ORIGINAL REPORTING: Rates That Can Move Electricity Customers To New Energy (Minnesota)

Has Xcel Minnesota designed the ideal residential time-of-use rate? The pilot program, to determine if price signals can get customers to shift energy usage away from peak times, has garnered wide acclaim. The main concern? It doesn't start soon enough.

Herman K. Trabish, Dec. 22, 2017 (Utility Dive)

Editor’s note: Most electricity users probably don’t know it but time-of-use rates will be their future and they will grow New Energy.

Some say pilot projects are a way to avoid the risk of real innovation, but a proposed Xcel Energy pilot to test time-of-use (TOU) rates is charging at innovation and winning praise as it goes. Xcel’s objectives are to find out how to effectively engage customers and if price signals can get customers to shift energy usage away from the peak, Aakash Chandarana, Xcel VP of Rates and Regulatory Affairs, told Utility Dive. Utility surveys consistently find customers “don’t really care,” he said. "This pilot will allow Xcel to test what our customers truly want.” The program is expected to drive greater use of renewables and reduce peak demand. Initial reactions are positive from a range of stakeholders. The pilot will require expenditures that must be paid for by customers, which rarely gets an unequivocal endorsement from ratepayer advocates. But Minnesota Citizens Utility Board (CUB) Executive Director Annie Levenson-Falk said she is happy to see Xcel moving ahead with the pilot because it will likely deliver customer savings.

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In addition, utility rate design pilots are usually not structured well enough to satisfy experts. Yet Rocky Mountain Institute (RMI) rate design authority Dan Cross-Call emailed that Xcel’s “is promising and applies many good design elements.” The pilot “follows many best practices” and will likely support a “future rollout of widespread opt-out TOU rates,” RMI pilot project authority Mike Henchen added. The two-year, 17,500-customer plan to use three price tiers and drive more off-peak use of Minnesota wind has stood up to serious stakeholder scrutiny. The worst thing said about it so far? It doesn't start soon enough. Utilities across the country thinking about TOU rates may need to take a close look it… click here for more

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