utilities

Energy Alabama Requests HSV Utilities Justify Rate Hike

Below is the Freedom of Information Act letter that Energy Alabama submitted to Huntsville Utilities requesting that they provide information that justifies their upcoming rate hike.

Information we have requested includes:

  1. Cost of service studies from fiscal year 2016 to present
  2. Any and all analysis and calculations to show the impact of the upcoming rate increase to each customer class
  3. Number of participants, by customer class, in each energy efficiency program offered by Huntsville Utilities or affiliates
  4. Actual weather adjusted energy savings and cost savings by all energy efficiency programs offered by Huntsville Utilities (or affiliates).

Read the full letter (submitted by email) below:

Mr. Joe Gehrdes
Director, Communication and Public Relations
Huntsville Utiltiies
PO Box 2048
Huntsville, Alabama 35804

Joe.gehrdes@hsvutil.org

RE: Open Records Request – September 2018

Dear Mr. Gehrdes,
Pursuant to the Alabama Open Records Act, we hereby request the following records:

1. Any and all cost of service studies on file with Huntsville Utilities from FY2016 to the date of this
filing;
2. Any and all analyses and calculations that show the impact of the upcoming rate increases to each
customer class;
3. Numbers of participants, by customer class to include residential, commercial and industrial, in
each energy efficiency program offered by Huntsville Utilities and/or its authorized affiliates;
4. Actual weather adjusted energy savings and cost savings by all energy efficiency programs offered by Huntsville Utilities and/or its authorized affiliates.

As used above, the term “records” includes, without limitation, all communications, correspondence, records of phone conversations, text messages, encrypted messages, transcripts of testimony, minutes or
notes of meetings, electronic mail, PowerPoint or other similar presentations, memoranda, reports, maps, photographs, drawings, data, tables, spreadsheets, formulas, notes, observations, impressions, contracts, and policies or directives, whether in an electronic or print medium, original or copy, or draft or final form.

The timeframe of this public records request is between January 1, 2016 and the date of this filing.

You may exclude news articles, press clippings, and duplicate emails.
The requested documents will be made available to the general public, and this request is not being made for commercial purposes. Therefore, we are requesting a waiver of any fees.

We are, however, prepared to pay reasonable costs for these documents. In the event that there are fees, we would be grateful if you would inform me of the total charges in advance of fulfilling my request. We
would prefer the request filled electronically, by e-mail attachment if available or USB drive if not. We are also available to obtain the documents via an on-site visit should that be most efficient for Huntsville
Utilities.

If you deny any or all of this request, please cite each specific exemption that justifies the refusal to release the information and notify us of the appeal procedures available to us under the law.

Thank you in advance for your anticipated cooperation in this matter.

Sincerely,

Daniel Tait
Technical Director
Energy Alabama

Letter to Huntsville Utilities

As of this writing, HSV Utilities has failed to respond to this letter. As such, we have provided these recommendations to the Huntsville City Council.

APSC

What Does a Public Service Commission Do, Anyway?

Lately, the Alabama Public Service Commission (PSC) has received a ton of attention around these parts. So you might be wondering, what does a public service commission do, anyway?

If you only read this blog, you might think the Alabama PSC was our nemesis or something – a regulatory Joker to our energy-industry-disrupting Batman. (No? Well, just humor us for a moment, k?) First, we told you about some comments we made for the PSC’s recent proceeding about EV charging stations. Then we told you about how we’re joining forces with some other advocates in calling for a public PSC hearing over some big Alabama Power tax savings. And most recently, we shared how some others have filed a complaint over a PSC-related solar tax. Whew.

The reality is that the PSC isn’t our nemesis at all. We just happen to disagree with a few policy positions they’ve taken. Honest! Our hope is that, through our advocacy for renewable energy, the PSC will adopt more progressive policies in regards to energy. That’s all.

