San Miguel Power listing peak consumption on customer bills, with potential eye toward tiered rate system
Timing matters.
At least that’s what San Miguel Power Association’s newest initiative says as the electric cooperative seeks to inform members about their energy consumption habits.
To do so, SMPA has included on some customers’ bills the amount of power they use during the peak usage hours of 4 to 9 p.m. in the past several months.
Currently, SMPA pays Tri-State Generation and Transmission Association four times as much for power consumed during those hours compared to the rest of the day. Those later times often mean electricity is primarily produced using coal and other fossil fuels, adding to customers’ carbon footprints.
At the moment, SMPA evenly distributes those surcharges throughout the day to avoid a tiered rate system. While there are currently no plans to institute such a system, it is a possibility once the cooperative collects enough information and examines the data. SMPA’s board of directors would need to approve any rate changes at a public meeting.
According to Key Accounts Executive Terry Schuyler, who also serves on the Ridgway Town Council, the campaign aims to influence members’ consumption habits over time. Whether that’s programming dishwashers to run at 10 p.m. instead of 8 p.m. or plugging in electric cars right before bed, every change could pay off for members in the long run.
“It will help lower the cost to the entire utility membership, so the idea is that we want to educate people that timing matters,” Schuyler said. “Because we’re a nonprofit cooperative, we want to equitably distribute those costs to the users.” SMPA determines peak usage hours based on when consumption first spikes the most and when that spike subsides. The idea behind listing peak consumption is to encourage members to consume energy outside of those hours and stretch demand throughout the day.
Schuyler said changed consumption patterns could help evenly distribute demand throughout the day and wouldn’t change when peak hours are.
Should the cooperative begin charging more for energy consumed from 4 to 9 p.m., it could most impact lower-income households. Those members’ homes typically have less insulation and less energy-efficient appliances, and they have less of an opportunity to adjust their habits due to their workday schedules.
Schuyler admitted lower-income members could ironically pay the most should SMPA institute a peak usage rate.
“It’s a systemic problem that’s societal, really. It’s not just SMPA, it’s across the board,” Schuyler said. “It’s something that’s a part of the calculus that the board of directors will look at when they make their decision on how to manage future rates.”
Transitioning to a tiered-rate system would also have implications for solar panel owners. Right now, they receive full retail credit for surplus energy fed back into the grid during daylight hours as part of a billing mechanism known as “net metering.”
Under a tiered-rate structure, the time that homeowners supply energy would determine its value. Solar panel owners who use more costly electricity at night would still earn retail credit.
Solar panel owners could also avoid higher evening rates by using battery storage systems. As a result, members with such systems would control when and how they use electricity, helping them avoid any potential future peak usage rate increases and further raising concerns about equity.
Existing net metering systems result in solar panel owners effectively being subsidized by those who don’t or can’t afford to own solar panels. This issue is not unique to Ouray County, and several states have altered their net metering policies to ensure more equitable cost distribution.
Members who are interested in learning more about SMPA’s “Timing Matters” initiative can visit their website for more information.
Daniel Schmidt is a journalist with Report for America, a national service program which helps boost reporting resources in underserved areas. To make a tax-deductible donation to fund his work, contact erin@ouraynews.com.
