• Simon

Lazy electric companies are bad for EV's

In most of the country, folks don't get to pick their electric company. Your zipcode determines your power provider. When the electricity industry began a little over 100 years ago, electric companies were given guaranteed monopolies - under the agreement that these "natural monopolies" would agree to be regulated.

But in some parts of the country, homeowners get to pick and choose their electric company just like any other competitive marketplace. When electric customers get to pick and choose their electric provider, the electric companies have to attract customers.

Texas is home to arguably the best electric market in the country. Many residents have dozens of power companies to choose from, and an equal number of various rate plans. If you value wind energy, there's a 100% wind powered rate plan. If you desire a guaranteed flat monthly bill, there are plans for that. If you're an EV owner, you're likely on a time-of-use (TOU) rate plan. We're on Direct Energy's Free Nights plan. And yes, the power is actually, truly, really free (zero cents per kilowatt hour) from 9PM-9AM. Twelve free hours every night. But because we're in a competitive market, Direct Energy isn't the only company offering free nights plans. Some offer lower peak hour prices, but fewer free hours. Some offer some free hours, but also will throw in programmable thermostats to help folks target those free hours better. And almost all electric companies offer some sort of "refer-a-friend" program - a credit for you and your referee to attract customers. The companies fight for their customers. And the customers win.

But for most of the country, this configuration likely sounds odd. Electric company competition and even different rates aren't universally available. You might even have a single standard rate that is averaged over the full course of a year. These standard rate plans are a legacy of the electric industry from 100 years ago. Standard rate plans are easy, because it's a single rate and the way things have always been done - but that also makes these rate plans lazy. In a world of smart phones, smart meters, and smart appliances, a flat standard rate plan is "dumb" because it does not match actual power prices. That's bad for consumers, and especially electric vehicle owners.

If you live in Lafayette, Louisiana, your electric provider is Lafayette Utilities System (LUS). LUS customers have one electric rate, and have no choice of electric provider. LUS's average residential rate is about $0.09 per kilowatt hour ($0.09/kWh), and that price doesn't change over the course of the day. There are no time-of-use rates. If you're an EV owner, there's no benefit to charging at night - even though that's when the cheapest power is generally available to LUS.

Electric utilities do not need to be completely deregulated (like much of Texas) to provide customers with smart rate plan options. Austin Energy, a municipal utility like LUS, is located within Texas' deregulated market - but it's customers do not get to choose a different electric companies. Still, Austin Energy offers a buffet of rate plans and different energy efficiency programs that help customers make better choices for their families. That's smart.

In Arkansas, Oklahoma Gas & Electric (OG&E) offers smart rate plans that can help electric vehicle owners save on their monthly bills. Specifically, OG&E's Variable Peak Pricing (VPP) rate plan is very attractive for EV owners. In that rate plan, OG&E charges a higher rate during summer on-peak hours, which are only from June 1 to September 30, from 2PM-7PM, excluding weekends, Independence Day and Labor Day. Wintertime (which is generously defined as October 1-May 31st) is entirely off-peak. When you do the math for 2021, OG&E's off-peak rate applies to about 95% of all hours in a year (8,360 hours out of 8,760 hours). That off-peak rate is just $0.024 per kilowatt hour ($0.024/kWh). That's an insanely low rate that customers can get for 95% of the time of the year.

But what about the 5% of hours? Do those eat into the savings? Those 400 on-peak hours are further subdivided by OG&E into a four part tiered rate plan for Low, Standard, High and Critical Peak pricing.

The Low peak price is $0.024 plus the off peak rate ($0.024/kWh), or $0.048/kWh - still an attractive price. OG&E anticipates 10 low peak price days, or 50 hours (Keep in mind, the peak pricing is only applied for five hours each day during the summertime.)

The Standard Peak is $0.08 plus the off peak rate ($0.024/kWh), or $0.104/kWh - a price comparable to LUS's single average rate. OG&E expects to charge the Standard Peak rate for 30 days during the summertime, or 150 hours.

The High Peak is $0.19 plus the off peak rate ($0.024/kWh), or $0.214/kWh - a high price that OG&E expects to charge for about 36 days during the summertime, or 180 hours. This High Peak price is actually about the same as Direct Energy charges in Texas for its non-free hours for 12 hours of every day in the year (50% of the time, or 4,380 hours annually).

OG&E's Critical Peak is $0.38 plus the off peak rate ($0.024/kWh), or $0.404/kWh - a crazy high price. OG&E expects to charge the Critical Peak rate for 10 days during the summertime, or 50 hours - or less than 0.6% of hours in a year.

OG&E notifies its VPP customers by 5PM the day prior to each day containing on-peak hours - so if you need to make adjustments on when you charge your car, you get advanced notice.

On OG&E's VPP, if you've got an electric vehicle and you charge at any time from 7PM-2PM (19 hours during the summer peak days), you'll get the $0.024/kWh rate. Replacing about 40 miles of daily driving would require about 10kWh, or $0.24 per day. That's also about $0.24/gallon equivalent. A quarter per gallon equivalent. It ain't free, but dang, that's great.

If you're in an all electric home like I am, you may be concerned about those 50 Critical Peak hours. Here in Texas, we've shifted about 80% of our power usage to those 12 free night time hours. At my home, we've put our electric hot water tank on a timer so it doesn't run during our peak time (12 hours) and we have plenty of hot water all day long. We run our dishwasher after 9PM, and try to do our laundry before 9AM. Our thermostat is programmable, so we pre-cool our home early in the morning, and our home stays cool all day - it's tough with a 12 hour span (8PM on an August evening after no AC all day can get pretty warm), but doable. If we were on OG&E's VPP, I'm positive we could pre-cool all the way up to 2PM and be fine for five hours to ride out the Critical Peak. Honestly, those 10 Critical days out of the summer afternoons sound like great times to go swimming or out to a restaurant.

Last year with Direct Energy here in Texas, we paid a total $558 for twelve months of electricity on our free nights plan. That's an average bill of $46.50/month. I downloaded our smart meter data here in Texas, and I ran our actual hourly usage against OG&E's VPP rate. Without much effort, our bill would be about $652 for the year, or $54.33/month. Sure, it's a bit higher - but we'd get the luxury of 99.5% of the hours being cheaper than our current rate (we could do our laundry a bit earlier in the evening, or later in the morning). But, our Direct Energy bills include refer-a-friend credits ($50 credit per referral). Last year we got about $200 worth of refer-a-friend credits - without those credits, OG&E's VPP would be cheaper (and more flexible) than our free nights plan.

Things are changing in the electric industry. Electric utilities, even natural monopolies, should provide customers with more rate plan options, like time of use rates. Time of use rates aren't perfect for everyone - but they are very attractive for electric vehicle owners. Electric utilities that don't give customers choices, and information to properly evaluate those choices (like smart meter data), are doing a disservice to their communities.

If you're in Texas and you're looking for a power provider, you can use my referral code for Direct Energy and receive $50 off: 3Q1LQ6


And if you're in the market for a Tesla, use my referral code:

(Disclaimers: Electric utility rates and plans change from time to time, and the rates discussed in this article aren't guaranteed to be accurate in perpetuity. Do your own research before choosing an electric plan.)

(And no, I wasn't paid by anyone to write this. I just love electric rate plan design.)

66 views0 comments

Recent Posts

See All