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Customer Concerns with Implementing Demand Rates

Explore the legitimate concerns associated with implementing demand rates in electricity service and the benefits and challenges these rates bring. Discover key insights from the 2015 NASUCA and NARUC Conferences in Austin, Texas, to help understand the impact of demand rates on utility bills and consumer behavior.

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Customer Concerns with Implementing Demand Rates

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  1. Customer Concerns with Implementing Demand Rates NASUCAand NARUC ConferencesAustin, TexasNovember 2015 David Springe Consumer Counsel Kansas Citizens’ Utility Ratepayer Board

  2. Don’t believe the Rhetoric • “It is widely agreed that existing tariffs do not reflect the cost structure of providing electricity service to customers” = FALSE • “Consumer advocates refuse to discuss changes to rate design” = FALSE

  3. What is the Objective? • Collect costs through fixed charges? • Raising customer charges is unpopular • Demand charges achieve same result if you can’t actually avoid them • Achieve better efficiency through demand prices? • Must be based on coincident peak • Must remove other price suppression measures • Must ask-”is there a better way to do this?”

  4. Legitimate Concerns • Higher bills for low use customers • Low use customers may be low income • Limited ability to change usage • Some things must run (AC, Refrig, Med) • Difficult to understand • Difference between broad concept and actual understanding of KW use

  5. Legitimate Concerns • Smart meters don’t read KW’s • Residential has more diversity than large commercial or industrial • Very difficult to calculate correct KW rate in ratemaking process

  6. 2014 Monthly kWh Usage vs System Peak (MW)

  7. August Billing Cycle: Daily kWh usage vs Daily System Peak (MW) SUNDAY WEDNESDAY SUNDAY THURSDAY

  8. August 7, 2014 kWh usage (15 minute increments) vs Hourly System Load (MW)

  9. Bill impacts: Standard Rates verse Demand Rates

  10. Predictable Result

  11. Bill impact of Demand Rates

  12. Volumetric rates • Do allocate costs rather elegantly • Customers do understand kWh’s • Smart meters actually read kWh’s • Can set discrete pricing times to send better price signals • Can give same education as demand rates to achieve same goal

  13. Conversation Checklist • What is the objective? • What is the specific plan? • Does the plan support the objective? • Does the data/evidence support the plan and objective? • Is there a easier/better way? • Protections for vulnerable customers? • 2nd and 3rd order concerns

  14. Contact Information David Springe Consumer Counsel Citizens’ Utility Ratepayer Board 1500 S.W. Arrowhead Rd Topeka, Kansas 66604 785-271-3200 785-271-3116 (fax) Email: d.springe@curb.kansas.gov http://curb.kansas.gov david.springe@nasuca.org

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