Supercharged: Seattle City Light moves to ‘Time-of-Use’ Electrical Rates

Want to reduce your carbon footprint? Dry your clothes at 10 pm? If you live in Seattle, doing those things will also cut your electricity bill and reduce the risk of blackouts. Seattle City Light is preparing to launch “Time Of Use” electricity rates that fluctuate as
demand rises and falls during the day.

Joe Fernandi, Director of Customer Energy Solutions at Seattle City Light, says the “rates more closely reflect the cost of power to the utility and the rate customers pay.” The new rates, although optional, will undoubtedly generate skepticism among some users
because the flexible rates are a break from the approach to electricity rates that have existed since the late 1800s.

Traditionally, utility rates have been set by regulators to protect customers from price fluctuations. Customers over-use electricity when it is expensive because they have
little incentive not to. The utility pays higher costs during peak hours to serve customer
demand which are passed along to consumers in the form of increased average rates. Consumers accordingly choose convenience in how they use appliances.

The new tiered-price system is a more accurate reflection of costs and gives consumers
more control over their bills. Since some customers will see the new system as manipulative, Seattle City Light ran a pilot project that found participants saved an average of $144 a year using the new rates. Electric vehicle owners saved even more.

Since this is a new system, some worry that it will be difficult to change how they use
electricity and will end up paying more. Fortunately, consumers now have access to
technologies that help them become more energy efficient and heat their home when it
is inexpensive.

As I note in my book Time to Think Small about the rise of conservation technologies,
smart thermostats like ecobee or Nest help keep your house comfortable by pre-heating
or cooling when rates are lower. Smart meters from Itron (which is based in
Washington) use AI to help homeowners track which appliances are using the most
energy so they can become more energy efficient.

Saving money isn’t the only benefit. Time of use pricing can also reduce CO2 emissions. To meet peak-hour demand for electricity in the evening, generators turn to sources of energy that can be turned on, like natural gas, so reducing demand during those hours reduces the amount of natural gas-powered electricity, reducing CO2 emissions.

Time of use rates also help prevent blackouts. The Pacific Northwest already faces
energy shortages in the near future. Those shortages will become more acute as
buildings electrify, as demand for AI increases, and more people purchase electric vehicles. By shifting demand out of the peak hours to times of day when there is plenty of generation capacity, the risk of the system exceeding capacity goes down.
Simple changes can make a big difference.

The program won’t suit everyone and it doesn’t have to. But many will save money in
the new system and even incremental improvements in how people use electricity will
offer benefits to their pocketbook, grid stability, and the environment. Seattle City Light isn’t the only Washington state utility basing prices on peak demand. Benton Public Utilities District launched a program last year that charges based on electricity use during peak hours. More utilities will soon follow suit.