ORIGINAL REPORTING: Momentum grows for piloting Netflix-like fixed electric subscription rates
Momentum grows for piloting Netflix-like fixed subscription rates, but not everyone's on board; A new flat bill concept can meet customer demand for simpler bills if smart technologies prevent abuse
Herman K. Trabish, July 7, 2020 (Utility Dive)
Editor’s note: Innovative rate design continues to move forward in support of the power sector’s energy transition.
Momentum is growing for giving electricity customers the kind of predictable subscription bill options that smartphone and home entertainment customers get.
Fixed rates — once preferred to align costs and revenues — are losing regulatory support as variable supply and load make demand peaks the bigger concern. Dynamic rates with price signals that flatten peaks and shift load to match supply are becoming the favored rate design. But the subscription rate concept, coupled with enabling smart home energy management technologies, is gaining momentum and could offer the benefits of both.
"Energy costs today are higher than they should be because customers value bill simplicity more than savings or environmental impacts," Brattle Group Principal Ryan Hledik, co-author of a new paper outlining a subscription-based rate design, told Utility Dive. "A FixedBill+ rate can combine a fixed bill's simplicity with the energy use benefits of energy efficiency and demand response," he said.
A groundbreaking 2018 subscription rate proposal by Lon Huber was less explicit about the role of enabling technologies and potential savings. Huber worked for Navigant at the time, but is now vice president for rate design and strategic solutions at Duke Energy. "Many customers are no more interested in the electricity system details on their bills than they are in IT protocols and servers that stream their Netflix subscription," Huber told Utility Dive. "New energy service subscription concepts can stabilize the bill, increase clean resources, and lower electricity costs for all customers." It is time for real world pilots of a subscription rate coupled with enabling technologies, Huber, Hledik and other advocates said.
But regulators must be cautious because poorly designed subscription approaches and those that do not include access to enabling technologies could lead to over-consumption that imposes costs on other customers and compromises utility revenues needed for a reliable power system, electricity retailers and authorities on rate design told Utility Dive.
Surveys show some customers "prefer simplicity and freedom from managing their energy," the June 2020 Brattle Group-Energy Impact Partners (EIP) paper found. Instead of a bill for the changing amount of electricity a customer consumes each month, FixedBill+ would offer a monthly bill "guaranteed to remain constant for a specified term." The voluntary rate is like those from "a growing number of subscription-based consumer goods" providers, the paper reported. Though interest from utilities, competitive electricity retailers, and third-party energy managers is growing, there are few results of real-world applications for electricity, they told Utility Dive… click here for more