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March 09, 2011 05:34 PM UTC

Today's Main Event: Tiered Electric Rates

  • 23 Comments
  • by: Colorado Pols

A bill up for debate in the House Transportation Committee today should prove quite interesting: House Bill 1271, sponsored by Republican Rep. Ray Scott and Democrat Sen. Cheri Jahn, would rescind the “tiered rate” structure for residential electricity billing in Colorado.

The rate tiers for electricity presently work like this: once an electricity customer exceeds 500 kilowatt-hours in a month between June and September, the price per kilowatt hour goes up. Under this plan, most residential customers actually pay less for electricity than they would otherwise, while about 30% of residential customers–typically large homes–pay a little more.

Well, HB-1271 rests on the presumption that this is not “fair,” and would require utilities to end the practice of tiered electric rates. Opponents estimate that this bill will increase electric bills for fully 70% of Colorado residential electric consumers, while the aforementioned 30% would see a decrease–again, those who consume less electricity would pay more per kilowatt if this legislation were to pass, while those who consume more would pay less.

Obviously there’s a policy goal, encouraging reduced electricity consumption, at the heart of the tiered rate structure. But it’s not like tiered rates are unusual–Utah, New Mexico, and Arizona, along with many other states, all have some form of it for the same purpose. It’s easier to disparage this policy goal in the wintertime, when there aren’t rolling blackouts due to the electrical grid maxing out while trying to keep Coloradans cool.

But there’s a simpler question for proponents of HB-1271 today: do they seriously want to hike electric rates on 70% of Colorado consumers–the ones who don’t live in big houses? That is not an achievement we would want to take home to our district afterwards.

Comments

23 thoughts on “Today’s Main Event: Tiered Electric Rates

    1. one family approached these legislators crying. Now it’s a problem.

      I’m fairly sure that local Fox did an investigative piece on it. Some “poor” family opened their bill and flown past the tier. Their bill was like double what they were expecting. Impressive for a family with all Energy Star appliances. Windows: They open.

      To your comment specifically, my landlord has plenty of money. He dries his clothes on the line, weather permitting. We keep our windows covered at night. Et cetera.

      The reward isn’t only for people living in small houses, it’s also for people willing to be responsible. Whether for monetary reasons, or, in the case of my landlord, because you’re a recovering hippie who supervises Superfund clean up.

  1. Why not? Those folks with 5000 square foot homes, yeah I bet they can’t afford to pay more. In addition, there is a flat service charge on each bill that is a higher percentage of the bill as you use less electricity. I am perfectly aware of this because I don’t use any electricity during the summer and very little gas because of the solar PV and solar hot water panels I have on my house, but I still pay those service charges. Also, we do this for water and it is very effective at getting people to conserve.  

  2. They, being Republicans, the short answer is “Yes…yes they do”.  It’s no longer possible not to see a pattern in the coordinated attacks on the middle class and poor for the purpose of transferring ever increasing portions of wealth and power to the wealthiest.  Granted 30% aren’t wealthy.  This is really rather generous on the part of Republicans.  Most of the policies they push benefit only a much smaller fraction at the very top.  The aims of Republicans here, with a one vote majority in the State House only and a Democratic, pro-business but not pro-privatized dictatorship, Governor must be more modest.  Not so in Michigan.

    The real and unified goal of the GOP is now clear from Wisconsin to Ohio to Indiana and now to Michigan whose Governor, apparently not content with just destroying unions or any other halfway measures, intends to out-do all those other GOP governors by really cutting to the chase. His plan includes claiming power to decide that a municipality is in crisis, dissolve local elected government and then turn over municipalities to private sector corporations.  Seriously:

    http://www.uaw.org/articles/ba

    When will we see some leadership from the President in this now openly declared War on the Middle Class? When will the Dem leadership stop being too skittish about being accused of class warfare to stand up and proclaim the obvious.  The Class War has been on for decades, the middle class has been losing and the Democratic leadership, who claim to be on the side of the people,  need to stop pussy footing around and show us whose side they’re really on.

    Nothing less than the American way of life those of us of a certain age grew up with, when the hay day of unions had not yet almost completely faded and the middle class was still at it’s strongest, most prosperous and most upwardly mobile (no coincidence that the golden age of unions was the golden age of the broadest most prosperous middle class the world had ever known and the decline of unions tracks the decline of our prosperity) is what is at stake.  

    1. But for too long Democratic leaders have abandoned even claiming to be on the side of “the people”. The middle class and working people have been left twisting in the wind by both parties while their leaders cower before the likes of the Chamber of Commerce.

