Xcel’s new en­ergy bill

In­dus­try look­ing for ways to fi­nance grid over­hauls in “Our En­ergy Fu­ture”

The Denver Post - - PERSPECTIV­E - By Mark Jaffe

Xcel En­ergy wants to re­write your elec­tric­ity bill and change the way you pay for en­ergy. The first step in that ef­fort is now be­fore the Colorado Public Util­i­ties Com­mis­sion, one of at least five fil­ings by the state’s largest util­ity.

Taken to­gether the fil­ings, known as dock­ets, would trans­form the way Xcel does busi­ness in Colorado and the re­la­tion be­tween the util­ity and its cus­tomers. Much of this is be­ing done in re­sponse to new tech­nolo­gies such as rooftop so­lar, elec­tric ve­hi­cles, home-scale-bat­tery stor­age and smart me­ters.

To fi­nance grid over­hauls, cope with loss of rev­enues and try to give cus­tomers price sig­nals that lead to a more ef­fi­cient en­ergy use, util­i­ties and reg­u­la­tors from New York to Cal­i­for­nia are look­ing at new types of rates and charges.

“This is some­thing we are see­ing across the coun­try,” said Corey Honey­man, a se­nior an­a­lyst with the con­sult­ing firm GTM Re­search in Bos­ton. “Ev­ery­one agrees some­thing has to hap­pen. No­body agrees how.”

Past changes in rates were trig­gered by the en­ergy cri­sis of the 1970s and the dereg­u­la­tion of the util­ity busi­ness in the 1990s, said Alice Jack­son, vice pres­i­dent for rates and reg­u­la­tory af­fairs at Xcel’s Colorado sub­sidiary. The in­dus­try, she said, is fac­ing an­other trig­ger.

The full shape of the fil­ings — parts of a five-year plan, which Xcel calls “Our En­ergy Fu­ture” — is not yet clear as it is spread out over three dock­ets al­ready filed and at least two more to be filed.

”There is no real abil­ity for the public to see all the in­ter­lock­ing pieces. It is not be­ing pre­sented in a way that is con­ducive to public par­tic­i­pa­tion,” said Re­becca Cantwell, ex­ec­u­tive di­rec­tor of the Colorado So­lar En­ergy In­dus­tries As­so­ci­a­tion.

The dock­ets deal with re­new­able en­ergy, a new so­lar en­ergy pro­gram Xcel would of­fer in com­pe­ti­tion with pri­vate so­lar com­pa­nies, up­grad­ing the grid and the util­ity’s elec­tric gen­er­a­tion needs.

And then there is the docket that would start to re­write your elec­tric­ity bill. In 2014, the PUC granted Xcel a $1.6bil­lion rate hike. The cur­rent docket divvies up that in­crease among cus­tomer classes — in­dus­trial, large com­mer­cial, small com­mer­cial and res­i­den­tial.

Within the res­i­den­tial class, all house­holds have been charged the same rate based on how much elec­tric­ity they use, but Xcel’s Jack­son says all house­holds are no longer the same. “The de­mands small cus­tomers are putting on the sys­tem are chang­ing,” she said. “We have some res­i­den­tial cus­tomers us­ing 200 kilo­watt-hours a month and some us­ing 4,500 kilo­watthours.”

The 25,000 rooftop so­lar ar­rays owned by Xcel cus­tomers “eroded” rev­enue by an es­ti­mated $9.8 mil­lion in 2015, ac­cord­ing to an Xcel fil­ing. That loss the util­ity says is made up by non-so­lar cus­tomers and it will con­tinue to grow as nearly 5,000 rooftop

units are in­stalled each year.

So how does Xcel want to re­write your bill? The change, and this is not a per­fect com­par­i­son, would be akin to the dif­fer­ence be­tween how you pay to run your car and the way you pay to in­sure it. To run it, you buy gaso­line and you pay for as much gaso­line as you use. Right now, Xcel pretty much charges you by how many kilo­watt-hours you use in a month. The av­er­age house­hold uses 628 kilo­watthours at a charge of about 11 cents of kilo­watt-hour.

The an­nual auto in­sur­ance pay­ment is cal­cu­lated based on a set of fac­tors, such as the age and type of ve­hi­cle, driv­ing record, credit score and amount of cov­er­age. Your mileage and fuel con­sump­tion may go up and down dur­ing the year. The el­e­ments used to set your in­sur­ance pre­mium do not.

The in­surer also looks at their to­tal cus­tomer base and cal­cu­lates the pre­mi­ums to en­sure there is enough money to cover pro­jected claims plus a profit for the com­pany.

Xcel is aim­ing to be­come a lit­tle more like an in­sur­ance com­pany by adding charges cal­cu­lated on the over­all de­mand or peak de­mand cus­tomers place on the sys­tem dur­ing the course of a year, sep­a­rate from the amount of elec­tric­ity used in a month. These fixed charges would not change even if you were on va­ca­tion for a month and used lit­tle elec­tric­ity.

These so-called de­mand charges have long been a part of the bills of large in­dus­trial cus­tomers who place unique de­mands on the sys­tem, re­quir­ing Xcel to add equip­ment or ca­pac­ity to main­tain ser­vice for that big cus­tomer.

Now houses with so­lar ar­rays, a home bat­tery, an elec­tric ve­hi­cle or high-tech en­ergy ef­fi­ciency de­vices are all dif­fer­ent, plac­ing dif­fer­ent de­mands on the elec­tric sys­tem, Jack­son says.

