Power to the People is a column by D. Maurice Kreis, New Hampshire’s Consumer Advocate. Kreis and his staff of four represent the interests of residential utility customers before the NH Public Utilities Commission and elsewhere. It is co-published by Manchester Ink Link and InDepthNH.org.
By D. Maurice Kreis, Power to the People
Mary Powell dared us to do it, and now we are delivering.
The CEO of Vermont’s biggest electric utility, Green Mountain Power (GMP), is famous in energy circles for shaking up the traditional utility business model. But something she said last year has been bugging me.
During an interview broadcast via GreenTech Media, Powell described the various initiatives her company is undertaking to reduce GMP’s monthly peak demand. It’s important because peak demand forms the basis for her utility’s share – and thus her customers’ share – of the ever-escalating cost of New England’s bulk power transmission system.
Tongue somewhat in cheek, Powell said she hoped nobody from New Hampshire or other nearby states was listening as she rattled off the stuff her company is doing to decrease GMP’s share, and increase everyone else’s share, of transmission costs. But we heard.
One of GMP’s signature projects consists of buying a bunch of Tesla PowerWall batteries and deploying them in the homes of interested customers. Each customer pays part of the cost of the battery and thus gets a low-cost source of backup power for outages. GMP gets to take control of the battery, and discharge its power to the grid, when forecasts indicate that a monthly peak demand is approaching.
The GMP battery initiative has gotten lots of attention but New Hampshire is about to leapfrog right over what our friends in Vermont are doing.
Specifically, a few days ago Liberty Utilities – which serves electric customers in the Hanover-Lebanon area as well as the southern Merrimack Valley – filed a settlement at the Public Utilities Commission that it reached with our office, the Staff of the PUC and others. If approved, it would allow Liberty to begin installing a limited number of Tesla PowerWalls in the homes of residential customers.
Unlike the GMP-installed batteries, however, the Liberty batteries come with an experiment in time-of-use rates. This is a big deal.
Here’s what we mean by time-of-use rates.
Right now, a Liberty Utilities customer in Hanover pays a monthly fixed charge of $14.02, plus an additional 16.5 cents for every kilowatt-hour (kwh) of electricity consumed. The rate never varies even though the actual cost of that electricity can fluctuate wildly. Generally, the cost soars as demand soars.
Under the battery storage pilot project proposed in the settlement with Liberty Utilities, a participating customer would still pay that $14.05 monthly charge, plus an additional $50 for two of the Tesla batteries. But the per-kwh charge would vary according to the time of day.
Specifically, during the summer period (May 1 to October 31), a participating customer would pay only 6.8 cents per kwh in volumetric charges during the off-peak hours of 8:00 p.m. to 8:00 a.m. The price escalates to 15.3 cents during the “shoulder” period (8:00 a.m. to 3:00 p.m. weekdays, at 8:00 a.m. to 8:00 p.m. weekends and holidays).
The price soars to 36.4 cents per kwh during the “critical peak” times of 3:00 p.m. to 8:00 p.m. on weekdays. That’s when electricity is at its most expensive because demand is highest and the grid must press its most inefficient units into service.
You can see how having a couple of Tesla PowerWalls might come in handy when subject to such rates. A savvy customer will suck power out of the grid when the price is 6.8 cents and then use the batteries’ stored energy during the critical peak hours, thus avoiding that monster price of 36.4 cents.
Will this work? Will participating customers succeed in saving money? We don’t know. That’s why this is a pilot program, to be deployed in two phases, limited to just 250 customers altogether.
We also don’t know how well Liberty will do in connection with its reason for buying the batteries and including most of their cost in rate base to be recovered from all customers. The idea is that, much as GMP does, Liberty will take control of the batteries when monthly system peaks approach — and discharge their stored energy to the grid.
In theory this will reduce Liberty’s share of so-called “coincident peak demand” and saving everyone money on transmission costs. But the results turn on how well Liberty forecasts that monthly peak demand as it approaches.
We are out on a limb here, along with our friends at Liberty Utilities. Most of my counterparts around the country are freaked out about time-of-use rates. They worry, not without reason, that customers who lack the time and the resources to monitor their energy usage carefully could end up with bloated electric bills when placed on time-varying rates.
But this is an experiment. And good ratepayer advocacy includes an interest in experimentation and innovation. New technologies, like the Tesla PowerWall, are emerging. If used well, they can empower customers and help them save money. If Liberty does a good job of recruiting motivated customers, this program will thrive and something like it could scale up to serve all of New Hampshire.
Another group of skeptics wonders: Since we restructured our electric industry to take advantage of competition, divesting our electric utilities of their generation monopoly, why would we let a utility rebuild some of that monopoly by letting it buy batteries and put them into rate base?
A balm for those skeptics is that the settlement provides for the development of a so-called BYOD (“bring your own device”) component to the pilot. Customers will be allowed to acquire batteries from a provider other than Liberty, and likewise rely on a third-party aggregator to dispatch the batteries in an effort to shave the monthly peak demand. Meanwhile, as with the Liberty-owned batteries, customers in the BYOD program will be able to take advantage of the time-of-use rates.
Sunrun – the nation’s 900 pound gorilla when it comes to deploying leased solar panels on the roofs of homeowners – achieved a publicity coup of sorts here. The California-based company intervened in the PUC docket in an effort to advance the BYOD line of business it is developing. Although Sunrun did not sign the settlement, that did not stop it from convincing the Concord Monitor to run a story whose headline is “Liberty Utilities seeks state’s first ‘bring your own battery’ program for N.H. homes.”
The first person quoted in the Monitor story is Sunrun policy director Christopher Raucher, who said it was “amazing to see a small utility in a small state” put forward such an “innovative” proposal.
Raucher is right. But it remains to be seen whether unregulated firms like Sunrun can play a meaningful role in delivering the benefits of batteries and time-of-use rates to residential customers.
If approved by the PUC, this will be a small but decisive step into the future for New Hampshire’s electric grid. Thank you, Mary Powell, for daring us to do it. And thank you, Liberty Utilities, for your willingness to innovate in a manner that benefits customers and shareholders alike.