Proposal shifts Long Island electric rates to reward customers for off-peak power usage
A proposal would allow Long Island residents to save money and help the environment by shifting more of their electricity use to later in the day.
The Long Island Power Authority’s new standard rate for 2024 would reward customers who move their major electricity use to off-peak hours, including receiving a refund if they would have paid less on a flat rate during the first year.
“A lot of this is about giving customers opportunities to save money,” said Justin Bell, LIPA’s vice president of public policy and regulatory affairs. “In addition, in that peak period it is also one of the dirtiest in terms of electricity production. So, as part of cleaning the Long Island grid, we really want to encourage people to avoid that peak.”
The plan requires approval from the LIPA Board of Trustees on March 29. If approved, customers would be automatically enrolled in the program in February 2024 — with the option of opting out to a standard, fixed rate.
Under the plan, customers would pay more between 3 and 7 p.m., but less during all other hours of the day and on weekends and holidays. Rates are further discounted during “super off-peak” hours from 10 p.m. to 6 a.m.
Households with amenities that require a lot of power, like a pool cleaning or electric car, could save approximately $50 on their electric bills by moving that usage to off-peak. Other appliances, like dishwashers and laundry, could save several dollars per month.
LIPA spent the past year weighing how the regional electric grid would keep up with the growing demand for power, especially as the state phases out fossil fuels. By changing customer behavior, reducing peak energy use by 6-8% would be equivalent to taking an entire power plant offline.
There will be two public hearings on Feb. 21, where customers can weigh-in on the new power plan. LIPA will also accept written public comments until Feb. 27.
How does it work:
“A lot of our customers today are already buying electric cars,” Bell told WSHU. “We expect, and forecasters are saying, that it is going to grow considerably over the next several years, and really over the next decade. And so as we prepare for that, there's going to be a lot of increased demand for electricity. And if that charging is done overnight, it saves everybody a lot of money, and it avoids the need for a lot of expensive upgrades.”
WSHU: Talk about what success looks like here.
JB: Well, we would really like to see between 85 and 90% of our customers enrolled in the time-of-day rate. Of course, it is optional. Customers will still have the option to stay on a flat rate like they're on today. And we're offering a money-back guarantee for the first year. So, customers are trying to see if they would have paid less on their flat rate, then we will refund them the difference at the end of the year.
WSHU: The road ahead is probably a lot of hearings with customers with a lot of questions, and you're going to tell them about the money that they can save. But the way that we use electricity is almost second nature to us, right? We don't think about when we have to turn on the lights or when we're running into the dishwasher. How are you going to convince customers that their daily routine needs to be a little bit more intentional?
JB: So, our job is really to make this easy for customers. And so a lot of appliances that you buy today already have settings that can make this automatic. And so we're going to encourage customers to use those settings so that they can set it and forget it and not have to think about this every day. We're also going to be doing a lot of outreach and education and providing tools that let customers estimate how much they could save, and figure out if this is worth it for them. And we really hope that just by staying in touch and engaged with our customers, we'll be able to help them if they're interested in this.
WSHU: If the board approves this, this will be optional, right?
JB: So, it's going to be the [new] standard offering. So, a new customer who joins our service territory in 2024 will be placed at this rate. They'll be informed of their other options, including the flat rate. And our existing customers will be given notice 90 days before their transition. And they'll also have the ability to opt out and choose a different option which could include the flat rate.
WSHU: It makes me wonder about shifting to a cleaner, more sustainable — less dirty — energy use that might help LIPA perform better. What does this mean for customers in the future?
JB: It means that we're going to be able to help customers save money, and keep costs down as we transition to a cleaner electric grid. And as we begin to electrify a lot more aspects of customers' lives.
WSHU: What does that mean?
JB: I mean that we expect that a lot of our customers in the future are going to be purchasing electric vehicles or installing clean electric heating in their homes. That's part of New York state's climate action plan to encourage that. And so that if all of that electricity use happened during our peak period from 3 p.m. to 7 p.m., then that would really require a lot of expensive upgrades to our transmission and distribution system as well as new generation.
By encouraging customers to use more electricity outside the peak, we can avoid a lot of those investments. And as a nonprofit utility: all of those savings get passed on to our customers.