Dive Brief:

  • The Minnesota Public Utilities Commission has approved a residential time-of-use (TOU) pilot rate for Xcel Energy, a tool the utility hopes will help it engage customers, use price signals to shift energy usage and bring more renewable energy onto the system.
  • Xcel customers could pay almost double the standard rate during peak hours, from 3 p.m. to 8 p.m., while from midnight to 6 a.m. the rate would be about half the norm. The pilot, initially open to 10,000 customers, will launch in 2020.
  • TOU rates are widely recognized as a way to help utilities reduce peak load and expensive electricity deliveries. While regulators and power companies have moved cautiously to embrace new rate structures, California utilities will fully embrace them next year when TOU rates become the default for all customers.

Dive Insight:

Regulators are wary of thrusting the new rate structure on customers, particularly when a lack of understanding over peak times could lead to unexpectedly higher bills. But several pilot programs have launched and utilities appear optimistic the structures could give them more control over their systems.

San Diego Gas & Electric recently proposed TOU residential rates with a year-long money-back offer which allows customers to opt out at any time, and the utility will refund them if standard rates would have been cheaper.

California investor-owned utilities must run opt-in and default pilots on TOU rates.

But while much of the West Coast will move to default TOU rates within a half year, Minnesota is two years away from launching its pilot.

The Minnesota Citizens Utility Board is pleased the pilot is moving forward, but would prefer a faster pace.

Utility Dive spoke with Minnesota CUB Executive Director Annie Levenson-Falk about the pilot in December. The 2020 launch means “the earliest we can expect a full rollout of TOU rates from Xcel would be 2022 or 2023,” she said. “That is pretty long to wait for rates that are already in use in other places.”

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