Protect Consumers and Savings –Don’t Raise Fixed Charges
At legislatures and regulatory bodies across the country a debate rages on over consumers’ control of their electricity bills. The debate centers on fixed charges, a monthly fee to obtain access to electricity that applies regardless of how much electricity a consumer actually uses.
Utilities are in favor of increasing fixed charges because it would increase certainty: the utility knows that it will collect a certain amount of revenue from all of its customers each month, regardless of the amount of electricity consumed. Consumers and their advocacy allies, on the other hand, are pushing to prevent these increases because they would reduce consumer control over energy bills, undermine the clean energy future, and reduce economic incentives for consumers to invest in energy efficiency and distributed generation.
Acadia Center recently analyzed the impact of increasing fixed charges in Rhode Island in a revenue-neutral scenario. In this scenario the utility is not allowed to increase the total amount of revenue it collects, just redistribute the total between fixed charges and the variable charges based on consumer’s energy use. National Grid will be proposing revenue-neutral changes to the fixed and variable charges in July, as required by Rhode Island Renewable Energy Growth program law. The analysis determined that if the fixed portion of the bill is increased, then the per-kilowatt-hour charge will be lowered because less revenue will need to be collected in that way (see table below). This essentially means that any effort consumers make to lower their energy usage and become more efficient will be less valuable because the majority of their bill is fixed.
Percent Change in Variable Rates Compared to the Current $5 Fixed Customer Charge and Revenue Requirement for Residential Customers in Rhode Island
|$10 Fixed Charge||-22%||$10 Minimum Bill||-6%|
|$15 Fixed Charge||-44%||$15 Minimum Bill||-17%|
|$20 Fixed Charge||-67%||$20 Minimum Bill||-36%|
|$25 Fixed Charge||-89%||$25 Minimum Bill|
The analysis also showed that a significant number of Rhode Island customers—those using less electricity than the monthly average — would see an increase in their electricity bill if fixed charges were increased above the current $5/month; higher usage customers’ bills would go down due to the lower variable rate. These results show that high fixed charges are regressive: low-use customers see their bills increase, while higher-use customers see their bills decrease.
Acadia Center recommends that policymakers and regulators avoid reliance on fixed charges. Instead, policymakers should consider the following recommendations for short-term reforms that protect consumers and maintain incentives to use energy wisely:
- Adopt a narrow definition of fixed charges. Limit fixed charges to the cost of keeping a customer connected to the grid, such as metering, billing, and the service drop. The impact of public policy considerations should be factored in as well.
- Increase transparency. The components of a cost of service study that are included in the fixed customer charge, and the data, process, and methodology used to determine the components, should be publicly available and easily accessible.
Energy Forum Highlights Programs that Help Reduce Demand
…The program, known as DemandLink, was highlighted Friday at a forum on clean energy that was hosted by Acadia Center, a regional environmental group with expertise in energy issues, and the Rhode Island Foundation.
DemandLink is just the type of initiative that Acadia Center wants to see more of as part of a transformation of the New England power system that’s based on expanding energy efficiency, integrating more renewables and ultimately reducing the fossil fuel emissions that are driving climate change…
As I See it; Give Solar a Chance to Shine
The current stalemate around solar caps is preventing those who need it most from finding relief on their utility bills. Is holding out for a long-term solar policy–worth the cost of blocking projects that serve renters, low-income housing, and municipalities? Others are taking action to craft a long-term vision, for example, one policy framework by the Acadia Center has earned the endorsement of over 50 community, labor and environmental groups. The long-term debate aside, we need to act now to remove barriers to solar and help Massachusetts thrive.
As Net Metering Debate Continues, Report Shows Benefits of Solar Energy Far Outweigh Costs
…One of the studies, authored by Acadia Center, showed that a typical rooftop solar installation in Massachusetts offered benefits to the grid and to society at large of 29 cents per kilowatt-hour (kWh), compared to the state’s average retail electricity rate of about 17 cents per kWh …
Relationship Counseling with Your Utility is Better than Breaking Up
Frustration with utilities combined with declining costs of solar and energy storage has raised the possibility that customers will start divorcing from the grid. Cutting the cord and going “off-grid” has technically been possible for decades, but as costs fall, the idea is starting to gain some real traction. SolarCity, a solar power provider, plans to lease solar photovoltaic (PV) plus storage systems in Hawaii, where high power prices, abundant sunshine and frustration with the local utility has made grid divorce alluring.
