The utility Connecticut Light & Power (CL&P) has asked state regulators to change its pricing structure beginning in 2012 to institute a tiered system with a ratio of 10 to one between peak and off-peak hours.
The shift would be a radical change from flat-rate pricing, which provides no incentives for reducing power consumption when demand is greatest.
The proposal is one of three new pricing options under the utility's Plan-it Wise Energy program.
Last Summer approximately 1,500 commercial and industrial customers throughout CL&P’s service area and 1,500 CL&P residential customers from Hartford and Stamford participated in a pilot study of smart meters and new energy pricing options.
According to the Hartford Courant, participants in the pilot program paid $1.60 per kilowatt hour during peak periods and 15.5 cents a kilowatt hour the rest of the day. The utility said the rates would be different, but the 10-to-one ratio would be the same.
"Our pilot clearly showed that customers will use significantly less energy during times of peak electric usage when clear pricing signals are available through smart technology," said Jessica Brahaney Cain, director of Customer Solutions, CL&P. "However, we believe that a series of industry standards need to be in place before we roll the technology out broadly. Our phased-in approach anticipates those standards will be in place so that customer installations could begin in the latter part of 2012."
CL&P estimates that with this program, peak demand for power by its customers would be reduced annually by approximately 125 megawatts (MW), the equivalency of not running a small electricity generation plant. In addition, customers would reduce their total energy usage annually by about 190 million kilowatt hours, which is equivalent to the amount of electricity used annually by 20,000 homes. Connecticut would also see a reduction in carbon emissions of approximately 100,000 tons per year, which is equivalent to taking over 13,000 cars off of state roads.
All CL&P customers would have the choice to sign up for one of two new pricing options - Peak-Time Pricing or a four-hour Time of Use rate. A Peak-Time Rebate option would be made available exclusively to limited-income customers who choose to reduce their energy use during peak hours.
CL&P is also recommending that as part of this program, hourly energy information be made available to customers via the company Web site and the monthly utility bill be expanded to provide customers with additional information about their highest energy usage times.
"There is still plenty that needs to be done to get ready for all of this, beginning, of course, with DPUC approval," said Cain. "Between now and 2012, there is project planning, additional testing of equipment and the development of a full marketing campaign that would educate our customers about the pricing options and the advantages of signing up. By 2017, we believe 25% of our residential and 50% of commercial and industrial customers will be participating in the program."
The company has asked regulators for permission to recoup $296 million in capital costs for smart metering technology needed to deploy the pricing system. The Department of Public Utility Control is expected to respond to the request in four to six months.
CL&P is a Northeast Utilities company (NYSE: NU).