The Boston Globe
CONSUMER BEAT
'Power-shifting' can save hundreds on energy bills
Pilot program pushes evening, weekend use

By Bruce Mohl, Globe Staff  |  September 30, 2007

The five-member Winslow family is big into power shifting, a skill
that has saved them money and could soon be important to the region's
energy future. 

The Winslows run their washer, dryer, and dishwasher during the
evening and keep their pool heater on a timer that operates only at
night and on weekends. They are participating in a voluntary NStar
program that charges customers more for the delivery of electricity
during peak-demand periods and less for power delivered during
off-peak periods such as evenings and weekends. It's very similar to
the way long-distance telephone companies used to charge for minutes -
higher rates during the day when phone traffic was high and lower
rates at nights and on weekends. 

Over the past year, the Norfolk family has used just over 20,000
kilowatt-hours of electricity, of which 85 percent was consumed during
off-peak hours. Their power-shifting saved them $348 and would have
saved them even more if the pool timer hadn't been broken for part of
the summer. 

"It's been easy to do," said Daniel B. Winslow, who signed the family
up for the program. "The off-peak time tends to be our leisure time,
nights and weekends. " 

State and utility officials are eager to see whether the experience of
the Winslows can be duplicated on a much broader scale. Right now,
most power customers are charged a single rate for electricity no
matter when they use it. But the wholesale prices for power vary
dramatically during the course of a day, with prices typically much
higher when demand is the highest. By reducing the demand for
electricity during peak periods, the need for new power plants and
expensive peak power could be reduced or eliminated. 

"What we're trying to do is get prices to reflect costs," said Mike
Oldak, senior director for state competitiveness and regulation at
Edison Electric Institute, which represents the electric power
industry. "At the peak of the day, costs are higher, and if you can
shift use of that power to an off-peak period, we'll save money and
you'll save money." 

NStar's current time-of-day pricing plan applies only to the utility's
delivery charges, and not to the larger power portion of a customer's
bill. As a result, savings are limited. A typical customer using 500
kilowatt-hours a month would have to use nearly 80 percent of his
power off-peak just to break even under the current time-of-day
pricing plan. Only 160 of NStar's 800,000 residential customers
currently participate. 

But as part of a July settlement with Attorney General Martha Coakley,
NStar agreed to develop a pilot dynamic pricing program that would
charge participating customers rates that vary by time of day for both
the power and delivery portions of the bill. The program, still months
from launching, would generate savings for most customers who shift
usage to off-peak hours. 

"Time-of-use pricing and meters have the potential to give consumers
more control over their energy use by using price signals to change
usage patterns," Coakley said in a statement. "Consumers may both save
money on their bills and, if enough use is curtailed during peak
demand, offer relief to our power grid at the most critical times." 

NStar spokeswoman Caroline Allen said the utility is reviewing many
options for the pilot program. For example, what kind of meters are
needed? They must be capable of tracking how much electricity a
customer is using and when it is being used. Should they also allow
the utility, subject to a customer's approval, to turn down a
thermostat, shut off appliances, or deliver messages about upcoming
price spikes? 

What about the cost? Allen said a standard electric meter costs
between $50 to $75, but more advanced units can cost up to 15 times
more. Under the pilot program, participating customers must help pay
for the cost of the new meters. 

Allen said NStar also has to structure a power-supply deal with the
generators from whom it purchases electricity and decide which
customers should participate. She said customers with above-average
electricity usage would probably be targeted. 

The other big unknown is whether time-of-use pricing will prompt
consumers to not only shift their power usage but to use less. Other
pilot programs have indicated significant conservation savings are
possible. 

"We hope it will answer a lot of questions," Allen said.

According to ISO New England Inc., which oversees the region's power
system, the six states currently have the capacity to generate as much
as 32,000 megawatts of electricity. Demand peaks in the summer and hit
a record high of 28,130 megawatts on Aug. 2, 2006. 

Average electricity demand declined 3 percent last year compared with the year before, but demand at peak times increased 4.6 percent. Over the summer months, when electricity consumption is the highest, peak demand has increased 20 percent over the last 10 years and is expected to increase another 15 percent over the next decade.

The increase in peak power demand is costly for consumers, since the
power plants that provide peak power are rarely used yet expensive to
maintain and operate. 

Utilities have been experimenting off and on with time-of-use pricing
for decades, but the practice is being studied more closely now with
electricity supply and demand precariously balanced. Oldak, of the
Edison Electric Institute, estimates utilities are currently running
as many as 40 time-of-use pilot programs around the country. 

Winslow said his chief concern about time-of-use pricing was that he
and his wife would have to become strict power disciplinarians,
forbidding the use of electricity during peak periods. 

Instead of paying the standard delivery charge of 6.2 cents per
kilowatt hour all day long, the Winslows currently pay 13.95 cents
from 9 a.m. to 6 p.m. weekdays and 3.4 cents from 6:01 p.m. to 8:59
a.m. on weekdays and all day weekends. Because they require a special
meter, their fixed monthly customer charge is $9.99 instead of the
standard $6.43. 

But Winslow said his wife and three children have adapted to the
pricing system without any major disruption to their lifestyle and now
can't wait for the new pilot program, which should increase their
savings dramatically. 

"When we were considering doing this, we were concerned about how far
we would have to go to change our habits," he said. "But our
experience has been not at all. It's been very easy." 

Bruce Mohl can be reached at mohl@globe.com. 
© Copyright 2007 The New York Times Company