LIPA time-of-day rates to offer lower costs to those who shift power usage

LIPA trustees on Wednesday unanimously approved a plan to shift nearly all of its more than 1 million residential customers to a new electric rate starting in 2024 that offers lower costs for those who switch more of their power usage to off-peak hours.

Under the plan, power would cost the most during the four-hour weekday summer peak, but off-peak rates would be lower year-round. Customers who don’t want the time-of-day plan can opt out by calling PSEG Long Island, which manages the grid for LIPA, after the rates take effect.

LIPA says when the plan is fully in place, it could save the utility the equivalent of a 300-megawatt power plant, or from $30 million to $60 million a year. 

Also during the board meeting Wednesday, the utility briefed trustees on preliminary proposals for the New York electric grid that would create at least one new power line from Long Island to bring offshore wind energy to New York City, Westchester and other parts of the state over the next decade.

The time-of-use plan, set for a phased-in rollout in January, will come with a one-year guarantee by LIPA to refund the difference to customers whose bills are higher under the new rate compared with their prior standard fixed rate. "We'll send you a check, no questions asked," said LIPA Chief Executive Tom Falcone.

LIPA and PSEG will gauge the success of the rollout in stages before proceeding with the next phase, Falcone said.

Under the plan, the highest prices for power will come between 3 and 7 p.m. during summer weekdays from June 1 through Sept. 30.

Using rates adopted this year as the standard, LIPA said the peak 3 to 7 p.m. summer rate this year would have been 39 cents a kilowatt-hour. The rate includes only the power supply and delivery charge, and not other fees and charges, LIPA noted.

Non-summer peak power would cost 37 cents a kilowatt-hour.

All other hours both during the summer and the rest of the year are considered off-peak and offer discounts from what’s considered the standard rate of around 25 cents per kilowatt-hour.

Off-peak rates would be 20 cents a kilowatt-hour in the summer and drop to 18 cents in the non-summer periods.

The new rate plan also includes what’s called a super off-peak rate plan, which offers larger discounts for those who shift usage to evening hours between 10 p.m. and 6 a.m. It’s especially beneficial to those who charge electric cars during the evening hours.

Customers can opt out of the time-of-day rate for a standard rate, which, under the current budget, would cost customers 24 cents a kilowatt-hour in the summer and 21 cents a kilowatt-hour for all other months.

Falcone said average customers would probably save around $3.50 a month without big changes in behavior, but those who maximize use-shifting could saveup to $90 to $125 a month, though each customer's results may vary. 

Meanwhile, a list of more than a dozen proposals by the New York Independent System Operator, which manages state energy markets, to create at least one new power line from Long Island put the cost of the project between $2 billion and $17 billion. LIPA ratepayers, under a state Public Service Commission ruling, will pay a 12.5% share of the costs of the line, suggesting a potential cost of between $240 million and $2.04 billion, were the state to choose the most costly line.

Falcone said the new power line is essential to make sure energy from more than 9,000 megawatts of planned offshore wind energy, about 3,000 megawatts of which will land on Long Island, isn't wasted because of transmission bottlenecks. 

"These projects will reduce curtailment," said Falcone, which means that "even though the wind can produce [energy], we can't take it, so you just kind of shut down the turbines." 

The need for the new transmission line could be particularly acute when a new generation of offshore wind farms is producing its most power. Without the new pipeline, about three terawatt hours of energy, or around 15% of LIPA's total load, would be curtailed from planned wind farms each year, Falcone said. 

In the United Kingdom, the inability to transmit power from offshore wind turbines off the coast of Scotland to where it’s needed in the south of the country has resulted in hundreds of millions in additional costs to UK ratepayers. According to a report in SkyNews, National Grid UK spent around $264 million last year to pay wind generators to turn off their turbines, cutting production by around 6%. In addition, the company spent $883 million “turning on gas turbines located closer to the source of demand, in order to fill the gap,” SkyNews reported.

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

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