Long Island Power Authority Board Approves Time-of-Day Rates Plan

by Paul Ciampoli
APPA News Director
March 31, 2023

The Long Island Power Authority Board of Trustees on March 29 voted to modernize electric rates for residential customers throughout Long Island and the Rockaways beginning in 2024 with a standard time-of-day rate and an optional super off-peak rate.

Customers will still have the option to stay on a flat rate.

“Time-of-Day Rates are an important rate modernization reform that will help lower customer bills and advance clean energy,” said Thomas Falcone, Chief Executive Officer of LIPA. “Once implemented in 2024, this initiative will save 80 percent of customers money even before changes to how or when they use electricity. By moving to Time-of-Day Rates, we can reduce carbon emissions and take the burden off the electric grid during the highest times of demand.”

With the new TOD rate, customers will pay different rates for electricity based on when they use it. Electric rates will be higher during weekdays from 3 p.m. to 7 p.m. (peak) but lower all other hours of the day and on weekends and holidays (off-peak). With the super off-peak rate, rates are further discounted in the (super off-peak) hours from 10 p.m. to 6 a.m. 

Most customers will pay the same or less under the TOD rate or super off-peak rate without changing their electricity usage or habits because. These customers already conduct most activities during discounted off-peak periods, which make up 88 percent of hours throughout the year.

While developing the TOD proposal, LIPA proactively sought feedback and received input from customers and stakeholders. Through the process, LIPA evaluated best practices from other utilities across the U.S. that have successfully implemented TOD Rates for their customers, beginning as early as 2018. In California, public power utility SMUD has implemented time-of-day rates.

The LIPA TOD rate design was collaboratively developed with input from the Department of Public Service, the New York State Energy Research and Development Authority, the New York Solar Energy Industries Alliance and consumer advocates such as the Utility Intervention Unit, and the Public Utilities Law Project.

LIPA’s service provider, PSEG Long Island, will be conducting extensive outreach to all customers before they are transitioned into the new rate. Customers will receive 90-, 60-, and 30-day notices, which will include information about the different plans, how to optimize their rates, and details regarding a bill protection guarantee.

To help customers transition to the new plan, LIPA is offering a one-year bill protection guarantee for a customer’s first year on the TOD Rate (or Super Off-Peak Rate). If a customer’s electric bill on the TOD Rate (or Super Off-Peak Rate) is higher after 12 months than it would have been under the Flat Rate, LIPA will automatically refund (in the form of a bill credit) the difference for the entire 12-month period.

Customers will be migrated to the new TOD rate plan in phases beginning in 2024 and continuing through 2025. Starting in the Fall of 2023, customers will also have the option to both voluntarily opt into the time-of-day rate and super off-peak rate early or opt out entirely and remain on the current flat rate.

LIPA said that the electricity that is generated off-peak emits up to 50 percent less carbon than the electric generation needed to serve peak demand from 3 p.m. to 7 p.m. during weekdays. The power plants that run during peak periods need to be highly flexible to turn off and on quickly and are less efficient than plants optimized to run all the time, it said.

By reducing demand during peak periods, LIPA can reduce the capacity and runtime of less efficient power plants and avoid the need to expand the electric grid’s capacity. As LIPA operates on a not-for-profit basis, those savings are then passed on to customers under this program. 

Under the TOD rate, customers will also have the ability to save even more money by making small changes in their daily routine that conduct energy-intensive activities—such as doing laundry or charging electric cars —in off-peak hours. For instance, a customer on the TOD Rate could save approximately $4 per month by doing their laundry and $43 per month by charging their electric vehicle during off-peak hours.

LIPA previously held two public hearings in Nassau County and Suffolk County, and members of the public also had the opportunity to speak in front of the LIPA Board of Trustees at its regularly scheduled meetings. Additionally, written comments were accepted and provided to the Board for consideration before the vote.

For more information, visit https://www.lipower.org/time-of-day/