But here’s the thing. Since we’ve been talking about the PSC so much lately, we’ve heard one question more than any other. What, exactly, is the purpose of a public service commission?

 

‘To Ensure Regulatory Balance’

Here’s the elevator pitch, straight from the Alabama the Alabama PSC website: “To ensure a regulatory balance between regulated companies and consumers in order to provide consumers with safe, adequate and reliable services at rates that are equitable and economical.”

What does that mean? It means the PSC is supposed to regulate monopolies like electric utilities (read: companies like Alabama Power). The idea is that it’s fine for a utility to operate without competition – you know, as a monopoly – because of the huge amount of infrastructure needed to deliver electricity or water. Think about how enormous the power grid is. It wouldn’t make sense to have multiple power grids in one town, would it? Many public service commissions regulate other monopolies like telecoms and natural gas companies.

But while it makes sense for utilities to function as government-backed monopolies, oversight is still needed. After all, they are still monopolies. And unchecked monopolies do not have a great reputation for doing the public good. (Think airlines, cable companies, Microsoft in the 1990s, your brother when he owns Park Place and Boardwalk, etc.)

 

Serving YOU

That’s where the PSC comes in. In theory, the PSC ensures that consumers enjoy reliable service while paying a fair rate for it. There’s more to it than that, but you get the idea. In Alabama, the PSC has three members: Two Associate Commissioners and one President. All three won their seats in statewide elections, and two of them are up for re-election in 2018. That means they serve YOU.

So it only makes sense (it does to us at least) to call out the Alabama PSC and Alabama Power for something like that solar tax mentioned above. And it makes complete sense to call for complete transparency in PSC decision-making, like the Alabama Power tax savings. After all, the PSC exists to serve consumers, not just utilities. We elected them. Now we should put them to work.

What do you think? What would you like to see the Alabama PSC – or any PSC – accomplish the next time it meets? You should tell them. 

Contact the Commission President Today!

Can electric cars save utilities

Can Electric Cars Save Utilities?

Over the past decade, we as a society have become much more energy efficient; we have energy efficient light bulbs, our appliances require less watts, and we can even install solar panels onto our homes to generate our own energy. Undoubtedly, these are great steps to take if we want to preserve natural resources and save some capital for other expenses like shopping or groceries. But is there a downside to someone?

As mentioned in a previous blog, the utility death spiral is a reality that could be all too imminent. Hawaii and some parts of Europe are already seeing the foreboding signs of a utility crisis. A result of declining prices and rising costs, utility companies are left desperate for new load growth. Utilities have been threatened by numerous factors like LED bulbs, on-site solar, and energy efficient appliances, which cause significant declines in utility sales. If revenue falls too quickly, then utilities become liable to start in free-fall, much like what happened in Germany where utilities lost half a trillion euros in their markets. Innovation and progressive change are good, but pace is pertinent in their execution. 

Another haunting reality for utilities is the void of commonly found, high-demand appliances in consumer facilities. Decades have passed since the refrigerator or heating and A/C units, all of which require considerable amounts of energy to operate, have been taken into our homes and commercial facilities. When these appliances were first introduced, utilities saw a major increase of demand. But that was long ago, and we have since become a much more energy efficient society, especially with largely encouraged renewable energy sectors.

However, quick innovation can involve shifts in losses and benefits from one industry to another. So if the electric car companies can take business away from the gigantic petroleum energy by releasing more electric cars (EV’s), then everybody wins. Well, everybody except the petroleum industry, but that’s another discussion.

Can a Shift to Electric Cars Save Utilities?

The answer to this question is a bit complicated. The Energy Information Administration (EIA) states that transportation energy is the second largest consumer of energy in the U.S, right behind electric power generation. However, a predictable 93% of that power comes from petroleum products. A recent post by the Edison Electric Institute (EEI) claims that EV’s could provide the load growth that utility companies so desperately need. EEI published a post on Transportation Electrification back in 2014. This post details how EV’s could benefit all parties involved, society included, if we moved from petroleum powered vehicles to battery powered ones.

