Maine utilities eye move to time-varying electric rates to boost electrification

This story was first published by Energy News Network.

Maine is considering new kinds of electric rates to encourage more widespread home adoption of electric-vehicle chargers and heat pumps while easing the strain these technologies add to the power grid.

Central Maine Power, the larger of the state’s two investor-owned utilities, is working with regulators and advocacy groups on designs for time-of-use rates, which charge customers more for electricity use at times of day when demand on the grid is at its peak.

But these rates are only one piece of the puzzle, stakeholders say. They anticipate more planning work to come on complementary technologies that will make it easier for customers to change their energy use.

Time-of-use rates and related tools to limit and shift electricity demand are currently most common among larger commercial and industrial customers, according to the U.S. Department of Energy. But as home electrification accelerates, some utilities have begun trying out similar programs for residential ratepayers.

Central Maine Power is currently piloting seasonal-heating and electrification-focused rates, and the smaller Maine utility, Versant Power, has its own time-of-use programs for heat pumps and electric-vehicle charging already in place.

The Maine Public Utilities Commission is working to expand time-of-use rates on multiple fronts, including in one proceeding that was required as part of the June settlement in Central Maine Power’s latest rate case. The utility, which is owned by Connecticut-based Avangrid, is due to file a proposal on the issue Dec. 1.

“I personally believe that there’s a great opportunity here for all of our policy goals to be advanced,” said Drew Landry, Maine’s deputy public advocate, whose office acts as an ombudsperson for residential utility customers. ​“But if we do it wrong, there’s a chance that we could undermine all of them.”

Incentives for efficient use of climate solutions

Transportation and buildings are Maine’s top sources of planet-warming greenhouse gas emissions. That’s a big reason why the state’s climate plan includes ambitious goals for expanding the use of electric vehicles and heat pumps, which use electricity for high-efficiency water and space heating as well as air conditioning.

Maine relies more than any other state on home heating oil but has made strong progress on switching to heat pumps, already meeting its initial target of installing 100,000 new units by 2025. The large, rural state is also hoping to accelerate its so-far slow progress on electric vehicle adoption.

The utility commission’s goals for its ongoing time-of-use work with Central Maine Power and other stakeholders are to ​“incentivize customers to shift usage away from the summer peak,” encourage wintertime use of heat pumps and other efficient systems, and complement state rebate and discount programs for this kind of technology.

In its upcoming proposal, the utility must consider at least four alternative rate designs specific to electric vehicles and heat pumps and consider a rebate program for customers who successfully reduce their electricity usage at peak times. The utility is also asked to propose a ​“customer education and communication plan” on these initiatives and draft data-gathering plans to aid in future similar rate-design processes.

Rates in this particular proceeding would fit under the distribution charge on customers’ bills. A separate ongoing docket looks at tying similar rates to the supply charge, which is a larger part of ratepayers’ costs.

Shifting demand ​“off-peak”

Landry, the deputy public advocate, said more use of heat pumps and electric vehicles is sure to drive up New England’s peak demand, which typically falls between 5 p.m. and 9 p.m. in summer and, increasingly, in winter.

Absent large-scale energy storage, Landry said, this increased demand could exceed available renewable power supplies, potentially adding to emissions. New England’s grid remains largely reliant on natural gas and, in recent years’ cold snaps, has tended to burn oil and coal as its backup fuels.

Widespread electrification will require significant and costly investment in transmission and distribution infrastructure, stakeholders say, no matter how rates are designed.

But they see time-of-use rates as a way to moderate that impact. These rates, Landry said, send a price signal that encourages electricity use at ​“off-peak” times when it will be easier and cheaper on the grid — nudging people, for example, to wait to charge their cars until near bedtime as opposed to right after work.

The solution is less straightforward for heat pumps, but Landry said preheating with a smart thermostat or using an electric thermal storage system could help limit the need for intensive heating during peak hours.

Pairing load-control technology

Landry and others agreed that helping customers access technology to manage their electricity use — and making it extremely simple to navigate related rate changes — will be vital to success.

“There needs to be careful consideration and effective implementation of consumer protections to make sure that it doesn’t create financial hardships for customers who are either low-income and/​or have high energy burdens, in this time of high electricity prices,” said Phelps Turner, a senior attorney with the Conservation Law Foundation, which is an intervenor in the distribution-focused utility commission proceeding.

Landry said he feels customers need ​“an action they can take in response to the price signal.” Otherwise, the rates ​“may simply penalize customers for using electricity when they have limited options,” he said, or ​“may be perceived as being burdensome,” creating a potential backlash.

Efficiency Maine, the quasi-governmental agency that runs energy rebate programs for the state, already offers a ​“load management” incentive of $50 upfront plus $50 a year for EV drivers who give the agency permission and electronic access to set their cars to charge automatically overnight by default.

“Study after study shows that the cost of our transition, very broadly — like the amount of generation, transmission, distribution that we need to fully electrify our economy — is dramatically lower the more load control you have associated with it,” said Ian Burnes, the agency’s director of strategic initiatives. He referenced a recently published draft study from ISO-New England, the regional grid manager, showing that transmission costs to accommodate increased load rise sharply with higher peak demand.

This means programs like Maine’s existing EV incentive will be important pairings to any future time-of-use rates, he said. ​“What we’re trying to build off of is to have devices that can respond to prices,” he said, ​“so the customer just has to say, ​‘I’m just going to set this up once,’ and then the device does the work for them.”

Education and verification

With Central Maine Power’s initial time-of-use plans still in progress, there are open questions remaining around whether participation should be ​“opt-in” and whether and how these rates might apply only to people who use relevant technologies or to all ratepayers.

Either way, customer education will be key, said the Conservation Law Foundation’s Turner — either ensuring that ratepayers understand the benefits of signing up if the rates are voluntary or offering easy steps they can take to avoid penalties and achieve cost savings if the rates are automatically applied.

Burnes said he also hopes that more data-gathering by the utilities and agencies like his will help assess the ​“fairness” of current and future electrification-focused rates.

Smart meters will be one tool to achieve this, he said, with a goal of determining whether new rates only make power cheaper for some more than for others or whether they create savings across the system.