Long Island Power Authority Unveils Roadmap For New Residential Time Of Day Rate

December 15, 2021

by Paul Ciampoli
APPA News Director
December 15, 2021

The Long Island Power Authority (LIPA) and the New York State Solar Energy Industries Association (NYSEIA) on Dec. 14 unveiled a roadmap to develop a modern standard residential rate for electric customers on Long Island and the Rockaways.

The new Time of Day (TOD) rate, which will be developed and adopted over the next three years with extensive stakeholder input, will allow customers to save money by using cheaper electricity during off-peak hours, LIPA said.

LIPA said it remains committed to leading deployment of solar in New York and achieving New York Gov. Kathy Hochul’s 10 gigawatt by 2030 target.

As part of this proposal, LIPA will phase in the Customer Benefit Contribution (CBC) for net-metered customers, which exists in every other part of the state and provides funding for environmental and low-income assistance programs, over three-years while the new TOD rate is developed.

LIPA will also fund an additional “declining block” of incentives for residential solar projects paired with an energy storage system that participate in LIPA’s Dynamic Load Management program.

“Time of Day rates are an innovative way to help customers save money and the environment. Customers will have more control of their electric bills, carbon emissions from the electric grid will decline, and those that adopt electric vehicles, efficient heating, or energy storage will save even more money.” said LIPA CEO Thomas Falcone. “The three-year phase-in of the Customer Benefit Contribution will provide new solar customers on Long Island with a generous amount of time to become part of an important environmental and low-income assistance program that is already in place in the rest of the state.”

LIPA pointed out that many utilities have introduced TOD rates, which better reflect the cost of providing electricity.

“Reducing electric use during a few peak hours in the summer reduces LIPA’s need to buy energy from sources that are less environmentally friendly and more expensive. The new Time of Day rate will provide lower rates when cleaner power is abundant and higher prices during the few peak hours when power is more carbon intensive,” LIPA said.

Developing and implementing new or enhanced electric rate designs is a key part of achieving New York’s Climate Leadership and Community Protection Act goal of a carbon-free electric grid by 2040, it went on to say.

Time of Day rates will bring even greater savings for solar customers with residential energy storage, allowing batteries to power homes during summer peak hours and use grid-energy during cheaper off-peak hours. Time of Day pricing also reduces cost for customers with electric vehicles and heat pumps, allowing customers to use cheaper off-peak hours for extra savings.

TOD pricing will not be mandatory. Customers will still have the option of a fixed rate. LIPA said it will deploy programs, services, and tools to help customers minimize summer peak usage and bills.

According to LIPA, utilities that have deployed a standard TOD rate have seen peak usage decline 6-8% or more during the summer months, as customers shift more of their usage to off-peak times of day. The savings are passed along to customers through lower TOD rates.

LIPA said that the results on Long Island and the Rockaways will inform future statewide utility rate design, as the New York Public Service Commission takes into consideration differing levels of Advanced Metering Infrastructure deployment and other market characteristics in the rest of New York.

The CBC charge, which exists across New York State and will be phased in on Long Island and the Rockaways over three years, was developed through a public stakeholder process led by the New York Department of Public Service (DPS) and will ensure that all customers contribute proportionally to the cost of providing important customer benefit programs, such as energy efficiency, heat and transportation electrification, renewable energy, and low-income bill discount programs for all customers.

Under this new agreement, the full CBC charge for new net metered LIPA customers will phase in over three years, while a new standard TOD rate is developed.

LIPA and NYSEIA will also explore additional rate designs for the CBC that similarly fund customer benefit programs and are complimentary with the new TOD rate.

Among public power utilities that have implemented a TOD rate is California’s SMUD. Click here for additional information about SMUD’s TOD rate.

A TOD rate is also available to residential utility customers of the City of Fort Collins, Colo.

Meanwhile, Seattle City Light launched a residential TOD Rate Pilot Program that runs through December 2022 or when opt-in TOD rates are available to all customers.

Also in Washington State, Snohomish County PUD earlier this year launched its “FlexTime” pilot program.

FlexTime pilot participants earn incentives and save money by using energy when it’s less expensive, including a lower rate on nights, weekends and federal holidays. Participants operate under a new fixed-rate design year-round that rewards them to use energy at off-peak hours and avoid using energy at on-peak hours. During the winter (November–February), on-peak hours will be billed at a higher rate.

The peak rate will be applied when the PUD’s grid sees high demand during weekday winter mornings 7 to 10 a.m. and evenings 5 to 8 p.m., from November 1 through February 28. There are two winter seasons during the pilot. In all other months, there is a discount and standard (or mid-peak) rate, but no on-peak rate.

The FlexTime rate plan offers participants a tiered and seasonal rate plan with different rates for electricity based on the time of the day it is used.

Participants will receive a 20% discount during nights, weekends and federal holidays, while being charged a peak rate during three-hour periods in the morning (7 to 10 am) and evening (5 to 8 pm) on weekdays in the winter (November through February). Discount and peak hours are already defined, so it’s easier to make little tweaks that add up to big annual savings, the PUD noted.

After the 20% discount, the nights and weekend rate will be 7.99 cents/kWh and the peak rate will be 21.37 cents/kWh. All other hours will be billed at the PUD’s standard rate of 10.4 cents/kWh.