Bacon's Rebellion

Democracy Thrives in Sunlight

“Lexus Lanes” for Electricity

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by

James A. Bacon
in

Pepco is doing it in Washington, D.C. Why isn’t Dominion doing it in Northern Virginia — and the rest of its service territory, for that matter? From today’s Washington Post:

Pepco is about to start sending personal e-mail messages to Jonathan and Lauren Schwabish every few hours that could determine when they do the dishes, wash the baby’s clothes or turn on the air conditioner.

The couple will learn when the price of electricity for their old Capitol Hill home will spike the next day because Washington’s winter chill or its steamy summer is nudging up the demand for power.

If they wait to turn on the washing machine or they turn off the air conditioner when the sun beats down, they’ll be rewarded with a credit on their utility bill that could reach hundreds of dollars a year. Other D.C. residents have agreed to pay rates eight times the average if they use their appliances at peak times but rates well below it at off-peak hours, as part of a pilot program starting next month.

“Lexus lanes” are coming to the electricity grid. Energy conservation programs that died when the power market switched from regulation to competition are back, but with new technology and aggressive demands from government regulators facing anger over rising prices.

Just as long-awaited high-occupancy toll lanes will charge drivers a fee to travel at rush hours, electricity customers will pay more when the grid is congested and less when it’s not.

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13 responses to ““Lexus Lanes” for Electricity”

  1. Anonymous Avatar
    Anonymous

    Just what I need. Check the email before I turn on a light.

    This might be a good idea, but it isn’t ready for prime time.

    Eight times the normal rate for peak periods? How much is the discount for off peak?

  2. Anonymous Avatar
    Anonymous

    If everyone got a computer and left it on all the time to take advantage of the e-mails…how much more energy would that use?

  3. Anonymous Avatar
    Anonymous

    Let me get this straight.

    They are going to charge me $280 for a new meter so that they will know when to charge me eight times as much during peak hours.

    Then, If I’m a good boy, read my emails, and do without electricity during peak hours then I might save $8 a month.

    Oh Goody, I can hardly wait.

  4. Anonymous Avatar
    Anonymous

    “Just as long-awaited high-occupancy toll lanes will charge drivers a fee to travel at rush hours, electricity customers will pay more when the grid is congested and less when it’s not.”

    This isn’t a good analogy. When the power company lights off the peak load generators, that’s expensive, and they do work to meet the demand. So, you pay extra and you get high dollar electricity.

    But the HOT lanes cannot be “turned up” to provide more. You are going to get one chunk of capacity (The HOT lane) and thats it. The more congested it gets, the higher the price, but this is to encourage people NOT to use it rather than to cover additional costs and provide additional capacity during peak times. All they will do is raise the price to squeeze demand until it meets capacity.

    Higher peak prices for electricity will also encourage people not to use it at that time. But the power comnpany gets eight times the revenue from those that do, so they have a strong incentive, and the cash flow, to provide more peaking plants, if and where needed.

    That isn’t gong to happen with the HOT lanes.

    RH

  5. Larry Gross Avatar
    Larry Gross

    Peak hour pricing is charging you what it costs to provide that power rather than selling it to you for less than what it costs.

    Until the advent of smart meters, all they could do was total up the costs of providing peak hour power and then charge everyone for it – no matter whether you used peak hour power or not – or more importantly how much.

    so those that routinely crank up the heat and air and wash dishes and clothes and take baths at peak hour – are being subsidized by those that don’t.

    I think peak hour pricing is very similar to HOT lanes though – unlike RH.

    Let’s just pretend that cars get a whole lot cleaner – perhaps even become plug-ins – and air pollution no longer would prevent consideration of more roads.

    Then you’d have a clear choice. Do we build more, very expensive roads to serve peak hour traffic and pass that cost on to everyone whether they drive peak hour or not – or do we charge those that want to use peak hour capacity – for it?

    So we build special lanes for those that do want to pay just like we let folks who want to use peak hour electricity – buy it.

    And folks, if you think this is a nefarious concept – take a moment to look at your cell phone.

    Does the concept of “peak hours” apply?

    Exactly how would cell phones “work” if they did not employ peak hour charges? Well, they’d work just like electricity and roads work.

    We’d have to have more expensive infrastructure and you’d have to pay more for less minutes – in effect – subsidizing those that would use their phones at peak hours – if there was no penalty.