Between 2007 and 2013, retail sales of electricity in the United States across all sectors dropped 2%. In addition, the American Society of Civil Engineers gave America’s energy infrastructure a D+ grade in their 2013 report card and estimated a 3.6 trillion dollar investment needed by 2020.

–Transportation Electrification, EEI

However, there are some foreseeable problems with a large scale shift to EV’s. One being that peak demand times could be significantly increased by people charging their EV’s. From what we notice today, EV owners typically charge their vehicles when they get home from work. Makes sense, right? You get home, plug in your car, and go inside to watch football and chill out for a while. The only issue with that is that utilities already see peak load times around these hours, so adding even more demand during these times could prove costly and difficult for utilities to handle. Some utilities, including Alabama Power, are hoping to fight this by offering qualifying EV owners rate incentives if they charge their vehicles in off-peak hours, which, if done correctly, could actually benefit grid stability and efficiency.

“Alabama Power offers an optional rate rider for customers with a Plug-in electric vehicle (PEV). The rate rider allows customers to charge their electric vehicle at a discounted rate during off-peak hours of 9 p.m. to 5 a.m. To qualify for eligibility, a customer must own a PEV that is manufactured primarily for use on public streets, roads, and highways. Electric scooters, electric bicycles, golf carts, and motorized electric wheelchairs are not included.”

California’s Shift

EEI claims that a large scale electric transportation shift would benefit the electric vehicle industry, the consumer, the environment, and especially utilities who need to see a significant rise in load growth. As we know, electric vehicles have significantly lower carbon emissions that damage the atmosphere, save the consumer money on gas, and would cause a considerable rise in electric demand for utility companies.

California is already making notable efforts in regards to filling it’s streets with electric vehicles. The California Public Utilities Commission (CPUC) received several proposals from different companies who wish to accomplish different goals in expanding their fleets to exclusively EV’s and installing thousands of new EV charging stations. The proposals are filed under California’s Zero-Emission Vehicle Program that plans to propagate a utility infrastructure to support 1 million Ev’s by 2020. The state hit 250,000 in late 2016.

The proposals approximate to 1 billion dollars in funding. If granted, tens of thousands of charging stations would be installed in California airports, ports, warehouses, and residencies. The Pacific Gas and Electric Company (PG&E) is seeking $253 million for three efforts: “expanding electrification for fleets with medium- and heavy-duty vehicles, responding to consumer demand for fast-charging stations, and exploring new uses for vehicle electrification through five, one-year projects.”

Vehicle Electrification and Alabama

Alabama faces one big problem with the electrification of its transportation industry: charging. Alabama is all but void of any charging facilities that EV’s so desperately need. If utilities are truly depending on EV’s for the load growth that they need, then charging station projects would have to come soon.

Additionally, Alabama needs to take a hard look at its policy in the transportation policy to encourage growth in electric transportation. These changes could be everything from building codes at the local level that require installation of chargers for large destinations to the Alabama Department of Environmental Management (ADEM) using Volkswagen settlement money to build the infrastructure for heavy duty trucks.

As you can see from California’s example, where energy efficiency and renewables have stunted electric demand growth, utilities are making aggressive moves to electrify transportation. Regulators are working with electric utilities to build the shared infrastructure while keep the market open to private sector innovations. We hope Alabama will follow suit.

Probing Residential Demand Charges

What are Demand Charge Rates?

We have become very accustomed to the electric bill we receive every month. This bill has different charges like sanitation, tax, etc. But the largest charge is very likely to be the electric service charge. Put simply, this charge is what the utility company charges to meet your demand, or the amount of power your home consumes, during that monthly billing period. This is what is known as a standard consumption rate, which could be either fixed or variable. But you probably paid a fixed rate, which means that you pay the same rate for your energy regardless of how much or when you need it.

