When the mercury soars in summer, the cost of delivering electricity soars because of the surge in demand. The peak forces utilities to invest billions into peaker plants that might only operate 14 days a year. Still, the price for the average residential customer in the U.S. stays the same.
To bring the price of electricity a little closer to its actual price on the wholesale market, many utilities are looking at time-of-use plans that would charge more when demand is highest and less when it’s low, similar to how telephone carriers changed their pricing plans in the early 1990s from flat to variable rates. On a gut level, it makes a lot of sense; however, some consumer advocates argue it can penalize groups like the poor or the elderly, who are often at home more hours of the day and are more likely to be on a fixed income than the average consumer.
“I think our primary concern is consumer education,” said Marti Doneghy, Senior Legislative Representative for AARP’s Government Relations department on federal utilities issues. “Making sure how the customers understand the impact and how it’s going to affect their life, health and safety.”
While mandatory TOU pricing seems far off, voluntary programs are already underway in some regions like Phoenix where the municipal Salt River Project Agricultural Improvement and Power District has offered TOU plans for years. Customers have been signing up steadily, and about 25 percent of their residential consumers are on one of two TOU plans.
Will mandatory time-of-use come to pass? Or will voluntary programs find a happy balance to meet the needs of customers and utilities? Will technology be necessary? What do you think?
Read more on this topic in a joint effort by General Electric Ecomagination and Greentech Media, and join in on the conversation here.