LIPA's new time-of-day rates will charge more during peak hours

Get ready for electricity rates that change depending on the time of day that you consume energy, with a discount for those who shift more to "off-peak" hours.

The Long Island Power Authority’s plan for time-of-day energy rates will kick into high gear in 2025, after unexpected delays and a soft introduction over the past year.

The new time-of-day rates, also called time-of-use, first introduced in 2023, will be automatic for increasing waves of nearly all LIPA's 1.1 million customers next year. Customers can opt out either through "My Account" on PSEG Long Island's web page or by calling 800-490-0025. 

Customers who try the new rate but find they don't save money will get a credit of the difference once they opt out, between what they were charged with the time-of-day rate and their cost had they remained on the flat rate.

PSEG's online rate-comparison tool is based on customers' historical usage and estimates a customer’s cost under the new plan "using current rates and their electric usage over the last year," the company said. "Any estimated savings are not guaranteed because they do not account for future bill adjustments or potential changes to rates, their energy use or other factors."

LIPA in the past has said the vast majority of customers can expect bills to be around the same or to save around $3.50 a month by switching to the time-of-day rate, with more savings for those who are able to shift even more of the use to off-peak times. Super off-peak rates could save customers who use it around $5.75, LIPA has said.

With the change to time-day-rates, LIPA would be the first large utility in New York State to make these the standard rate, LIPA has said, though California utilities already have transitioned to such programs. LIPA is able to transition because of PSEG’s work switching nearly all of the LIPA territory to smart meters over the past half decade.

Starting in January, the first large wave of 50,000 customers will be shifted to the new rate, followed by 70,000 in February, and then 95,000 per month starting in March. The 95,000 migration will continue through May, when PSEG Long Island, which operates the grid for LIPA, will take a break to assess the program and iron out any kinks. PSEG has been communicating with each wave of customers four months in advance of the shift to tell them what to expect and what the options are, the utility said. 

The utility will restart with 95,000 customers each month from September through December until nearly all of LIPA's 1.1 million customers are on the new rate, according to PSEG’s road map. PSEG has said the figures are subject to change. 

Time-of-day rates entice customers to shift power to off-peak times by discounting power during those off-peak periods, while raising it for the peak between 3 p.m. and 7 p.m. Shifting customers to off-peak can save the utility money on its power costs, because summer peak power is among the grid's most expensive energy to buy. It also could help smooth out energy demand over the year as more intermittent energy sources such as wind power come onto the grid.

Cutting peak usage during weekdays could be a challenge for some, given that ratepayers typically arrive home from work at the core of the peak hour, and could turn on high-consumption devices such as air conditioners and electric stoves between 3 p.m. and 7 p.m., particularly in the summer. Other high-electricity use activities such as washing and drying clothes and charging electric cars can be put off to nonpeak hours. 

"With Time-of-Day plans, customers can save by shifting energy use of large items like air conditioning, pool pumps, pool heaters, dishwashers, washers and dryers, and electric-vehicle chargers from higher-cost peak hours to lower-cost off-peak hours," PSEG said. "We encourage customers to check back periodically because their best rate today may not be the best rate in the future."

Starting in January, the standard time-of-day peak charge will be 21.27 cents a kilowatt-hour from 3 p.m. to 7 p.m. each weekday during the June-September period, and 10.49 cents for all usage outside the peak hours — a savings of just over 10 cents a kilowatt-hour for shifting to off-peak. 

In the October-May period, the peak charge will drop to 18.09 cents a kilowatt-hour while the off-peak in those months drops to 8.91 cents per kilowatt-hour.

All weekend and federal holiday hours are considered off-peak.

Those who can shift even more of their use to later off-peak hours can sign up for a "super off-peak" rate that lowers the off-peak cost to 4.34 cents from 10 p.m. to 6 a.m. in the June-September period, and 4.32 cents for off-peak in the October-May period, PSEG said. The charge during the remaining off-peak hours will increase to 13.32 cents during the summer, and 8.91 cents in the October-May period.

In the "super" rate, however, the peak rate between 3 p.m. and 7 p.m. each weekday rises to 28.59 cents per kilowatt-hour used in the summer, and 23.41 cents for those hours from October through May.

The flat rate for customers who don’t want a time-of-use rate is 10.21 cents a kilowatt-hour for all times, except those who use more than 250 kilowatt-hours in the June-September period, when the charge rises to 12.94 cents a kilowatt-hour.

The new time-of-use rates are subject to the approval of the LIPA board in December. The rates are for the delivery charge portion of bills only, not the power supply charge, which fluctuates monthly and covers costs such as power-plant fuel.

LIPA is in the process of implementing a new rate hike for 2025 that could increase customer bills by around $7 a month. 

Since the time-of-use rates were introduced, about 95,000 customers have either been assigned it as part of a new service hookup or as part of a test migration this year, with around 10,000 of those customers opting in voluntarily, PSEG said.

To help customers get comfortable with the time-of-day plan, LIPA approved a guarantee that returns to customers the cost for electric charges over what they would have paid had they stayed on the standard flat rate, after the first year. PSEG has begun a marketing campaign around the new rate plan, including a video spot explaining how it works. 

"If a customer is not better off on Time-of-Day, we automatically provide a bill credit to refund for the difference, either upon un-enrollment from the program or after the first 12 months on the new rate, whichever comes first," PSEG said.

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

Mark Harrington, a Newsday reporter since 1999, covers energy, wineries, Indian affairs and fisheries.