was that, given access to the right information, households could respond to hourly prices and shift some of their electricity use to off-peak times when prices tend to be lower. This could result in savings for customers, while reducing strain on the electric infrastructure during peak times.
The first challenge was to find customers who were willing to try out the new program. Initial marketing was targeted to Cooperative members and selected neighborhoods. In 2003, more than 750 customer members enrolled in the program, and over time more than 1,400 customers were enrolled. Once enrolled, ESPP participants received information to help them manage their costs with hourly pricing, including energy efficiency tips and “high price alerts” by phone or email, letting them know when prices would be high.
CNT’s CEO Kathryn Tholin was general manager of the Cooperative when ESPP was launched. In a 2005 interview, she described how the intent was to keep the pilot simple, testing the premise that given the right data, people would be able to respond to hourly prices and manage their costs, even without expensive gadgets. “This program gives consumers more options and it lets people take greater control of their bills,” she said. “People are saving money, they’re changing the way they use energy in positive ways and they’re happy with the program.”
An independent evaluation of ESPP by Summit Blue Consulting (now part of Navigant Consulting) found that “ESPP participants were extremely satisfied with the program. They liked the help provided by the program, and the reminders (via price alerts and other information) to take their price adaptive actions.” Evaluations found that ESPP participants saved an average of 10 percent on their electricity bills and reduced their electricity use by as much as 20 percent during peak hours.
In subsequent years, the Energy-Smart Pricing Plan received numerous accolades and awards, including the first annual Inspiring Energy Efficiency Award from the Midwest Energy Efficiency Alliance and a 2006 Chicago Innovation Award, and was hailed as a national model for electricity demand reduction by Nobel Laureate Vernon Smith. “These types of programs have multiple benefits, including lower capital and energy costs, fewer critical power spikes, consumer control over electricity prices, and the environmental benefits gained by empowering consumers to use electricity more wisely,” Smith said in a 2003 address to the Cooperative.
The success of the ESPP pilot project helped to pave the way for the expansion of hourly electricity pricing in Illinois. In 2006, the Illinois General Assembly passed legislation requiring the major electric utilities in the state to offer their residential customers an hourly pricing option. This led to the 2007 launch of two full-scale programs: the ComEd Residential Real-Time Pricing (RRTP) open to ComEd customers in northern Illinois, and Power Smart Pricing from Ameren Illinois, the utility serving central and southern parts of the state. Both programs work much like the original Energy-Smart Pricing Plan, giving customers access to hourly electricity prices set in the wholesale market.
CNT Energy currently administers both programs for the utilities. This involves promoting the programs, providing customer support, and giving participants access to tools and information that help them manage their electricity usage and costs. Since these full-scale programs launched, participants have saved an average of more than 15 percent on electricity supply compared with what they would have paid on the utilities’ fixed-price rates. In addition, participants continue to reduce electricity demand during peak hours, and they report high levels of satisfaction with the programs.
Ultimately, what programs like ESPP and real-time pricing prove is that consumers respond positively to incentives that help them manage their energy use and costs. More importantly, positive behavior change and a shift in thinking about energy can result. These are important steps in our shared efforts to make the places we live more efficient and the planet we love less threatened.
More information on both programs is available on the CNT Energy website.
We’re celebrating CNT’s 35 years of impact on sustainable urban development through 35 weeks of posts like this one. If you have a story or picture from our past, please share it with Anjuli@cnt.org. Thanks!
CNT’s work is made possible, in part, through generous support from individual donors. Please click here to make a gift in honor of our 35th anniversary.
Next week: #20 Housing PLUS Transportation