Pilot Utility Pricing To Charge More During Peak Hours

November 9, 2009

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Wind energy may benefit from a pilot program that would charge utility customers more for using electricity during the peak hours of 2-8 p.m.

Proposed by Xcel Energy to be used in Boulder, Colo., the program – if adopted on a wider scale – would reduce the need for so-called “peaking” power stations, reports the Daily Camera. The benefit would be more pronounced during the summer, when peak rates would be higher than in the winter.

And by shifting energy use from peak hours to the nighttime, more electricity could be utilized from wind power, which continues generating electricity into the night, whether the electricity is used or not.

If approved by state regulators, the pilot program would enlist 2,000 customers and run from June 2010 through December 2011.

Boulder is a likely candidate for the pilot because the city is developing a smart grid infrastructure that will allow electricity users to make informed decisions about the timing of their energy use. Boulder is partnering with Xcel on the $100 million smart grid project, which aims to make it the world’s first “smart city.”

Customers participating in the program would have three pricing options:

- Time of use: Customers are always charged more for electricity used at peak times of 2-8 p.m., with rates higher in the summer than in the winter.

- Critical peak pricing: Similar to time of use pricing, this option offers slightly lower peak-demand pricing in both seasons. However, there is an additional price for power consumed during so-called “critical peak” days, estimated to occur about 15 days a year when demand on the grid is highest.

- Peak time rebate: For the most part, electricity billing would continue as it does now. Customers who reduce electricity use below normal on critical peak days would be offered a rebate.

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