While the thought of ending your relationship with a utility may be satisfying, it would undermine our capacity to reduce emissions and set back efforts to modernize the grid.
Battery storage clearly has an emerging and important role in our energy future, but using it to fully sever ties with utilities leaves many of the benefits of both storage and clean generation unrealized. Sure you may feel that you’re trapped in a one-sided relationship, that your concerns and needs are not being addressed, or that the utility does not reflect your values. But rather than cutting the cord, the solution is making structural changes to the grid that will move us toward a clean energy economy that benefits consumers.
Acadia Center examined the impact of adding battery storage (equivalent to Tesla’s Powerwall, a new battery system) and solar PV to homes in Connecticut, Hawaii, and Arizona to see what it would take to become independent from the grid. In all three states, going off-grid with a “right-sized” net-zero PV array (where a home’s demand for power approximately equals the energy it produces over a year) would be expensive. In New England, a very large number of batteries– 62 in Connecticut – would be needed to allow for year-round uninterrupted power off the grid. This is due to significantly lower winter PV production in the region and the resulting need for more batteries to store enough power to get a home through a long winter.
In sunnier and warmer climates with higher solar production in the winter, like Hawaii and Arizona, you would only need 40 and 42 batteries, respectively, to take a net zero home off-grid. But, average annual electric demand is higher in those states, so battery needs and cost would still be high when coupled with smaller solar PV arrays.
The least expensive path to an off-grid system is to oversize the solar PV array in order to reduce the number of batteries needed. (See chart and figure below.) Yet, while less costly, oversized solar arrays that are not connected to the grid essentially “waste” clean energy. In other words, once your demand is satisfied and the batteries are full, any excess energy that would otherwise be fed into the grid just dissipates. The Connecticut home with a 12.5 kW array may have reduced system costs, but it is now producing approximately 8,900 kWh per year more than it needs, and those kilowatt-hours are going unused. With a connection to the grid to use that otherwise wasted energy, the emissions reductions would be more than double what is achieved by only powering one home.
For a truly clean, efficient and affordable modern grid, customers should stay connected, and utilities should support that by avoiding discriminatory charges for solar customers and providing full and fair compensation for the unique value that rooftop solar generation provides to the grid. Cutting the cord will become less theoretical as solar plus storage systems continue to drop in price, but reducing overall emissions at the lowest cost and optimizing the function of the grid cannot be accomplished by going it alone. It may take a lot of counseling, but staying in a relationship with your utility is worth it in the long run.
System Size and Costs to be Grid Independent – Comparison of Net Zero & Optimally Sized (i.e. Lowest Cost) Systems in Connecticut, Hawaii, and Arizona
|Annual electric consumption||6,656 kWh (555 kWh/month)||10,520 kWh (750 kWh/month)||7,957 kWh (663 kWh/month)|
|Net zero PV system size||5.50 kW||6.75 kW||4.75 kW|
|Net zero annual PV production||6,850 kWh||10,726 kWh||8,216 kWh|
|Net zero PV system cost||$19,250||$23,625||$16,625|
|# of 10 kWh Batteries needed to go off grid||62||40||42|
|Total net zero off-grid cost||$236,250||$163,625||$163,625|
|Optimal system size||12.5 kW||10.0 kW||6.5 kW|
|Batteries needed for optimal system size||7||5||4|
|Optimal system cost||$68,250||$52,500||$36,750|
|Optimal system PV array potential annual production||15,567 kWh||15,890 kWh||11,243 kWh|
|Lost PV production with off-grid array||8,920 kWh||5,400 kWh||3,300 kWh|
The Fine Print: Our assessment used a blend of Department of Energy’s hourly electric consumption models to represent a new, high-efficiency single family home in each location. The National Renewable Energy Laboratory’s PVWatts tool was used to simulate hourly electric generation in each of the homes for the various array sizes. At net zero, the PV array size was set so that generation was approximately equivalent to consumption on an annual basis. The battery storage was modeled so that there was sufficient storage and production to meet hourly demand for every hour of the year. No safety margin was included, nor were considerations made for degradation of storage capacity or whether instantaneous demands (such as an air conditioning unit’s start-up requirements) could be met. Costs of $3.50 per watt for PV and $3,500 for each 10 KWh of battery storage were used for determining optimum configurations. Additional storage system integration costs were not included.
