Today, CUB and the Environmental Defense Fund (EDF) urged ComEd and Ameren to offer optional “Time-of-Use” pricing plans in Illinois. Such plans would reward energy-efficient customers for shifting electricity use away from “peak” hours–when demand is high, prices skyrocket, and power plants produce the most pollution. These plans would not only save individual consumers money, but could cut costs across the entire power grid.
CUB and EDF urged the Illinois Commerce Commission (ICC) to immediately explore how ComEd and Ameren could offer Time-of-Use pricing, with the hope that these new options can be offered by 2016.
“In order for the smart grid to work in Illinois, we need to give consumers new choices that allow them to use power more efficiently and slash their utility bills,” CUB Executive Director David Kolata said. “Now is the time for Time-of-Use pricing.”
Even though market prices plunge to just a few pennies per kilowatt-hour at certain low-demand hours of the day, most Illinois residents cannot take advantage of the potential cost-savings because they are locked into rigid, “flat” electricity rates that only change with the season. With a Time-of-Use option, customers with digital electric meters could lower their utility bills by putting off heavy electricity usage (doing the dishes or the laundry, for example) until times when power is cheapest, such as early in the morning or late in the evenings.
“Time-of-Use electricity pricing allows for a level of flexibility and efficiency that is nearly impossible with traditional, flat electric rates,” said Dick Munson, EDF Director, Midwest Clean Energy. “Power does not cost the same to produce every hour of the day, so why should it be the same price every hour?”
Ameren and ComEd already give consumers the option of signing up for “real-time pricing,” which charges a rate that can change hourly. A Time-of-Use option would charge customers different set rates for different periods of the day (a day rate vs. a night rate, for example).
The graph is a snapshot of market prices on a random summer day. Time-of-Use pricing encourages customers to shift energy usage to lower-cost times of day, like early morning or late evening.
The benefits of such dynamic-pricing plans go far beyond participating households. Cutting energy use at high-demand times lowers market electricity prices for everyone, reduces stress on the power grid, and offsets the need for expensive, polluting power plants.
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