Since the start of the summer when Xcel's new two-tiered rate scheme went into effect in Colorado, the PUC customer complaint line has been ringing off the hook. And, really, it's no wonder to anyone who has given this rate structure more than a modicum of thought. In the PUC propaganda promoting its decision approving the two-tiered rates, the PUC Chairman proclaimed that "For years, consumers have advocated 'the more you use, the more you pay' for electricity." Really? I wonder what consumers he's been talking to?
But, truthfully, this is a serious topic and those who complain about the tiered rate schedule are not all wrong, even though some may not artfully express their dissatisfaction. I agree with the sentiment that those who impose the greatest load during peak times should perhaps shoulder the greater incremental cost. But, if the average use is, as Xcel noted, 657 kWh per month, then the 500 kWh threshold at which the higher rate goes into effect seems exceedingly low. Does that imply that the average user is wasteful? What about the unfortunate person who is on an oxygen generator that by itself consumes over 300 kWh per month? Or the person who installed a ground source heat pump in the name of efficiency and is now being penalized because the electric pumps for those systems run much more often. And, those respondents who noted that Denver water users were so successful in heeding the Water Board's call for conservation that rates had to increase because revenues fell so drastically expressed a very valid concern. So much for the argument about efficiency saving consumers money. The same could easily happen here.
From a societal standpoint, I am not convinced that average rates (what we have traditionally had) are not in the best interests of the community as a whole. After all, we're not talking about a luxury here but a necessity. And, that is why the monopolist is regulated. If you want to place a luxury tax on the commodity, then increase the threshold for the more expensive tier to something that is truly reflective of luxury use rather than necessary use. Moreover, Xcel's two-tier rates for June-September don't seem particularly targeted at peak loads, just aggregate demand by individual users. If we want to fiddle with rates to promote energy conservation, then TOU rates would be better than a naive two-tier rate that does not provide adequate discrimination between uses. TOU rates would at least allow many of the consumers who have a valid use to shift it to lower cost times. We need a tool that can be applied with more precision than a sledge hammer.
Of course, TOU rates would require new, so-called "smart meters" which Xcel would be only too happy to foist on ratepayers. But the problem there is that the PUC and Colorado legislature seem only too happy to jump into palliative, partial solutions without considering all of their ramifications. While the PUC does have open a couple of "investigatory dockets" into matters such as data privacy and cyber security, one would think that it would address those issues before entertaining utility applications for cost recovery of its Boulder Smart Grid City experiment.
It seems a particularly perverse notion of technological innovation in which the goal is to increase the cost of a commodity necessity to the end user. If the computer industry had adopted this model of innovation you'd still be reading your morning paper on newsprint and blogs would be handed out on street corners as they were in colonial days. Rather than coercing users to use less of what has been called the "master resource," shouldn't the focus be on making its production more efficient, with less environmental impact, AND at lower cost?
But, truthfully, this is a serious topic and those who complain about the tiered rate schedule are not all wrong, even though some may not artfully express their dissatisfaction. I agree with the sentiment that those who impose the greatest load during peak times should perhaps shoulder the greater incremental cost. But, if the average use is, as Xcel noted, 657 kWh per month, then the 500 kWh threshold at which the higher rate goes into effect seems exceedingly low. Does that imply that the average user is wasteful? What about the unfortunate person who is on an oxygen generator that by itself consumes over 300 kWh per month? Or the person who installed a ground source heat pump in the name of efficiency and is now being penalized because the electric pumps for those systems run much more often. And, those respondents who noted that Denver water users were so successful in heeding the Water Board's call for conservation that rates had to increase because revenues fell so drastically expressed a very valid concern. So much for the argument about efficiency saving consumers money. The same could easily happen here.
From a societal standpoint, I am not convinced that average rates (what we have traditionally had) are not in the best interests of the community as a whole. After all, we're not talking about a luxury here but a necessity. And, that is why the monopolist is regulated. If you want to place a luxury tax on the commodity, then increase the threshold for the more expensive tier to something that is truly reflective of luxury use rather than necessary use. Moreover, Xcel's two-tier rates for June-September don't seem particularly targeted at peak loads, just aggregate demand by individual users. If we want to fiddle with rates to promote energy conservation, then TOU rates would be better than a naive two-tier rate that does not provide adequate discrimination between uses. TOU rates would at least allow many of the consumers who have a valid use to shift it to lower cost times. We need a tool that can be applied with more precision than a sledge hammer.
Of course, TOU rates would require new, so-called "smart meters" which Xcel would be only too happy to foist on ratepayers. But the problem there is that the PUC and Colorado legislature seem only too happy to jump into palliative, partial solutions without considering all of their ramifications. While the PUC does have open a couple of "investigatory dockets" into matters such as data privacy and cyber security, one would think that it would address those issues before entertaining utility applications for cost recovery of its Boulder Smart Grid City experiment.
It seems a particularly perverse notion of technological innovation in which the goal is to increase the cost of a commodity necessity to the end user. If the computer industry had adopted this model of innovation you'd still be reading your morning paper on newsprint and blogs would be handed out on street corners as they were in colonial days. Rather than coercing users to use less of what has been called the "master resource," shouldn't the focus be on making its production more efficient, with less environmental impact, AND at lower cost?
