The governor’s executive order is a strong launch pad. Now it’s time for the Department of Public Utilities to put some meat on the bone and follow through with decisive action.
Utilities across the nation are experimenting with time-of-use pricing, but too often programs have been poorly understood by consumers or off-peak discount rates have been set too low to spur significant changes in behavior. Massachusetts has the opportunity to get things right and become a model for the nation.
The state’s major utilities are in the process of rolling out smart electric meters that provide real-time information about how and when we use electricity. These meters supply a lot of information, but for most Massachusetts residents, it’s just that, information.
This spring, some incentives were offered to electric vehicle owners to shift charging to off-peak hours, potentially saving customers $120 a year. But the state and utilities can and should go much bigger.
The governor’s executive order calls for robust demand response programs: Households that shift energy use away from peak times, late afternoon through early evening, would benefit from a discounted off-peak rate.
As an example, if we could run our dishwasher overnight, we’d get a rate discount. That would also lower overall peak demand, which could save all ratepayers money.
Currently, the energy industry overbuilds grid capacity to ensure there’s enough electricity to meet peak demand. Think of peak demand as “just in case” electrons for extremely hot or cold days. On average, about half of the US electric grid sits idle, according to the Brattle Group. Locally, ISO New England estimates that 54 percent of our region’s grid sits unused, on average.
The goal of load shifting is to lower that peak so we don’t need to bake in as much capacity in the first place. That’s critical: ISO New England projects that peak energy demand could roughly double by mid century.
The Massachusetts Department of Energy Resources has recently been investigating how to lower that peak. Most energy reductions will come from greater efficiency, such as insulated homes with tighter seals (you won’t have to run the air conditioner as much if the cold air doesn’t leak out). But “active load management,” including shifting EV charging times, has the potential to lower peak demand by up to 800 megawatts by 2030 in the state. That’s equivalent to the energy output from the 62 turbines at the offshore Vineyard Wind project.
The Massachusetts Department of Energy Resources recently petitioned the Department of Public Utilities to get things moving and investigate the feasibility of time-of-use rates for utility customers.
“I don’t think DPU needs to take quick action — it’s more important that they are bold and get it right,” said Amy Boyd Rabin, vice president of policy & regulatory affairs with the Environmental League of Massachusetts. “But DPU needs to get started now so they can really dig in and create nation-leading programs that make effective use of this new technology.”
That means rewarding people with enough financial incentives to shift behavior, while not punishing customers who do not. Poor planning has led to a backlash in some places, most notably in Puget Sound in the early 2000s. Customers there were promised savings only to discover next to nothing off their monthly bills. Other customers were effectively penalized and charged higher rates than before during peak hours. The pilot program gave time-of-use programs a black eye.
Energy economist Ahmad Faruqui, a former principal with The Brattle Group, told the editorial board that it’s best to implement a gradual rollout “with proper marketing, education, and outreach, while leaving room to modify what’s not working.”
In Massachusetts, that should also include incentivizing more smart devices. For example, Mass Save, the state’s energy efficiency program, could restrict rebates to only smart heat pumps that can connect to the internet to better take advantage of time-of-use pricing.
A deluge of data is coming. Making sure utility customers can make use of all of that information is imperative.
Editorials represent the views of the Boston Globe Editorial Board. Follow us @GlobeOpinion.
