Licensing and Regulatory Affairs
FOR IMMEDIATE RELEASE June 1, 2021
As a new summer pricing program for electricity during peak daytime hours rolls out this week for customers of Consumers Energy, the Michigan Public Service Commission is urging the utility's customers to take charge of their electricity use to maximize the cost savings available for those who shift their heaviest electricity use to times outside hours of peak demand on the electric grid.
Consumers Energy customers have been notified in recent weeks of the utility's move to a new standard electric rate for its residential customers called the summer peak rate. Under Consumers Energy's summer peak rate, customers should consider reducing energy use during peak summertime hours, 2-7 p.m. weekdays from June through September - four months of the year. Those hours represent the period of the year with the highest demand on Michigan's power grid - during which it costs more for utilities to provide electricity service - and requires additional sources of power generation to be online and running compared to all other hours of the year.
It's a new approach to pricing that better reflects the cost to produce electricity at different times of the day and year. As a result of this change, customers will have more control over their electricity use with options for lowering their costs and, equally important, help to reduce demand on the state's electric grid during the summer daytime hours when electricity use its at its heaviest. The benefits of shifting use away from these high-demand hours include reducing the need to build additional sources of power generation that may only run during those peak hours of the year and limiting the emission of carbon dioxide and other pollutants.
The Commission has approved efforts by Michigan utilities to work toward full implementation of summer peak rates. In Consumers Energy's case, the Commission directed the company to eliminate its residential summer "inverted block" rate, in which rates rise with increased monthly consumption in block increments, and replace it with on-peak and off-peak rates. Consumers conducted a pilot of its summer peak rate during summer 2019 with more than 40,000 households and reviewed results with MPSC Staff to make improvements prior to full implementation.
Under Consumers Energy's current rates, approved by the Commission in December 2020 in Case No U-20697, customers will pay an off-peak rate of $0.100496 per kilowatt hour (kWh) and an on-peak rate of $0.149656 per kwh. This rate change is not meant to penalize customers for using electricity during peak hours, but instead is meant to more closely align the price paid for electricity with the costs to produce the electricity.
Consumers Energy reported that most customers saw an increase of about $2 per month in the summer, while some saw small decreases in the summer months, during the pilot.
The MPSC believes this rate will empower customers who shift some of their households' electricity use - such as air conditioners, washers and dryers and other energy-intensive devices - away from the times of day when overall demand on the electric grid is highest to save money.
The MPSC believes the switch to summer peak rates better reflects cost-of-service for residential customers by more accurately charging customers for the costs their electricity usage causes the electric utilities to incur for that service. Clearer pricing signals also give customers the ability to reduce electricity use during these peak hours to take advantage of the lower non-peak rates. Consumers Energy offers voluntary time of use rates that customers may sign up for to reward additional shifts of energy usage under varying conditions.
The implementation of time of use rates also aligns with Consumers Energy's commitments around decarbonization, which includes a goal of achieving carbon neutrality by 2040.
Customers wanting to take full advantage of the new pricing structure can take a number of steps:
Consumers Energy customers who have additional questions about the new rate can find more information at www.consumersenergy.com/summerrate. Check out the MPSC's consumer tip on beating the heat for suggestions on reducing energy use. The U.S. Department of Energy has additional spring and summer tips for saving energy.
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