Dominion to expand off-peak incentive program
Participants get a discount for using electricity in off-peak hours and pay a premium to cover anything used on-peak.
State regulators granted Dominion Energy permission to expand its Time of Use, or Off-Peak, Plan — an experimental program that incentivizes customers with smart meters to use less electricity during peak hours.
The company initially got approval from the State Corporation Commission to open the program up to 10,000 customers in 2021. On Wednesday, they got permission to double that.
Program participants do not pay the same rate for their electricity as a typical Dominion customer. Instead, the cost of electricity fluctuates throughout the day — TOU customers get a discount for using electricity in off-peak hours and pay a premium to cover anything used on-peak.
“We educate customers on when energy usage is most affordable so that they can shift their energy usage away from peak hours,” said Dominion spokesperson Jeremy Slayton.
The company mainly encourages customers to reschedule their use of big appliances like dishwashers, washing machines and vehicle chargers into off-peak hours — generally at night when lights are turned off and the air conditioning is down.
For Dominion, peak hours are the most expensive to cover. The company has to generate more electricity from its facilities, spinning up power plants and burning fuel that is not normally used to meet baseline demand. The company may also purchase electricity generated out of state or by other companies, which generally comes at a high price.
Under the Off Peak Plan, that cost fluctuation is represented in customer bills.
The least expensive time to use electricity is always 12 a.m. to 5 a.m., or “super off peak” hours. The most expensive peak hours for May-September are from 3 p.m. to 6 p.m.. In colder months (October through April) peaks are from 6 a.m. to 9 a.m. and 5 p.m. to 8 p.m. Weekends and holidays have no peak hours.
According to the Dominion website, the cost of energy for Time of Use customers at peak hours is about twice that of off peak, while super off-peak rates offer a modest discount from standard off-peak prices. The rates fluctuate between the summer and winter periods.
A yearly report on the program found participants lowered their energy usage during peak hours by 9.4% in the summer and 2.9% in the winter. It also found most customers paid slightly less overall, with savings concentrated in the 5-month summer period.
However, the report also found that “high baseline customers” — who use the most electricity during peak hours and have the highest savings potential in the program — ended up paying more for their monthly bills than they would have without the program, despite reducing usage during peak hours.
Meanwhile, “structural winners” already using little on-peak electricity can save without doing much to shift their usage.
Attorney General Jason Miyares’ office wrote in comments to the SCC that that could create an imbalanced incentive.
“That may prove to be an unsustainable feature whereby only structural winners overwhelmingly participate in a TOU rate offering, while those customers with the greatest potential for load shifting abstain,” wrote assistant AG C. Mitch Burton.
DNV, a third-party registrar and classification society based in Norway, completed the report.
As part of the program’s expansion, the commission ordered Dominion to further study bill increases for high-baseline customers and evaluate new education strategies for all participants.
Dominion did not provide a timeline for expanding the program to more households, but interested Dominion customers with smart meters can sign up for the waitlist.