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HomeMy WebLinkAboutStaff Report 2407-32313.Discussion on the Time of Use Electric Rates (DISCUSSION 7:00 PM – 7:30 PM) Staff: Micah Babbitt Item No. 3. Page 1 of 1 Utilities Advisory Commission Staff Report From: Dean Batchelor, Director Utilities Lead Department: Utilities Meeting Date: December 4, 2024 Staff Report: 2407-3231 TITLE Discussion on the Time of Use Electric Rates RECOMMENDATION Staff is providing the Utilities Advisory Commission an update on the time of use electric rates. This is a presentation only and no action is requested. ATTACHMENTS Attachment A: Presentation AUTHOR/TITLE: Dean Batchelor, Director of Utilities Staff: Micah Babbitt, Senior Resource Planner December 4, 2024 www.cityofpaloalto.org Time of Use Electric Rates Presenter: Micah Babbitt, Senior Resource Planner 2 Overview 1.What are time of use electric rates and its history in Palo Alto 2.Work in progress to enable time of use rates 3.Roll Out Plan 4.Existing TOU rates and Residential Rate Design 5.Communication, Customer Service, and Industry Best Practices 3 What are Time of Use Rates? Pricing structure for electricity that varies depending on the time of day •Energy is cheaper during off-peak times (like late at night) when demand is lower, and more expensive during peak times (like early evening) when demand is higher •May encourage people to use electricity during cheaper times •Can help reduce demand on electrical grid during peak times and lead to lower energy bills if customers shift usage to off-peak hours 4 Time of Use (TOU) Electric Rates History in Palo Alto •Residential Customers - E1 •Smart Grid/TOU Rate Pilot from 2013 through 2018 •Limited to 150 meters •Multifamily and Small Business Customers - E2 •No TOU Rates •Medium/Large Commercial Customers - E4 •Available 20+ years/requires special meters •0 customers enrolled •Very Large Commercial (Industrial) Customers - E7 •Available 20+ years/requires special meters •1 customer enrolled 5 Smart Grid Pilot/TOU Pilot 2013 – 2017 Lessons Learned •Gained practical experience in AMI technology options, vendors, residential TOU and billing, customer feedback •Customers like being able to see and access data •Small shift of usage into off peak hours observed for some customers 6 Components Needed for Full TOU Deployment 1.Advanced Metering Infrastructure installed 2.MyCPAU and Billing System upgrades complete 3.Design and Council adoption of new Time of Use Rates in accordance with Rate Design Policy Guidelines 7 Meter Install Target Completion •Residential 90% by December 2024 •Remaining 10% obstructed or problem meters by December 2025 •Commercial by May 2025 •Pending 4000 meters to be delivered in March 2025 Advanced Metering Infrastructure Project 8 Phase I (Target Completion December 2024) •Enhance MyCPAU to import hourly usage data •Enable “early adoption” Time of Use customers in all rate classes to access detailed usage data Phase II (Target Completion June 2025) •Enhance MyCPAU to support Time of Use for all non-solar customers •Enhance MyCPAU to support customers with solar energy systems (Net Energy Metered) MyCPAU and Billing System Project Status 9 FY 2025 •Large commercial customer rates (E4 and E7) updated with new time periods, include a peak demand charge, and a customer charge FY 2026 •Residential customers (E1) able to opt in to TOU rates (May exclude NEM solar customers) •Draft Rate Schedules included in Financial Plan to UAC in March 2025 FY 2027 •TOU implemented for all Residential (E1) customers •Multifamily and Small/Medium Business (E2) customers able to opt in to TOU rates Preliminary Time of Use Electric Rates Plan 10 DRAFT E1 (Residential) Time of Use Periods Peak (4 pm -9 pm every day) 10.3% Off Peak (9pm - 4 PM every day) 33.2% Peak (4 pm -9 pm every day) 11.9% Off Peak (9pm - 4 PM every day) 44.6% •Draft TOU periods similar to proposed time periods for non-residential •Residential schedule simplified to include only peak and off-peak periods 11 Initial Outreach and Customer Service Plan •Website updates •Explanation of opt-in for “Early Adopters” •Longer-term plan •Web-accessible opt-in form •Resources for additional information re TOU •Bill inserts •Resources to call center •Stakeholder engagement •FY 2026 Financial Plan review •Simple bill comparison for various residential customer usage profiles 12 Industry Best Practices & Lessons Learned •Fort Collins: Rate equity within residential class •SMUD: Helped achieve carbon reduction •Allows Customers to manage flexible loads as needed