There is an intense debate going on in Massachusetts between solar energy advocates and the Department of Public Utilities after the state approved demand charges for net metering customers.
Eversource, the state’s largest electric utility, received approval to eliminate Time of Use pricing (TOU) and implement a demand charge. The company argued that it faced more than $8 million in displaced distribution revenues from net metering customers.
They also argued that Time of Use pricing is dated and that less than 1% of MA customers are enrolled in TOU pricing. “The residential Time of Use rates we’re eliminating are obsolete, having been designed decades ago when we were responsible for both the generation and the delivery of electricity,” said Eversource spokesman Mike Durand.
The new demand charge is based on the highest electricity use at any given time during the month. It doesn’t matter whether that time comes in the middle of the night or on the hottest day of the year. Homes or businesses that tend to spread out their energy usage will see fewer demand charges while customers who use a lot of energy in a short amount of time will see higher demand charges.
Many feel that this type of pricing is a step backward for both Massachusetts customers and the utility. Under Time of Use pricing, customers were given an incentive to reduce energy usage that would also help the strain on the electrical grid during high demand. Demand charges remove that incentive since customers are billed for their highest usage no matter what that time is.
The Acadia Center, which works to build clean and environmentally friendly economies across America, were critical of the removal of TOU pricing and imposing demand pricing.
“Given the lack of sophisticated metering in Massachusetts, there is no way for consumers to know what time this peak occurred and what actions could be taken to manage these charges,” the group said. “As a result, consumers will be paying the highest possible rate for this charge without being provided the information needed to understand the cause of these costs.”
Eversource was also disappointed with the initial approval as the DPU only allowed a $12.3 million increase, nearly 80% lower than the company requested. An Eversource spokeswoman said the utility was “disappointed with the deep cuts the DPU made to our rate request because we feel we provided sufficient and detailed documentation to support the total increase we requested.”