Posted by: nialljmcshane | October 10, 2010

If it seems too good to be true……..

 

Commonwealth Edison

Image via Wikipedia

 

My thanks to Jeffrey Greenspan who pointed me to Commonwealth Edison’s Real Time Pricing Guide for details of the various additional charges that were missing from my analysis of the Impact of Real Time Pricing in Chicago.  This document provides a sample bill for a consumer on the real time tariff and it makes for interesting reading.  Many of the charges on the bill are the same as those for ComEd’s fixed rate plan.  However, there are a few additional charges that, as I suspected, reclaim much of the savings that my earlier analysis predicted.

The largest of these additional charges is something that ComEd are calling a Capacity Charge.  They describe this as a charge that covers ComEd’s costs to reserve enough electricity to meet demand at all times, including peak hours.  The charge is calculated based on a Capacity Obligation multiplied by a Capacity Charge Rate.  The Capacity Obligation is calculated once a year based on the consumers usage during the five highest demand hours of the previous summer.  In the sample bill that is provided in the ComEd guide, the electricity usage is 636 KWh compared to around 1000 KWh in my analysis.  The electricity supply charge is $27.77 which is broadly in line with what my analysis would have projected.  In this example, the Capacity Charge is $15.94.  Assuming that peak usage scales fairly linearly for all users, the capacity Charge for my hypothetical user would be around $25.  Of course, real time users can reduce their Capacity Charge by shifting demand to off peak hours but, at least initially, they are going to be stuck with a charge that significantly reduces their potential cost savings on the real time tariff.

Real Time users also pay a Miscellaneous Procurement Component Charge which ComEd describes as a charge that recovers the costs that ComEd incurs related to procuring electricity supply directly from PJM-administered markets for customers with hourly energy pricing that are not recovered through the application of the Capacity Charge, the Electricity Supply Charge, and the Transmission Charge. Similar costs for customers on the fixed rate are included in their Electricity Supply Charge.  Sounds like a charge to cover things we couldn’t charge you for under any other legitimate charge.  There are no details on how this charge is calculated but the sample bill shows a cost of $2.25.

 

Smart Meter

Image by Duke Energy via Flickr

 

Next, there is a Meter Lease Charge for real time users which is another $2.25.  Ironically, despite the fact that smart meters actually reduce the utilities costs by eliminating the need for manual meter reads, real time users who are required to have a Smart Meter to record interval usage still pay the Standard Metering Charge and also pay this additional meter lease fee.  The document makes an argument for why this is the case but points out that the full cost for users after the first 100,000 meters will be $7.65 for the smart meter and notes that all customers are subsidizing the first 100,000 meters via a rider on the Customer Charge portion of the bill.

Other charging differences which are impossible to analyze based on the information provided by ComEd include:

  • Different calculations for transmission charges because the supply for RRTP customers is procured differently (directly through PJM rather than through the Illinois Auction and recent procurement processes).
  • Different calculations for the Purchased Electricity Adjustment, which ComEd describes as the balancing mechanism to assure that ComEd’s supply charges exactly match supply costs over time.  They also note that in 2008 there were seven months when this charge was lower for the hourly customers and five months when this charge was higher for the hourly customers so this one can possibly be considered a wash except that they don’t specify what the differences were in each of those months.

Based on this new information, I have updated the table of projected costs for my original analysis.

Model Daily Cost Monthly Cost Saving
Standard Fixed Rate $2.45 $73.50
Standard Low Cost $1.16
Standard High Cost $2.92
Standard Average $1.61 $77.87 (6%)
Stay at Home Fixed Rate $2.45 $73.50
Stay at Home Low Cost $1.21
Stay at Home High Cost $3.17
Stay at Home Average $1.63 $78.44 (7%)
Peak Shifted Fixed Rate $2.45 $73.50
Peak Shifted Low Cost $1.02
Peak Shifted High Cost $2.37
Peak Shifted Average $1.40 $67.02 9%

Note, I have added $29.50 ($25 Capacity Charge and $2.25 each for the Miscellaneous Procurement Component Charge and the Meter Lease Charge) to the Standard Average and Stay at Home Average costs and $25 to the Peak Shifted Average to reflect the potential for this profile to reduce the Capacity Charge over the longer term.  Also, note that this analysis still doesn’t represent the entire cost but the other charges are either poorly defined and therefore impossible to predict based on the available information, or they are the same for both the fixed and real time tariffs.

In conclusion, it is apparent that the per KWh price is incidental to this game that ComEd is playing.  There are still savings to be had for consumers who aggressively manage their usage and the timing of that usage but for the casual consumer who isn’t willing to invest time and effort in reducing overall demand and shifting demand to off-peak hours, the real time rate looks less and less attractive.  This is unfortunate because it is in our best interests to find ways to encourage users to reduce and shift demand so that we can decelerate the ever increasing growth in demand for electricity but this plan is not the way to do that.

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Responses

  1. My household has been on the RRTP system for two years now. I am a full time homemaker and SAHM, so someone is in the house almost all day, every day. The first year, we had a very high capacity charge, based upon usage by the previous homeowner. We bought a programmable thermostat and precooled the house, programming the A/C to essentially shut off from 9 am until 6 pm. Over night, when hourly rates are low, we cool the house to 70F and at 9am the thermostat goes to 78F. This is the only change we have made to our usage, and it doesn’t impact our lifestyle at all.

    The first year, our savings were 2%. Last year, with a capacity multiplier of 3.69, our savings were 6%, or $60, which is a spring or fall bill for us. Our capacity multiplier this year (the part we can affect) is 0.77. We just replaced our HVAC system with one that has a dual phase fan, so we expect this number to go down again next year.

    But our best savings come from being able to enroll in Nature First. We get a monthly $10 credit during summer months for allowing them to shut off our air conditioner for an hour during high peak times. We also get to use a program called Load Guard that will shut our A/C off if for some reason it starts running when charges exceed 10 cents per kwH. (Again, it shouldn’t because we have it programmed to run only at night and early morning hours.)

    I hope this helps you understand what it’s like to be an actual user.


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