    So .. some folks pay a lot more for “unlimited” minutes and others choose to buy less – and that’s the same way that peak hour pricing would work for electricity and roads.

  6. Anonymous Avatar
    Anonymous

    Let’s pretend, because that’s all it is.

    We are not going to build new expensive roads in the urban regions where congestion is a problem.

    However, we might add some more peaking plants, appropriately located, if we needed them and if we had the money available from peak pricing.

    The pricing theory is the same but the actual events will be a lot different.

    With driving the drivers have a choice too. They may just not go, or charge their customers for the trip, which means we all end up paying for the road, just as we do now, but without the added costs of profit.

    But with electricity, the choice is not so much. The way the story is written, if you are very diligent you might save a couple of bucks, eventually, after the meter is paid off. But if you are lazy or forgetful, even once, then

    ZAP! 8x your bill.

    Just for living in a normal time frame, like everybody else.

    Just because something is possible, doesn’t mean its a good idea. Surely no one thinks that the power company is pushing this to save us money.

  7. Larry Gross Avatar
    Larry Gross

    I’m amazed at how stilted and limited we can be in our thinking some times.

    For instance, isn’t the obvious “cure” to “forgetting” to have auto-shut-off devices and timers that coincide with the peak hour?

    My own water heater can be shut off remotely by my power provider at peak hour – and it did not cost me a penny and, in fact, my power company will do a service call to replace the burner elements – and replace the unit at a fair market cost if it fails.

    The idea with peak hour pricing is not to save a couple of bucks but to put off the need for very expensive infrastructure that would not be necessary except to cover the gap between normal usage and peak hour usage.

    AND it reduces pollution – which is also not free but perceived as so.

    Fully a third of the pollution in the Chesapeake Bay comes from power plants and autos and the added costs of cleaning it up will be paid for by the same folks who are griping about peak hour pricing.

    And yes, it works for both electricity and roads.

    it’s the same basic concept.

    What this boils down to is whether each of us truly wants to do our part to reduce the need for more infrastructure (the cost of which WILL be passed on to us) AND to do our part to cut back on pollution (the cleanup costs which WILL be passed on to us).

    This is basically about making a choice to be responsible in our use of resources – or not.

    Peak hour pricing – puts the ball in each of our courts.

    Right now – we have a system that penalizes those who want to conserve – because the costs for peak hour infrastructure – both roads and electricity are evenly allocated to all – regardless of their personal behaviors.

    Peak hour pricing will more fairly allocate costs to those who wish to consume and not conserve.

    So – no, it’s no surprise that those who don’t want to be bothered by conserving.. don’t want to be charged more for not conserving.

  8. Larry Gross Avatar
    Larry Gross

    Here’s a basic strategy that will not only reduce the need for more power plants but actually save the individual money:

    Demand (tankless or instantaneous) water heaters provide hot water only as it is needed. They don’t produce the standby energy losses associated with storage water heaters, which can save you money.

    http://www.eere.energy.gov/consumer/your_home/water_heating/index.cfm/mytopic=12820

    so the obvious question is: why not?

    why not make it CODE?

    The answer is that these units cost 4 times what a conventional water heater costs – but just like fluorescent lights – over the longer run – they not only pay for themselves – they actually save money – AND the need for more power plants since the actual ‘savings” is somewhere along 1/3 of most homes electric bill.

    BUT – as will be pointed out – it will make homes “less affordable”.

    What could Virginia or Dominion do?

    Well they could offer incentives to make it easier and more affordable for their installation.

    The money required would be much less than the eventual need for new power plants – and that cost passed along to consumers in the form of higher electricity rates.

  9. Anonymous Avatar
    Anonymous

    “The idea with peak hour pricing is not to save a couple of bucks but to put off the need for very expensive infrastructure …”

    Oh, so its not about saving bucks its about not spending bucks.

    Or as my wife put it, they want to charge us more, just when it is time to shower.

    Here’s a question. You can have a super insulated hot water heater, heat the water off peak, and then store the hot water. Or, you can have one of the enrgy saving instant water heaters, but now you can’t avoid peak usage.

    Which one saves the user the most money? Which one saves the power company the most money? Which one MAKES the power company the most money? Which one saves the most energy and pollutes less?

    RH

  10. Larry Gross Avatar
    Larry Gross

    who do you think PAYS for peak power and more power plants?

