Time-based Pricing Pilot

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1 Time-based Pricing Pilot Frequently Asked Questions (FAQ) Overview In November 2012, New Hampshire Electric Cooperative (NHEC) launched a pilot program that studies the impact of time-based rates on members electric usage. NHEC solicited volunteers to participate in this pilot program. Participating members have been provided with a specially equipped smart meter and an In-Home Display (IHD) that communicates real-time pricing and usage information. Some participating members are continuing to pay the standard kilowatthour (kwh) electric rate, while others were placed in a new rate structure that charges different rates for electricity depending on the time of day it is used. This is a two-year pilot program, at the end of which NHEC will aggregate and assess the results and decide whether or not to make time-based rates available to the entire membership. What s a Time-based Rate? At present, nearly all Co-op members pay a standard kilowatt-hour rate for their electricity, no matter what time of day it is used. A time-based rate varies daily between a higher on-peak rate and a lower off-peak rate. Time-based pricing is based on a common sense idea. During certain times of the day there is more demand for electricity, and so it costs more. These onpeak times last only a few hours each day. The remainder of each day is off-peak and covers those hours when there is less demand for energy, so it costs less. Along with on- and off-peak periods, there are critical peak periods which occur when the demand for energy is extremely high. These critical peak periods typically occur on the hottest days of summer and although infrequent, greatly impact costs for a few hours. During critical peak events, electric rates can be significantly higher. During this pilot program, participants are being charged less than the standard kwh rate during off-peak hours and more than standard kwh rate during on-peak and critical peak hours. The goal is simple: To have lower usage during times of day when electricity costs the most (on-

2 peak hours) and shift that usage to other times when demand and costs are lower (off-peak hours). What are the benefits of the Time-based Pricing Pilot? Time-based pricing provides the opportunity for participants to save money over the course of the year if certain behaviors are modified. The pilot program provides participants with a detailed, real-time view of their electric use. Industry research has shown that electricity consumers who receive timely feedback on their usage frequently conserve electricity. Participating members will also be helping NHEC determine how best to serve members in the future. Is Time-base Pricing mandatory? No. It is being offered only to a select group of members who must volunteer to participate and can opt out at any time. Who are the eligible participants and how were they selected? Approximately 6,000 members in the Plymouth and Meredith areas received invitations to volunteer for the pricing pilot. This group of eligible participants was selected because they have smart electric meters that are consistently reporting usage data to NHEC headquarters in Plymouth. Two-way communication between NHEC and participating members meters is required for the proper functioning of the IHD and implementation of a time-based electric rate. Members who were selected to take part in the pilot program have received a new, advanced smart meter that is specially equipped to communicate with the IHD located in their home. How long does the pilot last? The pilot program will run from November 1, 2012 to November 1, Are members required to stay in the pilot program for the full two years? This is a voluntary pilot program. As such, members may opt out at anytime and return to the standard kwh rate. However, time-based rates are designed so that maximum benefits are realized over the course of a full year. For example, the summer bills of participating members are apt to be a little higher, while winter bills are apt to be lower. A member who opts out after only the summer period would not have benefit of lower bills in the winter period.

3 What equipment do participating members receive? Volunteers selected for the pilot have received a complimentary In-home Display (IHD) device worth $200 that will provide usage information, pricing information and messages from NHEC. Visual indicators on the IHD (red flashing light for critical peak hours, red pulsing for on-peak hours and green flashing for off-peak hours) will inform members at a glance about their current usage and the price of power. The IHD, about the size of a small calculator, can be plugged in to an electrical outlet or can operate on battery power. The device comes with operating instructions. Participating members have also received a specially equipped smart meter that has the ability to communicate usage and rate information to the IHD. This technology is not included in the standard smart meters installed by NHEC in its service territory. Who installs the IHD? IHDs are delivered and installed by a representative of Utility Partners of America (UPA). This is the company NHEC has contracted with to install smart meters as part of NHEC s larger smart grid project. UPA also installed the new meters necessary for participation in the pilot program. What are the new rate programs? Enrollment was limited, and not all volunteers were selected to participate in this pilot program. Participating members have been assigned to one of three rate programs: 1. In-Home Display (IHD) This group remains on the standard rate, but is provided with an IHD that shows real-time electric use and the cost of power being used 2. In-Home Display with Time-of-Use (TOU) this group also received an IHD, but pays an electric rate that varies daily between a lower off-peak rate and a higher on-peak rate. On-peak rates are charged from noon to 8 p.m. on weekdays in the summer period, and 4 p.m. to 8 p.m. on weekdays during the winter period. All weekend and holiday hours are charged at off-peak rates. 3. In-Home Display with Time-of-Use & Critical Peak (TOU/CPP) this group received an IHD and was placed on a TOU rate. Members of this group will also be subject to up to 12 Critical Peak Pricing events during the summer when regional electric demand is highest. Notice of these Critical Peak Pricing days are being sent via the in-home display and the day before the event. CPP events significantly impact pricing between the hours of noon and 5 PM the following day. As with the TOU pricing plan, all weekend and holiday hours are charged at offpeak rates.

4 How do members know when electricity prices are high? The higher priced (on-peak) hours for Time of Use are constant by season: Noon to 8 PM weekdays during the summer (May through October) 4:00 AM 5:00 AM 6:00 AM 7:00 AM 8:00 AM 3:00 AM 9:00 AM 2:00 AM 10:00 AM 1:00 AM 11:00 AM 12 Midnight 11:00 PM 10:00 PM 9:00 PM 8:00 PM 7:00 PM 12 Noon 1:00 PM 2:00 PM 3:00 PM 4:00 PM 6:00 PM 5:00 PM Noon to 8 PM - higher cost hours 4 PM to 8 PM weekdays during the winter (November through April) 4:00 AM 5:00 AM 6:00 AM 7:00 AM 8:00 AM 3:00 AM 9:00 AM 2:00 AM 10:00 AM 1:00 AM 11:00 AM 12 Midnight 11:00 PM 10:00 PM 9:00 PM 8:00 PM 7:00 PM 12 Noon 1:00 PM 2:00 PM 3:00 PM 4:00 PM 6:00 PM 5:00 PM 4 PM to 8 PM - higher cost hours When a Critical Peak event day is called, NHEC notifies program participants via the in-home display and one day prior to the event so that they may take any desired measures to reduce their electricity usage during the Critical Peak Pricing event hours (noon to 5 PM) the following day. Up to 12 Critical Peak Pricing events may be called on weekdays only during the summer period, for a maximum possible total of 60 hours per year at the Critical Peak rate. How can participating members reduce electricity usage during high price hours? Members can reduce electricity use during higher priced hours by:

5 raising their thermostats in the summer (if they have central air conditioning), or pre-cooling their homes by running room air conditioners early in the day and turning them off during high priced afternoon hours; shifting energy-intensive tasks such as laundry and dish washing to off-peak hours; switching from incandescent light bulbs to compact fluorescent bulbs; turning off lights scheduling errands/activities so they are out of the house during higher priced hours. Who might save money with this pilot? Members who are typically out of their homes during the on-peak hours or can switch energyintensive tasks from the afternoon period to a lower cost time periods such as later at night or in the morning may be able to save money. For the average participant who makes no changes, annual costs may remain constant. Those who increase usage, particularly at certain times of day, may see an increase in costs over the course of a year.