MGE Talks Business Newsletter - November/December 2005

MGE is installing demand meters for business customers with demand between 20 and 200 kW to meet the new PSCW mandate.

For MGE, as most businesses, prices are demand driven. Beginning in 2010, the Public Service Commission of Wisconsin mandated that the real costs of energy at the time it is used be paid by a broader number of utility customers statewide.

More MGE customers will be on Time-of-Use (TOU) rates. "Although results will vary by customer, this PSCW decision likely results in slightly decreased costs for a majority of businesses moving to this rate," stated John Krueger, MGE's rates manager.

Historically, TOU rates were mandated only for high use businesses, primarily with demand exceeding 200 kilowatts (kW). Now, all new medium demand businesses – between 20 and 200 kW – have TOU rates. Existing customers in this demand class will move to TOU during 2011, as MGE installs new meters that report use by precise time segments. Businesses with demand less than 20 kW can choose from standard or TOU rates.

"The commission wants people to understand the relationship between energy costs and the time it's used," stated Bob Connor, MGE's senior account manager.

The benefit from TOU rates depends on the percentage of use during on-peak periods. Generally, if less than 35% of total use occurs during on-peak periods, you're likely to benefit from these rates.

• On-peak energy is supplied during periods of relatively high demand: for MGE, from 10 a.m. to 9 p.m., Monday through Friday, excluding holidays.

• Off-peak energy is supplied during periods of relatively low demand: for MGE, from 9 p.m. to 10 a.m., Monday through Friday; all holidays; and all weekends.

On-peak time periods (dark grey) occur when demand for electricity is greatest, 10 a.m. to 9 p.m., Monday through Friday. The remaining time is considered off-peak. Time-of-use rates tie actual energy costs to on-peak and off-peak time periods.

"The PSCW views time of use as a way to encourage ‘demand response' from customers," said Greg Bollom, MGE's assistant vice president of energy planning. According to the commission, TOU rates are considered a "passive" demand response program in that customers change their normal consumption patterns in response to changes in electricity prices that vary by time.

"There is no 'active' control by MGE to reduce the customer's electricity consumption," noted Bollom, adding, "The objective of passive demand response programs is to provide customers with better price signals than a standard rate structure, which is a flat rate, regardless of on- or off-peak criteria," he said. "Increasing electricity prices during periods when costs are relatively higher should encourage lower use during higher cost periods and thus tends to lower overall costs," Bollom concluded.

Passive programs can also result in more equity. Businesses that use more electricity during high cost time periods pay more.

There is interest at the state and national levels in demand response programs. They may reduce emissions of greenhouse gases, as stated in the Governor's July 2008 Task Force Final Report on Global Warming.

"We'll work with businesses to help them understand and prepare for the impacts, and potential benefits, that come from this new mandate," Connor concluded. For more information, call 252-7007 and ask for a business account manager.