    If you think the Power Company or their investors do.. dream on.

    Over ten years, do you want to pay MORE for power, peak power, and power plants or do you want to pay LESS?

    Dumb Question?

    You bet – for dumb folks who want to pay less now even if it costs them a lot more later…

    If that’s the “logical” approach to this issue.. spare me the details.

    p.s. – yes.. this is such a “radical” idea that the rest of the world does “get it” on this issue.

    We’re about the only country in the world that does not.

  11. Anonymous Avatar
    Anonymous

    “…isn’t the obvious “cure” to “forgetting” to have auto-shut-off devices and timers that coincide with the peak hour?”

    Actually, no. It isn’t obvious at all. There are thousands of agendas out there, and thousands of charities, and hundreds of taxing auhorities.

    Each one, only wants a little bit, and of course, it is always “for the public good”.

    To just make it CODE, means that you will TELL someone that they will either spend money the way YOU want, or do without.

    BUT, there is only so much money in the individuals pocket. We could make ALL the good ideas CODE, but it wouldn’t make any difference, because NONE of us individually can afford ALL of the good ideas. As a result, we cannot afford collectively all the good ideas, either.

    We each have to pick and choose. What wors best for everyone is going to turn out to be pretty close to the sum of what works best individually. People who would prefer to tell people what to do through the CODE, don’t believe that, or they beleive they know more about waht is best.

    Even whether it (an environmental widget) saves money over the longer run, is debateable, because you have to consider – compared to what?

    If I invest in a CODE hot water heater that provides an ROI over ten years of 6%, and I have to pass up an investment in some energy comany that pays 15% over the same time period, then I have NOT saved any money. The water heater in fact cost me money by comparison.

    ——————————

    It appears to me that the real agenda here, whether it is HOT lanes, peak electric pricing, mileage tolling, or smart growth, is the idea that we would all be better off if OTHER people used less. That we would all be better off if we could tell people what to do, and what their values should be.

    We have carried that idea so far to the extreme that we believe we have the right to tell others what to do, because if they don’t, it will cost us money.

    I think that idea is bankrupt, because sooner or later it will come home to haunt us. When someone is telling us to do something we don’t want to do, and when they are not willing to pay us to do what they want done.

    We used to have a word for that, and it was called slavery.

    RH

  12. Larry Gross Avatar
    Larry Gross

    I simply don’t want to pay for you to take your shower for 3 times the cost of non-peak electricity.

    So the suggestion is, that from now on, if you must take your shower at peak load, then go for it – and pay what it really costs to take that shower.

    and of course… from your point of view, at that point, we are “stealing” from you because… you always used to be able to take a shower during peak loads and it’s wrong to now charge you for it.

    In other words, when we paid for your peak hour shower, you were not “stealing” from us….

    but if we require you to pay for your peak hour shower – we are “stealing” from you.

    correct?

  13. Anonymous Avatar
    Anonymous

    Nope. I actually agree that peak load pricing is the way to go – for electricity, but not for HOT lanes.

    I just don’t like the nonsense way it is being sold. And I don’t believe it will provide any of the results we would like to get.

    “I simply don’t want to pay for you to take your shower for 3 times the cost of non-peak electricity.”

    Well, I think that is both stupid and selfish. You are only looking at your costs, not the system costs. You see, you also have the option of taking your shower below cost – at my expense.

    This is like saying that drivers don’t pay the social cost of the congestion they cause. It is idiotic, because congestion is reciprocal.

    Actually, I never gave a thought about your shower. I can’t imagine mine costs you so much that you need to worry about it.

    But, let’s assume that higher prices do cause us to change our habits, and use less power during peak times. Most likely, that is going to occur with really big users, but for the rest of us, it just means the shower will cost more.

    So, we pay more, and where do the savings occur? Dominion already has the peak power stations, so that is a sunk cost. But they are still guaranteed a return on their investment.

    Theoretically, it might mean that they have to buy less new peak power plants over time, but that comes with a risk. What happens then, when we have a real cold snap or heat wave, with lives at stake and everybody turns up the juice?

    OOPS.

    So, yeah, I think Dominion should be able to charge what it costs to sell their product. I just don’t buy the argument that the present situation amounts to stealing, and therefore justifies forcing someone to do something via the CODE.

    RH

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