The government of Pueblo County in Colorado on Tuesday appealed a July decision by state regulators to pull the plug on a proposed $800,000, 15-month pilot program designed to test consumer acceptance of a time-of-day or time-of-use (TOU) electric rate.
Black Hills Colorado Electric, doing business as Black Hills Energy, proposed the pilot TOU program last October at the request of the Colorado Public Utilities Commission when it approved the company's last rate case in June 2018. The PUC however rejected the final version of the pilot after months of litigation, concluding that it had failed to clearly explain what it wanted in such a program.
Pueblo County agreed this week in its appeal of the PUC decision that the pilot program objectives could have been better spelled out but that the failing "does not warrant abandoning the Pilot altogether." The county is suggesting that a TOU rate could be incorporated in another proposal that will soon be before the PUC — a demand-side management pilot program.
The county's effort to save the concept of a residential TOU stems directly from comments made in July by PUC Chairman Jeffrey Ackerman who suggested that demand side management strategies could give customers, including low-income customers, a tool to lower their electricity use.
In its Aug. 6 appeal of the July decision rejecting the TOU pilot, the county argues that some of the proposals that are now being discussed for a possible demand-side management pilot program "incorporate tools that align with a time-of-use pilot, such as smart thermostats, whole-home energy analysis, and community solar projects, any of which could reduce demand during peak hours."
Black Hills Energy serves about 137,000 customers in Pueblo County and the county government early on intervened in the case. The company's pilot test program would have randomly chosen 2,820 residential customers, including about 2,500 regular residential customers, 180 net-metered customers who generate a portion of their power with solar arrays, and about 140 qualified low-income customers.
The company stressed that any of the randomly chosen customers could opt out of the pilot at any time and that low-income customers would "be held harmless from any increases in annual bills that may occur due to participation." Still, a PUC administrative law judge overseeing the hearings ruled low-income customers would not be included in the pilot.
The pilot program's TOU rate would have tripled rates at times of peak demand (3 p.m. to 7 p.m.) daily during the summer, except weekends and holidays, and doubled them during winter peak demand. Black Hills Energy said the steeper peak rates did not reflect the true cost of electricity but were instead designed to test customer response to such increases.
Nationally TOU rates are common for industrial customers equipped with the technology to instantly trim demand. Consumer TOU rates are rare.
An expert witness retained by the county during the case argued that 69.2% of residential customers would see their bills increase under the proposed TOU rate. A higher percentage — 73.4% — of low-income customers would have seen higher monthly bills, according to an analysis submitted during a hearing.
The impact on low-income customers was one of the critical issues litigated. And as controversial as the impact of a TOU rate could be on low-income families, the pilot also stumbled on how to deal with the net-metered customers with home solar arrays.
Colorado's net-metered customers are permitted by law to "roll over" kilowatt-hour credits they net from generating more power than they use during a monthly billing cycle until the end of the calendar year when they can "cash out" the excess — or request in writing that the positive balance be carried forward indefinitely until they are no longer customers.
Black Hills Energy proposed that the net-metered customers chosen to be in the pilot be cashed out at the start of the program rather than at the end of a calendar year. That prompted objections from the Colorado Office of Consumer Counsel, which also questioned where the funds for the cash-out would come from.
The PUC administrative law judge overseeing the case recommended the cash come from a fund not authorized to make such payments, argued the Consumer Counsel.