Juice in BGE `time-of-use' plan dims a bit

August 23, 2006|By JAY HANCOCK | JAY HANCOCK,SUN COLUMNIST

A few years ago, when electricity cost up to 80 percent less after 11 p.m., Suni and Andy Grosko's washer, dryer and other appliances mainly worked the night shift.

The Baltimore County couple probably saved thousands of dollars over the years by taking great advantage of Baltimore Gas and Electric Co.'s "time- of-use" plan, which gave big discounts for off-peak kilowatts. But these days, when the price for after-hours juice isn't much lower than that of the daytime product, their appliances are just as likely to be on at lunchtime as at midnight.

"Right now I'm running my dishwasher," Suni Grosko said the other afternoon. "Prior to today I would have made sure it was run last night." Under new BGE rates that took effect July 1, she said, the savings for nighttime use "is so negligible that it doesn't make any difference to me."

That's a problem. Not just for the Groskos but for the grid and electricity customers across Maryland.

Now that electricity rates have soared and households need every break they can get, shrinking discounts for off-peak use have removed what might have been an effective way to cope. This occurs just as the increasingly strained system needs to encourage after-hours use to forestall potential blackouts.

Having kilowatt prices that reward families for shifting consumption to low-demand hours "is really, critically important," says Dan Watkiss, a Washington lawyer who represents generation companies, power marketers and energy financiers. "Smart state regulators and politicians should be all over this issue."

About 78,000 of BGE's 1.1 million residential accounts have signed up for time-of-use billing. But the money they save by timing the dishwasher to start at midnight or getting up at 6 a.m. to run the dryer has become, for many, negligible. (Other BGE customers pay a flat price no matter what time of day they use electricity, and they have little incentive to switch now.)

In 1999, according to bills Suni Grosko saved, BGE's summertime rate for kilowatts burned from 11 p.m. to 7 a.m. was about 3 cents an hour. (That sounds right, says Wayne Harbaugh, BGE's manager of pricing and regulatory services.)

That was almost 40 percent less than the "intermediate" rate, charged from 7 a.m. to 10 a.m. and 8 p.m. to 11 p.m.

And it was 80 percent lower than the peak rate from 10 a.m. to 8 p.m. Nonsummer off-peak savings were similarly huge. The gaps narrowed during the six-year rate freeze that ended this summer but were still substantial.

Since July 1, however, the summertime off-peak price has been only 7 percent less than the intermediate rate and 25 percent less than the peak rate. Nonsummer savings are similarly smaller. (And, of course, today's "cheap" off-peak prices are often more than the peak rates of a couple of years ago.)

Regulators and industry officials blame the shrinking difference on increasing costs to run coal and nuclear generators, which provide most off-peak kilowatts. Coal and uranium prices have risen along with those of other commodities, so when BGE bought electricity for 2006 and 2007, vendors were less willing to give big discounts for off-peak consumption, Harbaugh said.

BGE serves Central Maryland. At Pepco, too, which powers Washington and its immediate Maryland suburbs, the difference between peak and off-peak prices is "still slightly advantageous, but it's not like it used to be," said spokeswoman Mary-Beth Hutchinson. (Pepco's time-of-use program is closed to new users; BGE's is open.)

But higher off-peak fuel prices aren't the only problem. In the wholesale markets, there are still "significant differences between on-peak and off-peak," said Harbaugh, but those differences don't seem to be getting passed to customers. He blames a disconnect between the wholesale pricing system, which recognizes only peak and off-peak prices, and BGE's use of a third tier - intermediate pricing - for households. That might keep vendors from offering the best off-peak price possible.

This situation could be improved if industry and regulators set their minds to it. In last year's energy bill, Congress urged states to consider variable daily electricity prices that would signal users when to conserve. The Public Service Commission is studying improving time-of-use plans as part of a wider investigation ordered by the General Assembly.

In one promising move, BGE is contemplating changing its bid requests to conform to the wholesale off-peak definition, Harbaugh said. In another, Pepco is launching a pilot program of "smart meters" for 2,500 Washington households that will deliver hour-by-hour information on kilowatt consumption and prices. Such computerized meters could allow extremely sophisticated time-of-use plans and even shut off certain appliances if spot prices exceeded a certain level, Watkiss said.

At the same time, no alternative electricity suppliers that I know of offer time-of-use pricing. They should get creative and add cheap, after-hour juice to their menu.

The goal should be to get as many as 25 percent of Maryland households on variable daily pricing plans.

Tonight, when you sleep, bargain kilowatts will be running all over the Mid-Atlantic grid, trying to get into your house. Let's set them free.

jay.hancock@baltsun.com

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