Mega-utility NStar has agreed to offer two environmentally friendly programs to its customers.
In a first of its kind for Massachusetts utilities, NStar yesterday proposed to let its 1.1 million electric customers in Boston and 80 eastern Massachusetts cities and towns buy their power directly from a wind farm in upstate New York and a second under development in Maine. Because the wind farms are more expensive than other sources such as coal and nuclear power, a typical homeowner would pay a premium of about $7.50 to $15 monthly. The program will need approval from state utility regulators before it is launched, which could be as soon as Jan. 1….
Technically, NStar customers would not get their power directly from the Maine and New York wind farms, because it is impossible to transmit electricity through the power grid to a specific meter. But by paying for the turbines at Maple Ridge and Kibby Mountain to feed into the interconnected New England and New York power grids the same amount of power they’re drawing from conventional sources closer to Boston such as coal, nuclear power, and gas- and oil-fired plants, NStar customers signing up for the program would be able to say they use the equivalent of 100 percent wind power.
And peak pricing:
Nstar also will allow customers to buy an electricity meter and be charged variable rates depending on the time of day. Prices will be highest during periods of peak overall energy use. Nstar?s so-called ?Dynamic Pricing Pilot Program? is designed to provide an incentive for customers to ease the strain on the electric grid during periods of peak demand.
Two steps in the right direction. Let’s hope for more, and that other area utilities (like mine, National Grid) follow suit.
…this just sounds like a option where they can charge you more for the same amount of power, depending on when you use it.
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As for wind power, I’m all for it, but let’s be clear- will 10,000 people choosing this option mean that less power will have to be generated in oil, gas, or coal plants here in MA, thereby reducing emissions? Or will connecting up to the wind turbines in NY state just feed more power into the Boston area, and have no effect on emissions?
….Gee – even if they DON’T build Cape Wind, maybe I can get Christy Mihos to sell me his surplus!
It costs more money to generate electricity during peak times (those generators that sit around idling most of the time aren’t free), so god forbid the price signal make its way to the end customer.
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If everyone suddenly had time-of-day pricing, we’d see a lot more interest in things like ice-based cooling systems. And that would be a good thing.
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One cool thing about wind power is that the marginal cost of operation is pretty close to zero- the fuel is free. I don’t fully understand how the electricity markets work, but new wind power is going to pretty clearly displace fuel-based generation (given constant demand) b/c wind can pretty much always be the low bidder (b/c of low marginal costs). But I know it gets a lot more complex than that.
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The way I look at green energy pricing, carbon offsets, etc., is that if something pumps money into the building of incremental renewable energy capacity, that’s pretty much a good thing.
with the energy markets is that wind is worth less because it can’t be turned on when the market asks — it can’t be counted on as base load. Solar doesn’t have this problem in as large a scale because daily weather forecasts can give a pretty reliable prediction of the productivity of solar cells, and because in many places annual peak demand occurs on a very sunny day at a very sunny time.
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But, you’ve basically got it. There’s a spot price, and all generators bid their production capacity and their price. Wind, nuclear, solar, and hydro bid $0.0000/kWh or somesuch because as you mentioned, the marginal cost is nearly $0 [in fact, nuclear could even bid negative, since it could cost more to turn the plant off than to keep running it!]. Of course, coal, natural gas, and oil power plants have the fuel costs, so they must bid higher, as do wood-burning renewable energy power plants [mostly waste from paper and lumber industries, and yes Martha it is renewable], but at a low non-zero bid because the wood is nearly free, but the transportation isn’t. To determine the price, they line up all bids by price, and add up the capacity. When that summation first exceeds demand, they look at the price of that bid, and that’s the price for all power generated — so the plant that just made the bid makes marginal profits, but everybody else makes more. This system is rather elegant because it allows each producer to bid his true cost and not have to try to rig bids or game the system. It’s also elegant because it favors low-variable cost production, which nearly all renewable energy production entails.
Their current time of day pricing allows you to pay for a special meter so that you can be charged more for peak electrical usage. You get a very slight discount in non-peak usage, but you would have to be able to shift about 70-80% of your total usage to offpeak hours to break even, and more than that in order to actually save money. In other words, you can choose to pay more for your power if you would like to. Anybody that understands why this is good can save themselves the trouble and cost and just move their usage without changing the pricing.
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For this plan to actually have any benefit, it has to be possible for people to save money without shutting down all their appliances during all peak hours. The ideal price point would have breakeven with 50% peak usage. Most people can probably shift 2/3 of their usage to non-peak hours if they have an incentive, so this would allow people to save money by buying the meter and shifting their consumption patterns.
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I haven’t looked at the details of the new program, so I don’t know if it could actually be a good deal or not.
if you work a “regular” schedule and have electric heat [running AC can make it even more attractive]. Couple time-based metering with a digital programmable thermostat, and it can work out well.
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If you don’t have electric heat, it’s really hard to make this work — your refrigerator and your vampires [TV, DVD, computer, etc] will tend to use too much during the day.
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Still, it’s progress. Time-based metering is one market-based distributed method of saving power and reducing peak load. The parameters have to be right for it to be effective [and they may not be just yet], but those can be tweaked on an ongoing basis.
