Government regulation is making power more expensive. Benton PUD offers a better way | Opinion
How much do you pay for each kilowatt-hour of electricity you use in your home? Most homeowners don’t know. In fact, most homeowners don’t know what a kilowatt-hour is.
This is understandable because electricity prices are politically regulated, giving consumers little choice. Why focus on something when you have little or no control?
Politicians have taken advantage of this lack of knowledge to impose policies that make electricity more expensive and less reliable. Washington’s electricity prices are becoming more volatile due in part to the growth of intermittent sources of energy like wind and solar. The state’s new tax on CO2 emissions also drives costs up.
The good news is that Benton PUD is launching a program that gives customers more information and control over their energy costs.
The Residential Demand Charge rewards customers who avoid using electricity when it is most expensive. It is a big change in how people think about using electricity, and there will probably be skepticism and opposition. But it is better than the current system in which government makes the key decisions and families pay the price.
A big reason Benton PUD’s plan is good for customers is it will help reduce the cost of electricity bills.
The price of electricity fluctuates during the day. Costs are low at night and go up during periods of high demand, like morning and evening hours. PUDs pay higher wholesale costs for electricity used during high-demand hours and pass those costs on to customers.
Most customers don’t know this and fail to take simple steps to use electricity when prices are low because electricity rates hide those charges.
What customers don’t know is hurting them.
Beginning Nov. 1, Benton PUD will reduce residential electricity rates by about seven percent per kilowatt hour. The PUD will also add a monthly charge based on the highest amount of electricity residential customers use for one hour during peak hours, when wholesale electricity rates are highest.
The utility says the rates are designed so residential customers will pay about the same cost they do now. The new rates, however, make it easier to lower your electricity bill. Those who want to use electricity during periods of high demand can still do that, and those who don’t can save money.
The demand charge is based on the maximum one-hour use between 6 a.m. and 9 a.m., and 5 p.m. and 8 p.m. on weekdays. Waiting until 8:30 p.m. to wash clothes or dishes will save customers money.
Transparency means decisions about how customers use electricity and the price they pay are in their hands, rather than being made by politicians or regulators.
Trust in government is low and there will be people who are skeptical of this plan, worrying that they are being manipulated. I understand this, but the fact is that regulators prefer the old system, because they use it to set prices and then hide the cost of their decisions, as the state’s utilities commission did earlier this year. Showing the costs of electricity and giving consumers more control is the best way for people to prevent manipulation by politicians with hidden agendas.
Some people worry plans like this will allow utilities to shut off or limit power use by homes. But utilities already have that power, as we have seen in California, where utilities shut off power to certain areas when demand is too high. This plan doesn’t change that. But it does reward people for saving energy during peak hours, reducing the risk of California-style brownouts.
These new flexible rates give homeowners more control over their electricity bills than they have ever had. Homeowners can still use electricity whenever they want, but they now have the information necessary to avoid the highest costs and make the electric system more reliable. At a time when some officials are trying to hide the costs of energy, Benton PUD’s innovative decision is an important step forward.