So I’m to be punished now by the state for buying a battery-powered, rechargeable mower? It sure looks that way.
Earlier this month, when Xcel Energy filed for a hike in electric rates, the company’s plan included a twist: For the first time, the increase would include “inverted- block” rates, which is utility jargon for charging customers one price for the first 500 kilowatt- hours of summer service and a higher price for all electricity above that level.
About 60 percent of customers will find themselves in the higher rate if the state’s Public Utilities Commission approves the idea later this year, according to Xcel’s Scott Brockett.
And why wouldn’t the PUC approve it? Under Gov. Bill Ritter, that regulatory body has become a fan of policies that “encourage desired customer actions,” to quote from one of its recent documents. Translation: Regulators want us to use less electricity and are poised to make us pay if we won’t (or can’t). So after the PUC ordered Xcel to come up with alternative rate schemes, the company offered its inverted-block plan.
Now, let’s be fair. The argument for constraining electricity demand through inverted-block rates is based in part on the following logic: Since the marginal cost of new supplies exceeds the cost of existing generation, those who contribute most to peak seasonal demand deserve to pay extra.
That argument is fine so far as it goes. Yet how do regulators know which residential customers actually use a greater percentage of their electricity during the critical peak hours of summer afternoons and early evenings, when air conditioners and home appliances may be going full blast?
Answer: They don’t.
Consider my situation. Given Denver’s ozone problem, my new rechargeable lawn mower is clearly preferable, environmentally speaking, to a gasoline-powered mower. And if I recharge it at night, it is no burden whatsoever on the electric grid. But with the blunt instrument of inverted-block pricing, I might as well recharge the mower in the afternoon. Either way, I’ll pay the same.
For that matter, what happens when electric cars — perhaps the ultimate answer to both urban smog and our dependence on foreign oil — come on line? Their owners will be treated like power-guzzling scofflaws every time they plug in their vehicles, no matter what time of day.
The inverted-block proposal also tilts the billing field against Coloradans who work out of their homes, stay-at-home parents with young children, larger families and poor people with old, inefficient appliances — even if their peak-hour use is no greater than many households with lower total energy consumption.
The fairest way to price electricity — if we’re determined to manage demand — is according to the time of day it is used. Interestingly, Xcel’s Brockett agrees. The problem, he told me, is that many electric meters don’t record the time of power use, and upgrading them wouldn’t be cheap.
At the moment, Xcel believes, inverted rates are the easiest way of charging customers for the true cost of summer service.
Maybe so, but I still don’t like it. Any policy that favors gasoline- powered mowers, edgers and hedge trimmers — and eventually, vehicles — over their electric alternatives, as well as some family and work arrangements over others, amounts to a bag of crudely targeted incentives.
If we can’t move to time-of-use metering, I say leave the present system alone.
E-mail Vincent Carroll at vcarroll@denverpost.com.
