Electric Rates 101
ESPP featured in Newsday, May 16, 2004:
…Small amounts of conservation during the short periods when electric prices soar can lead to substantial reductions in overall energy bills, but experts have been stumped about how to get consumers to act.
Now a range of new programs is seeking to educate the public about fluctuations in power prices and give them financial incentives for conserving or shifting their usage to periods when electricity can be generated more cheaply…
In Chicago, a first-of-its-kind pilot program [ESPP] is tracking residential customers’ usage by time of day and charging rates based on actual market prices for the same times. Those customers can now see the price fluctuations that flat rates have always hidden, and save money by adjusting their habits accordingly.
Anne Irving, who lives with her husband and 3-year-old daughter in Chicago, said enrolling in Community Energy Cooperative’s program made the family focus on how and when they use electricity.
Irving said they cut about $10 from their monthly bills by being careful to shut down the computer when it wasn’t in use and paying close attention to the settings on their central air conditioning system, among other measures.
“They weren’t huge changes,” Irving said. “We’ve been able to save money without making that much of a difference in our lifestyle…”
Many economists say the best way to do that is with real-time pricing programs like the one in Chicago. But hurdles include the cost of special meters, complicated billing and the difficulty of convincing consumers that tracking electricity prices won’t be an onerous chore.
However, Community Energy Cooperative worked with Illinois utility ComEd to establish a pilot program last year that appears to have overcome many of those obstacles. Residents enrolled in the program don’t need to check electricity prices every hour; they merely have to understand the predictable patterns prices follow, said Kathy Tholin, general manager of the cooperative.
“You’re always going to see lower prices during the overnight, during the morning and the late evening, and you’re always going to see them somewhat higher during the afternoon,” Tholin said. “And it’s those hot summer afternoons when you’re going to see the price go significantly higher.
“If people understand more about how energy prices work, then they’re more likely to change their day-to-day behavior,” Tholin said.
The 750 customers who enrolled in the program’s first year saved an average of about $12 a month on their bills and, as a group, reduced their energy use during peak periods by as much as 25 percent.
Tholin said the biggest energy savings in a typical home comes from air-conditioning reductions. But homeowners in the program also have learned to shift discretionary use such as clothes and dish washing to lower-priced periods, she said…
Copyright © 2004, Newsday, Inc.
