Changing when we use the most electricity
You may have heard an ad on the radio, a billboard along the
highway or seen a notice in your bill: Over the course of the next year,
PG&E and other utilities across California are moving customers to a new
kind of rate plan for their electricity bills. For today’s MicroClimates, we’re
taking a deeper look at what these changes mean for your electricity bill and
what it has to do with climate change.
What’s a time-of-use rate?
For most California residents right now, the cost of
electricity is the same throughout the day, no matter if you’re using it 2 a.m.
or 6 p.m. Time-of-use rate plans increase the cost of electricity during the
time period of highest demand, and when it’s most expensive to provide it —
usually in the late afternoon and evening.
For PG&E customers, the utility plans to shift most
customers over to a time-of-use plan where electricity is more expensive from 4
p.m. to 9 p.m. each day, on the order of a few cents per kilowatt-hour. The
difference between the peak and off-peak price is larger during the summer
months as well.
The move to time-of-use plans is actually driven by a
mandate from the state’s utility regulator, the California Public Utility
Commission.
When is this happening?
PG&E is moving most customers over between April 2021
and March 2022. First up in the Bay Area are eligible customers in Sonoma
County in April, followed by Alameda County in May, Santa Clara in June, San
Francisco in July, San Mateo in September, and Contra Costa, Marin, Napa and
Solano in March 2022.
Not everyone will be automatically moved over: customers in
the medical baseline program and those who are eligible for discounted rates in
hot climate zones (which doesn’t apply to the Bay Area) won’t make the switch,
and anyone will be able to opt out at any point before or afterwards. The
utility will be notifying customers months before hand and offering a
personalized look at the difference in the rates on customer’s online account,
says Katie Allen, a spokesperson for PG&E.
What does this have to do with climate change?
California produces more and more solar power throughout the
day — but it begins to ramp down at the same time period more people are using
electricity across the state. To serve the combination of more demand and less
solar during those hours, more electricity is generated through natural gas and
other fossil fuel burning energy sources to make up the difference.
By cutting down and shifting some of that electricity use to
different parts of the day, the state hopes to lessen the planet-warming
emissions produced overall and make the grid more flexible. Lowering peak
demand is “an important part of the puzzle,” to meet California’s goal of 100%
emissions-free energy, says Meredith Fowlie, an environmental economist at UC
Berkeley.
How am I supposed to lower my energy usage during these hours?
The biggest impact you can make is shifting your household’s
largest uses of energy away from the evening, especially if you have the means
to do so easily. This may mean not doing laundry during the early evening or
delay your dishwasher cycle so it runs well past dinnertime. Programmable
electric water heaters can also shift when they’re using the most energy.
While turning off lights or unplugging devices can’t hurt,
“those behaviors don’t move the needle very much,” says Nicole Sintov, a
professor of environmental behavior change at The Ohio State University.
Heating and cooling are often a household’s largest use of energy, so
weatherstripping to prevent leaks and pre-cooling or heating the house before
those evening hours will also help.
If you have an electric vehicle, don’t charge it during
those hours. (In fact, utilities tend to have separate rate structures for EV
owners for this reason.)
Will it be more expensive? Does this actually work?
On the scale of the whole grid, shifting most utility customers
in California to this plan will probably lead to some reduction in peak energy
demand. The Sacramento Municipal Utility District piloted a time-of-use rate a
decade ago and Fowlie found residents there responded to the new rate and
shifted energy use, whether they actively opted in or were moved over but could
opt out.
PG&E and other California utilities saw reduction in
peak demands during their own pilots — and a study of studies of these kinds of
shifts found the greater the difference in prices, the greater the effect on
demand.
But will it make individual households’ energy bills more or
less expensive? That’s a big “depends.”
If your energy usage is already spread out across the day,
or if you have the flexibility to move it and do so, you’ll probably save money
compared to what your electricity bill would have been on the old rate. At the
end of the first year, if your bills were more expensive than they would have
been otherwise, PG&E will credit the difference on your bill.
“Right now customers get no price signal,” Fowlie said. “If
you go to the grocery store and Brussels sprouts are out of season, they’re
going to be more expensive, so maybe you choose broccoli instead. There’s real
benefits to sending people price signals, especially when it’s low cost to
shift.”
You’ll notice some of the easiest ways to shift energy use
are available to residents with more updated appliances and opportunity to
better insulate their homes. Despite the ability to opt-out at any time,
there’s still concerns about how rates might affect those struggling with their
energy bills.
While the findings across the country on whether low-income
families can shift energy use are mixed, Sintov said a common problem is the
continuing effects of historical housing discrimination: Individuals are forced
to live in areas where there’s been less investment in insulation and
efficiency, especially when it comes to heating and cooling use.
PG&E’s own pilot showed customers on discounted rates as
a group had reduced their peak energy use less in summer than the overall
reduction.
“The person in the leaky house, even if they do the exact
same behavior as the person whose house is well sealed, is not going to see as
significant of a change in energy use or savings,” Sintov said. “These rates
are not going to work the same way for all different people.”
The bigger picture, Fowlie said, is if California can move
its energy demand to better match when renewable energy is available, utilities
will spend less on capital investments that can raise rates even further. But
more on that in the next question.
I heard PG&E is raising their rates? Is this related?
PG&E reached a settlement agreement late last year to
raise monthly bills by an average of $5.69 per month to help fund wildfire
safety investments. The rate rise still requires judicial review and final
approval by the commission, but the mandate to move to time-of-use plans
predates that request.
In a recent paper, Fowlie and her colleagues argued
California’s electricity prices already have too much built in that obscures
what it actually costs to power homes and businesses.
“These are real costs that have to be recouped, but
recovering them in the rates makes electricity look really expensive,” Fowlie
says.
