MLGW weighing peak-hours pricing

From today's Commercial Appeal....

MLGW weighing peak-hours pricing
Volunteers would test new system

Memphis Light, Gas and Water Division is poised to take another step toward charging customers different electricity rates at different times.

The utility is likely to seek volunteers for a "time-of-use metering" experiment among the roughly 1,000 households that have already agreed to participate in the Smart Grid Demonstration Project.

The utility has given the 1,000 households special meters that measure their electricity consumption every 15 minutes, and in-home displays or the Internet show charts that give these customers a much clearer sense of how they are using electricity than does a monthly bill, said Becky Williamson, the utility's strategic marketing coordinator.

The volunteers within this group would agree to a new pricing system in which electricity rates could shift depending on the time of day.

The utility hopes to encourage people to use less electricity through steps such as adjusting thermostats, she said. It also wants to encourage people to delay chores until off-peak hours. For instance, customers would pay less to run a dishwasher at night than during the day.

"The time-of-use option is kind of the financial reward for doing that," Williams said.

Rates aren't final yet, and MLGW's board is likely to review the concept at a meeting later this month, Williamson said. If approved, the program would start in October. The demonstration project is scheduled to end in December 2012 and the utility hopes to use data gathered from the project to help determine next steps, she said.

The program will only affect a small number of customers, but it reflects a larger trend.

Both MLGW and the agency from which it buys its electricity, the Tennessee Valley Authority, are taking slow steps toward "time-of-use metering."

It's expensive for TVA to produce electricity at peak times, such as hot summer days when many people are running air conditioners.

That's because TVA has to turn on additional power plants. The agency wants to avoid the cost of running these plants and building new ones.

A much more limited version of the time-of-use concept is already in place.

Starting this month, TVA began charging different electricity rates at different seasons of the year, and MLGW is passing the changes to its customers. The differences are quite small.

"The emphasis, again, is just to introduce the concept to the customers," said Rod Cleek, assistant manager of MLGW's budget, plant and rates department.

The move from the old pricing system will actually save customers some money, he said.

For instance, an MLGW residential household using 100 kilowatt hours of electricity per month paid $96.71 before the move to the new system.

Under the new rates, the same amount of electricity would cost $95.49 in the summer months of June through September.

In the winter months of December through March, the same amount of electricity would cost 12 cents less, or $95.37.

In the remaining spring and fall months, the price for the same amount of electricity would drop an additional 63 cents to $94.74, Cleek said.

In April 2012, TVA is scheduled to begin charging MLGW different wholesale rates at different times of the day, said MLGW controller Dana Jeanes.

MLGW might not immediately pass the rates along to customers, since it would have to install the high-tech "smart meters" in more households first, he said.