Envisioning the Energy Future for RI: Making the System Work for Consumers and the Environment
As consumers become more aware of the costs and impacts of energy use on health and the environment, we’re looking for ways to re-envision the energy system. With emerging technologies and approaches, a new system is possible.
Acadia Center invites you to a discussion, hosted by the Rhode Island Foundation, which will lay out a strategic plan to achieve a new system that meets our energy needs and supports a fair, healthy economy and environment.
Acadia Center staff will tell the story of how we can get there. The presentation will draw on the user-friendly visuals, recommendations and original research in our recent reports EnergyVision and UtilityVision, with background on trends from ClimateVision 2020. It will show an optimistic and achievable pathway for making deep greenhouse gas reductions and introduce specific recommendations for advancing a consumer- and environmentally-friendly clean energy future. The presentation portion will be engaging and brief, leaving plenty of time for questions and discussion. We hope you will join us.
Friday, June 26 10 AM – 12 PM
Rhode Island Foundation
1 Union Station
Providence, RI 02903
We encourage you to use public transportation, but the Rhode Island Foundation is generously offering to validate parking.
If you plan to come, please register on our Eventbrite page. The event is free and all are welcome to register.
Support a Clean Energy Future: Event Recap
Acadia Center is grateful to our friends and colleagues who made it out to Boston’s District Hall on a rainy Monday night to share in conversation about realistic pathways to a brighter, clean energy future.
Acadia Center provided updates on efforts to re-energize state leadership to address climate change, reduce emissions and advance clean energy. Staff experts were on-hand to answer questions and engage in discussion on key issues such as extending MA’s leadership on energy efficiency; increasing incentives and infrastructure for electric vehicles; harnessing solar power and other clean energy resources; and, leveraging RGGI and carbon markets.
Leslie Malone, Senior Analyst, shares results of Acadia Center’s Value of Solar study for Massachusetts
Posters with infographics and charts helped jumpstart conversation and showcased a key element of Acadia Center’s approach: credible research with user-friendly visual presentation that tells a story. Some recent publications include EnergyVision and UtilityVision, which illustrate pathways to deep carbon reductions and a consumer-friendly energy system.
Please join Acadia Center for our next event: Envisioning the Energy Future for RI: Making the System Work for Consumers and the Environment. Friday, June 26, 10am -12pm, in Providence, RI at the offices of the Rhode Island Foundation. Learn more and register here.
Acadia Center: SouthCoast poised for new energy future
SouthCoast is facing a choice between its existing energy infrastructure made up of power stations and miles of wire or a different energy future, officials at the region’s environmental policy nonprofit say. With the Brayton Point Power Station in Somerset scheduled to go offline and with a terminal to build off-shore wind projects slated for New Bedford, “the SouthCoast is facing a huge transition point,” said Abigail Anthony, Acadia Center director in Rhode Island.
Energy Rules Need to Change
Our energy system is evolving and will look very different in years to come from what we have today. Electricity produced by solar, wind, and other renewable technologies will power our cars and provide efficient heating. Homeowners and businesses will anchor an integrated grid with power flowing between consumers and among smart appliances and batteries within energy-sipping buildings. The transition is underway. In 2013 more renewables came online than coal, oil, and natural gas generation combined, and financial analysts think there is no going back.
Acadia Center’s May Newsletter
A look at Acadia Center’s work this May. This newsletter includes information about the Next Generation Solar Policy Framework that Acadia Center developed with 52 other organizations, an update on fixed charges in Connecticut, and details about our upcoming Rhode Island event.