Peaks and valleys: the new landscape of electricity in Vermont

by Kristin Dearborn, Customer Support Specialist

How would you live your life if the cost of your electricity depended on the time of day? Eight hundred Vermont Electric Coop Members are getting to find out by trying a Variable Rate Schedule as part of a study with Efficiency Vermont.

Utilities pay different amounts for electricity at throughout the day, as different power plants come online and electricity is needed in different places. The “peak” is when energy consumption is at its highest—in the summer demand peaks between 11am and 5pm, when temperatures are hot, and more homes and businesses rely on air conditioning. Residential use can rise to 40% above typical levels at this time.  The hotter it gets, the harder it is for the grid to keep up. When Vermont’s more efficient power plants reach capacity, we have to fire up older, less efficient power plants. Vermont has several of these (similar to this plant in New Jersey), which run for less than one week per year and exist only to back up the grid when it becomes stressed. A new natural gas plant consumes 7,500 MMBTUs (one million British Thermal Units) per mWh (megawatt hour), whereas some of our state’s oldest peaking plants consume 18,000 MMBTUs per mWh. These figures make it clear that newer plants offer much more value for the dollar.

VEC helps its customers beat the peak

VEC is partnering with Efficiency Vermont to help ensure that those “peaker” plants won’t be turning on as much this summer. Participating VEC customers, all of whom have opted in to a special study, have the opportunity to pay rates more in line with wholesale energy market prices. For most hours each weekday and all day on weekends and holidays (the green and yellow on the chart below), the price per kWh is lower than what a typical residential VEC customer pays.

 
It’s only during the orange times (the variable rate) that the rate is higher. As the above chart shows, participating members pay a minimum of $0.2634 per Kwh when the variable rate is in effect. This price is directly tied to the wholesale cost of electricity, determined daily by ISO New England, which oversees the operation of New England’s transmission lines and makes sure we all have electricity. Each day, participants in the study are informed of the next day’s variable rate so they can plan the timing of their activities.

The study has been a great learning opportunity for everyone involved. As it has progressed over the last year, I’ve heard some great stories. Some of VEC’s members have started to think of this as a fun challenge. One family I spoke to has copies of the rate schedule on display all around their home as a reminder. 

In July 2014 the study will end and participants will return to VEC’s standard residential rates. VEC hopes it will have gained valuable insights about how variable rates could be beneficial in the future for consumers and utilities. What do you think? Would you be interested in electric rates that changed, or do you prefer a static rate?

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