Related: Understanding Your Utility Bill

Fixed rates have been used for a very long time for residential consumers, and are probably the most common rate structure around. However, a different billing policy exists for commercial consumers, one called demand charge rates (DC’s). DC’s are a completely different charge that commercial and industrial sectors have to pay for, along with their consumption rates. A DC can be defined as an extra cost that a consumer has to pay for their maximum demand over a billing period, and can make up around 30% of a utility bill. So, imagine not only paying for the energy you use, but paying more the maximum used at any one time. Kinda lame, right?

Another way to think of this is like turning everything in your house on at the same time. That’s a lot of juice! And the utility will charge for this because they still have to supply you even when everyone is turning on everything at once.

(If you want to learn more about rate design, then check out our article on the ins and outs of rate design! )

Are Demand Charge Necessary?

Demand charges are designed to lower the cost of grid operation during peak hours of demand. DC’s supposedly help utility companies offset the cost of meeting high peaks of demand, which they have to do at all times, and that can be expensive. Utilities have to meet demand 24/7, and to do so they have to operate a lot of expensive equipment and generation plants.

Utilities argue that DC’s help cover the cost of maintenance and construction of wires, transformers, power plants, substation, etc. DC’s also encourage consumers to have a more consistent demand, with smaller demand peaks offset by spreading demand over a larger period of time.

However, charging the consumer more just because they have a peak demand during any given time is not always the best solution. For example, a business could reach its peak demand in system off-peak hours where the total demand on the grid is considerably less significant than system peak demand hours. This means that a business has to pay more for their energy although they are not costing the utility any more to meet their demand.

You can read our article on the Duck Curve if you want to learn more about demand, peak hour efficiency, and the costs of meeting demand during peak hours!

Residential Integration

DC’s have been around for decades in the industrial and commercial worlds respectively, until recently.  The Arizona Public Service (APS) attempted to integrate their residential customers into their Demand Charge policies back in 2016, but was met with frustration and from residential costumers. APS and and regulators were swarmed with public backlash in the form of upset calls and even protest.

The problem with integrating DC’s into residential districts lies in that individual residential homes, even in their peak demand, do not often put adequate stress on the grid to justify charging more. This stress point usually occurs only a few times per year. Furthermore, residential consumers are not used to being charged this way and frankly many do not understand what the charge is much less how to manage it. Simply put, it requires action by the consumer to manage.

Residential demands and peaks are also very similar. For the most part, we all wake up, shower, and use appliances before we leave for work/school, and we turn on the air conditioner when we return. Commercial and industrial facilities, however, tend to have much more sporadic and instantaneous peaks and demands throughout their billing cycles, especially those facilities operate on a 24 hour basis. Not to mention that these facilities require much larger amounts of power than any given residential home.

APS also made errors in giving proper effort to outreach to consumers of what DC’s really are. It takes a long time, sometime years, to adequately inform every consumer of policy changes. Some people don’t watch TV or have a smartphone, and some do not even have an adequate mailing address. So conducting proper outreach is difficult, but absolutely required.

It is doubtful that APS will be the only utility to attempt to push DC’s on their residential consumers.

A Better Alternative

A third rate design currently exists in the world of energy, one that we believe to be a healthier, more efficient one. This rate is called Time of Use (TOU). This system is more complicated than the standard consumption rate, so let’s break it down.

Related: 6 Reasons Time of Use Rates Are the Best Option

TOU rate policies work by monitoring energy use during peak demand hours. Peak hours vary slightly from grid to grid, but utilities generally see a big ramp in demand in the morning hours (approximately 6AM-9AM) followed by another ramp that evening (approximately 6PM-10PM).  Consumers under TOU rates would be charged more for using energy during these hours. But, unlike demand charges, time of use rates only apply if you use energy during hours where the grid is at its most stressed, and not just whenever your home meets its own peak demand. Consumers under TOU’s are generally charged less per kWh in the off-peak hours than consumers who are billed through the standard fixed rates. TOU’s give business and homeowners alike the capability to save money by reducing stress on the system by lowering their demand peaks, which in turn saves money for the utilities, as well. 