      Everyone’s talking about how Wisconsinites might get the Repubs’ attention. Hell, I hope they wake up our Democrats. There’s a grim reality out here in America they’ve been conveniently napping through as they dream of those juicy corporate campaign dollars.

  3. It’s about running the damn air conditioner.

    Not too long ago, it seemed that most Colorado homeowners had a swamp cooler. Lately all the new homes have central air conditioning. Central air uses much, much more electricity than swamp coolers.

    The reality is that new power plants are extremely expensive to build, and the main reason they’re being proposed is to handle summer peak use, which really is for all new new damn air conditioners.

    Why shouldn’t the heavy-consumption electrical users (people with central air) pay for new power generation and not the people who don’t use much and therefore don’t force construction of multi-million dollar power stations?

    1. The AC is the killer and is a huge draw on the grid – I think when that substation blew in Denver last summer all of the AC drawing from it may have contributed to the problem.  

      To deal with this problem last year we would not run the AC in our house all day, and we kept windows open where we could, and kept the shades drawn where sun shone in.  

      After the sun went down and it started to cool off outside we opened all the windows and ran the overhead fan (sucking all the heat out of the house up into the attic, and pulling in cold air).  Then we set the AC for something reasonable over the evening.

      This worked well and wasn’t much of a sacrifice.  What is really mindless is when you see a house in the middle of the day with AC running and no one home – those people should pay more.

  4. This seems like an interesting committee assignment. Oh wait, that’s right – there is no committee on energy. After all, it’s not like we have any energy production in this state

  5. Peak load is needed on those hot days when a bigger AC is needed for a bigger house.

    Several years ago I lived in South Fork, a very small town at the western edge of the San Luis Valley. There was no natural gas in South Fork, so heating was by propane, wood, or electric (or a combination thereof).

    The San Luis Valley Electric Cooperative had a tiered rate system of about 11 cents KWH peak, (about what we pay on the front range), and about 3.8 cents KHW off peak. I had a 3 bedroom 1200 sf. apt., all electric. The apartment had an electric furnace with heat storage bricks. The bricks were electrically heated up at non peak time per electronic controls, and the stored heat distributed at peak time. Electric water heater set up the same way.

    I was careful to use electricity at non peak times when possible, such as when doing laundry, running the dishwasher, etc. My highest electric bill in January was $85, and that’s at a 8500 degree day heat load (Denver is about 6000 degree day heat load).

    Tiered rates, whether by time or a threshold use of energy that kicks in a higher rate tier is an appropriate and very effective way to promote conservation, which should always be the first objective in reducing energy production costs. HB 1271 as explained here would completely ignore that undeniable fact.

    If we stay in denial about our finite ability to produce “cheap” energy, we’ll never seriously address our energy problems.  

    1. You’re all making too much sense. Why should you be rewarded for being sensible and frugal?  Get out a here! That’s no way to fill corporate pockets. Now go out and find a used Hummer to buy and keep the AC blasting, say a nice 24/7 65 degrees or lower,  all summer long. You can wear a sweater if you get chilly.  Just the thing for that Christmas in July party.

      1. Haven’t you ever wondered why they run all those ads encouraging people to conserve energy? It’s because if they can’t meet peak usage demands, they have to build another power plant, which not only costs a lot, but it’s complete brain damage getting it approved, etc.

          1. That was the best alternative they could come up with when the PUC put the kabosh on time of day pricing. I can’t remember what the exact reason was, but I do remember thinking it was absolutely ridiculous.

        1. Solar rebates.  The more solar, the less need for new power plants.  The more solar, the less peak demand (solar produces most when demand peaks – hot sunny Summer days).  Shouldn’t they continue to the incentives for solar?  

          1. The more solar, the less need for new power plants.

            That may be true in the long run, but solar capacity is a drop in the bucket and will be for some time.

    2. In most states with tiered rates, it’s based on on/off peak usage, not overall usage. Xcel has tried to do it that way, but the PUC won’t let them.

      1. Why won’t the PUC allow on/off usage for Xcel?

        The San Luis Valley Electric Cooperative does it, and even though they are a cooperative, I’m sure they are still under regulation by the state PUC.

        Can anyone shed some light on this?

  6. Time of Day pricing?

    Sure. Peak and off-peak pricing makes sense as there is a huge cost difference to Xcel in supplying electricity at 0200 and at 1700.

    ToD pricing gives you an incentive to time-shift your electricity consumption.

    Time of Year pricing?

    No.

    1. It will discourage “good for the environment” electric vehicles.

    2. It only has a tiny effect on shifting consumption to off-peak.

    3. Lots of people will pay the price and not consume less.

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