Xcel is propos­ing to add what it calls a “grid use charge” based on a rolling 12-month av­er­age of a house­hold’s monthly use. A cus­tomer us­ing an av­er­age 200 kilo­watt-hours would see a monthly charge of $2.62, one us­ing more than 1,400 kilo­watthours would have a $44.79 charge. The av­er­age 628-kilo­wattt-hour house­hold would pay $14.56 a month.

Xcel is propos­ing cut­ting the ba­sic kilo­watt-hour charge, so on the av­er­age bill the change amounts to an ex­tra 18 cents. The util­ity says that about two-thirds of res­i­den­tial cus­tomers will see a lower bill.

Six other charges, called riders, now on your bill to pay for things such as trans­mis­sion, en­ergy ef­fi­ciency, re­tir­ing coal plants and re­new­able en­ergy would re­main. A rider would be added to pass through the cost of items such as chem­i­cals and wa­ter used in gen­er­at­ing elec­tric­ity.

Xcel isn’t alone in seek­ing to add de­mand charges. About 15 large util­i­ties, from Florida to Cal­i­for­nia, have added them, and Illi­nois’ Com­mon­wealth Edi­son is seek­ing leg­isla­tive ap­proval to add one.

Xcel also wants to add a sec­ond monthly de­mand charge for trans­mis­sion and gen­er­a­tion costs. This would be based on the 15-minute peak use of a house­hold dur­ing a 2 p.m. to 6 p.m. week­day pe­riod — the time the util­ity sees the high­est de­mand for elec­tric­ity.

This pro­posal will have to wait un­til smart me­ters, which can keep track of daily use, are in­stalled for all Xcel’s 1.2 mil­lion res­i­den­tial cus­tomers. The cur­rent me­ters only record monthly use. An up­com­ing Xcel “en­ergy fu­ture” docket will pro­pose a plan for me­ters, grid im­prove­ments and the money needed to cover them.

Not ev­ery­one is en­thused with Xcel’s vi­sion. The plan jeop­ar­dizes the rooftop so­lar in­dus­try, said the in­dus­try as­so­ci­a­tion’s Cantwell. Adding a fixed charge and cut­ting the credit so­lar house­holds get for putting kilo­watthours on the grid, so-called net me­ter­ing, un­der­mines the eco­nom­ics of so­lar pan­els, she said.

“This is a big dis­in­cen­tive to so­lar,” Cantwell said. “The so­lar in­dus­try is op­posed to the new rate de­sign.” Rooftop ar­rays in­stalled be­fore Jan­uary 2017, when the new rates would go into ef­fect, would not pay the new charges.

En­ergy ef­fi­ciency ad­vo­cates are also crit­i­cal of de­mand charges and cut­ting kilo­watthour charges. “When util­i­ties lower the amount they charge per kilo­watt-hour, they re­duce the fi­nan­cial in­cen­tive for con­sumers to save en­ergy,” Howard Geller, the di­rec­tor of the South­west En­ergy Ef­fi­ciency Pro­gram, wrote in a blog. Fixed charges also fall more heav­ily on low-in­come house­holds.

And while in­dus­trial cus­tomers can mon­i­tor and man­age their peak de­mand, it is of­ten not easy for a house­hold to do the same.

“A fixed charge is a blunt and short-sighted ap­proach to costre­cov­ery. It doesn’t send much in the way of price sig­nals for cus­tomers to man­age their load,” said Dan Cross-Call, a man­ager in the elec­tric­ity prac­tice of the Boul­der-based Rocky Moun­tain In­sti­tute.

An ap­proach fa­vored by rate re­form­ers and en­ergy-ef­fi­ciency ad­vo­cates is time-of-use rates, which are higher dur­ing peak de­mand and drop dur­ing pe­ri­ods of low de­mand, en­cour­ag­ing con­sumers to shift their en­ergy use to low-cost pe­ri­ods.

“Res­i­den­tial time of use rate is a much more pre­cise,” Xcel’s Jack­son agrees. “Over the long term, you send the most ap­pro­pri­ate sig­nals, it keeps the cost of en­ergy down.” But Xcel must await in­stal­la­tion of smart me­ters, which can read the time house­holds are us­ing elec­tric­ity.

As part of the rate docket, Xcel is propos­ing a vol­un­tary pi­lot in which smart me­ters would be in­stalled and time-of-use rates would be used in up to 42,000 house­holds over three years to de­ter­mine the best way to im­ple­ment such rates. “That’s why the pi­lot is so im­por­tant,” Jack­son said.

So the Xcel bill of the fu­ture could have two set de­mand charges, a new pass-through charge for the cost of ma­te­ri­als used in mak­ing elec­tric­ity and even­tu­ally time-of-use rates. This would all lead to more pre­dictable rev­enues.

But rate re­form needs to be about more than in­dus­try prof­its, RMI’s Cross-Call said. “Rates have for too long been fo­cused on cost re­cov­ery for the util­ity at the ex­clu­sion of other equally im­por­tant ob­jec­tives such as cus­tomer en­gage­ment and en­vi­ron­men­tal prac­tices,” he said. “The chal­lenge is not just the re­form of rates. The larger ques­tion is how the util­ity busi­ness model needs to evolve.”

Cus­tom So­lar’s Houston Sherer works to in­stall so­lar pan­els on a home in Boul­der ear­lier this month.

Mark Jaffe writes on Colorado en­vi­ron­ment and en­ergy is­sues. He is a for­mer Den­ver Post re­porter.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.