But we like TOU’s for a number of reasons. One being that it gives you the ability and encouragement to work around times of peak demand, and you can even save money by doing so. And who doesn’t like saving money? But it does take some amount of work on the consumer’s part to do. If you usually wash clothes in a dryer and washer or keep the A/C or heat on during peak hours, then try and move those times of usage to non-peak hours.

Furthermore, you can install automatic timers on your water heater and other equipment to only make it run during off peak hours. (Trust us, you’ll still have plenty of hot water). Also, and we love this one, you could install solar panels into your home to lower your demand even more! This would be especially helpful if the the highest charges are during the day with the sun is plentiful. TOUs and committing to these changes could save you hundreds of dollars per year on your electric bills. It’s also worth mentioning that a true TOU system would leave out any unwarranted and extraneous fees. You pay for the energy you consume, when you consume it, period.

TOU’s can not only help you save money, but they also provide real help to the grid. If implemented properly, TOU’s will reflect times when the grid is at it’s highest demand. These times are much more costly for utilities to meet as they have to operate a plethora of expensive equipment to do so. Operation of less expensive equipment = money saved for utilities and you.

Our own Tennessee Valley Authority is proposing TOU’s for utility companies such as Huntsville Utilities, but it’s unknown if they have plans to move TOU’s to their other consumers.

Perfect Utility Rate Design

6 Reasons Time of Use Rates Are the Best Option

Previously we discussed the pros and cons of the available utility use rates. In that post we mentioned that while none of the options are perfect we do have a favorite, so here’s

6 Reasons Time of Use Rates Are The Best Option

 

  1. Time of Use (TOU) Rates will lower your bill.

With some simple adjustments to your electricity use habits, you would save a significant amount of money with TOU rates versus standard consumption rates.

  1. A true Time of Use Rate system wouldn’t charge any unwarranted fees.

Utilities are notorious for trying to increase fixed charges and fees. With a true TOU rate, you are only charged for the amount of electricity you consumed (based on when you used it) with no extraneous charges.

  1. Time of Use Rates rates encourage the use of solar.

The current system for most utilities across the country charges a “fixed rate,” meaning you are charged that rate regardless of the amount of electricity you use. Without these fixed charges, TOU rates can encourage the use of solar, especially if the peak rates are during daylight hours.

  1. Time of Use Rates can be available to everybody, whether you’re a business owner or a resident.

Additionally, in most states, TOU rates are already available on a voluntary basis.

  1. Time of Use Rates are good for the consumer and the utility.

If implemented properly, TOU rates are directly related to when the system (e.g., the grid) experiences the most cost. By changing your behaviors, you’re not only saving money but also helping the entire system.

  1. There’s only one downside.

Many don’t know of – or have not seen the benefits of – TOU rates. As such, consumer education would be the greatest barrier for getting TOU rates off the ground. Consumers would need to be educated on how they can actually save money with TOU rates – because, unfortunately, you would not be able to switch to TOU rates and have your bill magically decrease. Saving money with TOU rates would require some work on the part of the consumer. Here are a few things that you would have to do to save more money with TOU rates:

  • Plug devices such as computers, televisions, game
  • consoles, and printers into power strips and turn off the switch when these devices are not in use during peak demand hours.
  • Program your AC/heater to not run as much during peak hours.
  • Use your washer and dryer during non-peak times.
  • Install automatic timers to only run your water heater during non-peak times (trust us, you’ll still have plenty of hot water).
  • Use solar during peak demand hours!

With some careful alteration of your electricity habits, most consumers would save hundreds of dollars a year on electricity with TOU rates compared to standard consumption charges. TOU rates are good for utilities and your electricity bill – and all that’s needed is to get the word out.