Designing rates to ease the trade-offs of electrification

Maine electric customers will be able to opt in to new rates that encourage home EV charging at night, when demand on the grid is low.

by | October 2, 2022

Editor’s Note: The following story first appeared in The Maine Monitor’s free environmental newsletter, Climate Monitor, that is delivered to inboxes for every Friday morning. Sign up for the free newsletter to get important environmental news by registering at this link.

If you live in a place like South Portland right now, you’ve probably seen the signs: ones urging residents to “electrify everything!” to fight climate change. These signs are part of a program that offers bulk discounts on tools of the trade, such as home electric vehicle chargers and heat pumps (Portland is partway through a similar initiative). These upgrades are a big deal in a state where vehicle transportation is the top source of greenhouse gas emissions, and home oil heating is far more common than anywhere else in the country.

Maine has invested heavily in encouraging these adaptations, part of our goal to reach net-zero emissions by 2045 to help forestall the worst effects of climate change. But the transition brings a new set of wicked problems: How can we keep the rising electricity use from these new devices from straining the grid and inflating costs, especially at times of high demand?

On Tuesday, the Maine Public Utilities Commission approved plans to address this problem and promote the state’s electrification goals through something called “rate design.” Before your eyes glaze over, bear with me! I promise this topic is important if you care about your energy bills or your carbon footprint. As New Hampshire ratepayer advocate Don Kreis used to say when I was a climate reporter there, PUCs are the motherlode of unreported news — and, I’d argue, the motherlode of unsung debates over the nitty-gritty of climate solutions.

In this case, the PUC approved two stipulations that were mostly agreed to by a range of stakeholders — Versant and Central Maine Power, businesses, renewable energy advocates and environmental groups, the Governor’s Energy Office, Efficiency Maine and the Office of the Public Advocate, who acts as Maine’s ratepayer ombudsman. They devised an option for what are called “time-of-use rates” for EV charging, and expanded winter discounts over certain usage levels for heat pump users.

Regulators will also require data collection on how these programs perform — to gather information on customer participation and the effect on participants’ costs, etc. “In my view, while modest, the stipulations will move the ball forward to achieving better designs more aligned with public policy goals,” said PUC chair Phil Bartlett during deliberations Tuesday.

Customers with EVs who opt in will agree to program their vehicles to charge at “off-peak” hours — late at night, for example, instead of at 5:30 p.m. when people are using the most electricity at the same time. The new rates also include provisions for electric storage through home battery systems, which are expected to become more common in the coming years. Customers will get a second meter for this without the added monthly charge.

Heat pump users, meanwhile, can opt in to a healthy discount in winter for energy use above certain thresholds, shifting costs to summer when heating demand is far lower (though heat pumps can also provide air conditioning, which will be increasingly needed in New England’s warming climate). The heating rate will be a new program for CMP, while Versant will adapt and expand a heating rate it already has. Versant attorney Dave Littell, a former Maine PUC commissioner, said in an interview this week that 13% of their customers or about 20,000 people currently use that rate.

Even as states like Maine make strides on energy efficiency, Littell said, demand for electricity is expected to start to go back up due to all this climate-focused electrification in the next five years or so. “But if we can send pricing signals so the usage goes up when there’s plenty of capacity on the grid and when supply costs are lower,” he said, “that’s going to reduce the overall cost of the increase.”

The elephants in the room are the rate hikes Versant and CMP are also pursuing at the PUC. The hefty increases have drawn general opposition from the governor’s office and most of the other stakeholders that agreed to this rate design plan. All the while, New England and many other states are staring down a geopolitically precarious winter.

Littell argues that these separate heat pump and EV rates will reduce overall costs — all the other things that make up your bill and hinge on issues like infrastructure — even if and when the rate for individual electrons goes up.

The proposed rate for opted-in CMP customers to charge their EVs between 8 p.m. and 7 a.m., for example, will be about 1 cent per kilowatt-hour compared to the current norm of 16 cents/kWh at at all other times. The standard battery in the Ford F-150 Lightning truck holds 98 kWh of power, meaning that each full overnight charge will cost just under $1 instead of more than $15. Versant’s heat pump rate that will be expanded, meanwhile, offers a discount of more than half off above a certain level of usage in winter.

Littell is framing these rate designs as a means of helping customers help themselves weather the effects of electrification and the many storms that plague our demand for energy in an unsettled world. California, for its part, has made this kind of time-of-use rate mandatory. Littell said Maine isn’t there yet — he worries that without stable political buy-in, customers will get burnt out on a whiplash of new policies and swift rollbacks.

It makes these opt-in rates, and the data they’ll generate, a proof of concept for a new way to handle energy costs in an electrified world. This is a key example of the wonky reforms that will be necessary to pave the way for even simple-seeming goals without undue trade-offs. And moreover, it’s an intriguing combination of three varied approaches to trying to fight climate change — individual action, market flexibility and government mandate — which all tend to jockey for focus in these debates, depending on who’s doing the debating.

 

To read the full edition of this newsletter, see Climate Monitor: Designing rates to ease the trade-offs of electrification.

Annie Ropeik has been given the keys to the Climate Monitor newsletter while its regular author, the Monitor’s environmental reporter Kate Cough, is on leave until November. Reach Annie with story ideas at: aropeik@gmail.com.

Annie Ropeik

Annie Ropeik

Annie Ropeik is a journalist based in Portland, where she focuses on climate change, energy and the environment. She is the assistant director of the Mississippi River Basin Ag & Water Desk and a board member with the Society of Environmental Journalists. Annie previously reported for Spectrum News Maine and spent about a decade as a local public radio reporter, including for New Hampshire Public Radio, where she co-hosted the special podcast series Windfall and covered wildfire adaptation for NPR. Annie's reporting has earned accolades from SEJ, the Public Media Journalists Association and the U.S. Environmental Protection Agency in New England.


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