Xcel Preparing To Pitch New Pricing Model

(KNSI) – Running your appliances would cost more during “prime hours” if a new pricing system is adopted.

Xcel Energy has studied a time-of-use model in various neighborhoods in Minneapolis and suburban Eden Prairie. The proposal being readied for the Public Utilities Commission is to allow the company to set the rate from 3:00 to 8:00 p.m. at twice what it will charge for the rest of the day. Overnight hours, from midnight to 6:00 a.m., would be set at one-seventh of the peak rate, or about 30% of the standard “day” rate.

The model also adjusts depending on the time of year. Winter rates would run about 30% below that charged in the dog days of summer. The reason is that most Minnesota homes are heated with natural gas rather than electricity used for air conditioning.

The program would start as an opt-in. Customers need to have a smart meter installed. Energy News Network looked at the issue last month. It says there are some benefits but also drawbacks to the model. It cited a study from the University of Texas that showed people changed their energy use habits so much that they actually shifted peak demand hours to later in the day when it was more economical. That still presents challenges for utilities, though.

The dynamic pricing could start as early as 2025.

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