April 30, 2001
Time-of-use utility rates optional
by Jeanette Knutson
State utility regulators unanimously approved Puget Sound Energy's (PSE) time-of-use rate proposal, which became effective May 1. But the rate plan is voluntary and will only be applied to the roughly 300,000 residential customers who have so-called "smart meters" that electronically track power use by time of day.
The trial rate plan will run through Sept. 30, at which time it will be re-evaluated to determine if it should be continued, tweaked or expanded. Those who have smart meters and who do not want to participate in the tiered-rate program must notify PSE by telephone at 1-888-225-5773. Customers who do not call will automatically be put on the time-of-use rates.
Lawyers for the Washington Utilities and Transportation Commission (WUTC), the regulatory body that gave the green light to the optional time-of-use plan, believe that a rate change now is inconsistent with the 1997 merger agreement that united Puget Power with Washington Natural Gas.
In that merger agreement, customers' rates were to be left unchanged for five years, until January 2002. This "legal conflict" prompted the WUTC to steer clear of a mandatory rate change, making the optional or voluntary rate change the only viable alternative.
The new time-of-use rates are as follows:
6 to 10 a.m. ‹ 6.25 cents per kilowatt-hour
10 a.m. to 5 p.m. ‹ 5.36 cents per kilowatt-hour
5 to 9 p.m. ‹ 6.25 cents per kilowatt-hour
9 p.m. to 6 a.m. and Sundays and holidays ‹ 4.7 cents per kilowatt-hour.
Those who do not qualify for or who choose not to participate in the new time-of-day scheme will pay the current rate of 5.4 cents per kilowatt-hour for all the electricity they use, regardless of when they use it.
PSE has dropped its plan to levy a surcharge upon all customers, a plan designed to insulate the company from loses should its new proposal not generate as much revenue as former rates did.
Moreover, if PSE overcollects with the new rate program, it will be required to return any extra money to customers in the form of a credit.
However all sales revenue from excess power sold on the spot market will go to shareholders and the company, not to ratepayers.
Additionally, an incentive plan to encourage power conservation began on May 1. Customers will be given a 5-cent per kilowatt-hour rebate (in the form of a credit) if they reduce their monthly bills by more than 10 percent beyond what they what they paid in the same billing period the year previous. The incentive plan will be effective through Dec. 31 and will be available to all of the utility's 925,000 residential and business customers.
"This program is not a stick to penalize customers," said Gary Swofford, PSE's vice president and chief operating officer. "On the contrary, it's a carrot to reward them for using energy more wisely. If a lot of customers just do small things, like running their dishwashers after 9 o'clock at night or doing their laundry on Sundays, they'll not only lower their personal bills, but they'll help to limit the amount of high-cost power we buy on the wholesale market.
"And that's the primary goal. The less exposure we have to today's volatile wholesale power market, the less chance there is of our customers seeing the kind of large rate increase that so many other West Coast utility customers have faced in recent months."