The current delivery charges for Somerville are:
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regular: .06439
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summer peak: .14156 (weekdays 9am-6pm)
summer off-peak: .03594
winter peak: .08291 (weekdays 8am-9pm)
winter off-peak: .03491
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heating winter: .05642
heating summer: .06401
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Time-of-day metering also increases the monthly service charge by $3.56. If you can shift all of your usage to off-peak hours, you save about $.03/kWhr (or about $.02/kWhr if you have electric heat). It takes 120kWhr of usage just to make up for the higher fixed monthly cost (180kWhr if you have electric heat). The penalty for peak usage is about $.02/kWhr in the winter and about $.08/kWhr in the summer. If you have electric heat, you have to be able to keep 2/3 of your usage in offpeak hours (which start at 9pm) to break even, in addition to the 180kWhr for the higher monthly fee. During the summer, you have to be able to keep 3/4 of your usage to offpeak hours before considering the higher monthly fees. A non-heating customer in the winter only has to keep about 40% of their usage to off-peak hours (plus enough to make up for he extra monthly charge), but that will be difficult if you want to turn on the lights before 9pm.
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It would be possible to structure things so that people aren’t penalized for choosing time-of-day metering. But the current prices make it nearly impossible for someone to save money by shifting their usage. If they want to get people to adopt this program, they have to cut the rates more (either peak or off-peak) so that it is feasible to actually save money. Especially if they are going to make you pay a monthly fee for the meter.
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Alternatively, they could make the time-of-day pricing apply to supply charges as well as distribution charges. The supply charges are about 2/3 of the total cost, so there is more room for letting people save money. Supply costs also vary more by time of day.
The parameters aren’t set well.
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First of all, the “monthly fee” for time-of-day should be the same or cheaper; after all, encouraging time-of-day metering is good policy, and so financially discouraging it for no good reason is just dumb. Besides, the monthly fees should be lower anyway — by making the monthly fee lower and rolling the added costs into the rate, you create an even higher financial incentive to save. In my last apt [400 sq ft, radiator heat, gas stove] my electric bill was as low as $14.79 and never higher than $30. That included a $6.43 [or very close, NStar] customer service fee. 20% of my bill! Good grief. I even offered to pay them a full year ahead for a reduced customer service charge, no dice. By shifting the customer service fee into the rate, they could be revenue neutral and provide an even stronger incentive to conserve energy.
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Additionally, calling off-peak 9pm is insane. It needs to start earlier than that. Use the actual numbers — look at the time inverval where usage is within 90% of daily peak over the course of the year [or interval if using seasonal shifting] and use that as a guide. 9pm is just way too late to induce homeowners to make the switch. 7pm might do it, but 9pm?
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And yes, the ratio of peak pricing vs “regular” is far too steep. I don’t know what the actual spot prices are, but they can’t be based on the numbers above, or the “regular” rate would be a money loser. They’re overly penalizing peak usage or underpricing “regular” rates.
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Also — they’ve had peak and non-peak pricing for a while… so what’s new about the news? Are the expanding the availability? Changing the rates? What’s up?
davesoko raises cynical, but relevant issues
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1. On time-based pricing, they make you pay more during peak, but let you pay less during off-peak. If customers can shift enough load to off-peak hours [when the price to produce electricity is lower], they save the electric company money, themselves money, and help to reduce their environmental impact because the pollution generated per kW produced during peak demand is higher than off-peak — primarily because the peaking plants, those used only when demand is high, are very inefficient, so they release more CO_2 per kW generated, and often more particulates.
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As an added bonus, this helps stimulate solar power on homes. Why? Because the electricity generated by the solar cells is during peak pricing, thereby generating “more valuable” electricity and holding the meter back [or even running it backward] during the high prices, and letting the user enjoy the lower prices when the sun isn’t shining. Peak pricing makes solar cell installations a better deal financially.
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As for wind power and 10,000 customers: in the short run, maybe. NEISO is the New England Independent System Operator; they manage supply and demand of New England power. Since the wind power is coming [in part] from NY, that means NE is importing it — and may offset that production in New England. That offset wouldn’t happen in nuclear or renewables because the variable cost is so low — it would happen in coal, oil, or natural gas. But, they may turn around and apply that gain in imports to energy exports, resulting in some other location [likely elsewhere on the North Atlantic coast] to reduce their coal, oil, or natural gas generation.
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But here’s the great news: if PA burns less coal, that’s also good for us because of the direction of the wind, especially since PA [and OH and KY] tend to have far more pollution per kWh of electricity generated by coal than MA, and that pollution blows our way every hour of every day.
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In the long run, by buying wind power at the market price for wind power [a premium], you send the market signal that there’s demand for wind power, and more gets built. Any power generated from a wind turbine results in that same power not being generated by coal, gas, or oil. Because the growth in renewables still isn’t as fast as the total growth in electricity demand, you’re generally not going to see carbon-based power plants taken off line; instead, you simply won’t see as many being built.
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It’s a start. I currently buy offsets through a 3rd party, but will likely switch to this in an effort to show support.
They have a program called GreenUp, by which a consumer can choose one of several providers with different rates and mixes of energy. Like NStar, it is added as a premium on the electric bill.
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Every little bit helps the environment.
through WMECO?
Western Massachusetts Electric Company (WMECO)
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Here’s their page on renewables.
Due to the RPS [renewable portfolio standard], NStar et al are required to have a minimum percentage of electricity generated by renewable sources.
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Does the wind power that customers are paying a premium for count toward this requirement? If it does, then why would I pay extra for something that NStar would be doing anyway? If it doesn’t, then paying extra is great, because it means that the amount of renewable energy NStar will be buying will be their RPS requirement plus all that extra.