||| FROM CHOM & CHRIS GREACEN |||
Our customer-owned electric utility, OPALCO, has voiced with increasing alarm: “blackouts are coming.”1 Why? Coal and natural gas-fired power plants are being retired faster than we can add new wind and solar energy, and electric load is growing with the addition of new electric vehicles and power-hungry data centers. We are entering a new reality where electricity will be in short supply and the consequences for our electric bills may be painful.
For OPALCO, the biggest crunch time is when the mercury dips well below freezing and our heaters work extra hard to keep us warm and pipes from bursting. A cold snap in December 2021 led to a spike in power consumption that resulted in a $300,000 penalty imposed2 by OPALCO’s wholesale power supplier, the Bonneville Power Administration (BPA), for peak consumption exceeding the normal range. This past January cold weather triggered a similar penalty.
To make matters worse, when demand spikes, BPA has to scramble to find extra supply in the spot market, where prices can be very volatile and can surge to 25 times the normal wholesale price.3
A problem is that there is a gaping mismatch between who causes the demand spikes and how much they pay to cover the system costs associated with peak demand. On 1/12/2024 when OPALCO’s system demand peaked, top 10 residential customers (“mansions”) were consuming as much as the bottom 19% or 2,308 customers! Similarly, the top 100 contributed as much as the bottom 29% or 3,489 homes. (See graph.)
Despite the deeply unequal contribution to the system peaks, OPALCO imposes the same fixed charge of $56/month that every other residential customer pays.
A fairer way to allocate costs associated with the peak consumption would be to use metered demand charge: the more one contributes to the system peak, the more they pay. If allocated
based on peak usage, the top 10 customers should have been charged fixed costs of $167,000 per year, instead of the $6,720 OPALCO collected from the flat $56 per month access charge4 – an underpayment of $160,000. Similarly, the top 100 customers collectively underpaid by $547,000. OPALCO recovers this shortfall by padding everyone’s energy charge. We, the 99%, have been unwittingly subsidizing the uber-rich.
Mansion owners need to pay their fair share and be given a disincentive to not squander our limited collective energy resource, driving up the price for everyone.
1 https://www.opalco.com/wp-content/uploads/2024/02/Anatomy-of-a-Close-Call-PNGC-R4.pdf
2 https://www.opalco.com/why-is-my-opalco-bill-so-high-this-month-cold-temps-bpa-demand-charges-and-4-rate-increase/2022/01/
3 https://www.opalco.com/wp-content/uploads/2024/02/Anatomy-of-a-Close-Call-PNGC-R4.pdf
4 Based on OPALCO’s 2019 Cost of Service Study (https://www.opalco.com/wp-content/uploads/2018/09/2018-Cost-of-Service-Study-Presentation.pdf) cost-reflective demand charges should be $8.30/kW to cover the costs of “wires” (distribution system). These numbers were based on 2017 data, which means the current figures could be substantially higher due to inflation, more stringent regulations, etc. If we assume a conservative inflation-driven 15% cost escalation, the demand charge would be around $9.55/kW. The other part of the demand charge is related to the penalty BPA charges for peak demand (at $300,000 per 85 MW peak, this amounts to a demand charge of $3.33/kW to cover the demand cost of purchased electricity.
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OPALCO has committed throughout 2025 to doing an extensive rate analysis. We started presenting information on this topic in our September Board Meeting. Here is a link to that presentaion: https://www.opalco.com/wp-content/uploads/2024/10/2025-Residential-Rate-Study.pdf.
This is a critical topic that has no easy answer. We are going to be going through and weighing out the pros and cons of differing rate structures. We are trying to avoid rate shock and ensure this is fair to all of our members. Somehow we want to encourage all electric homes while discouraging wasteful energy usage.
Please get involved throughout the year. Watch OPALCO’s 2025 communications to get opportunities to dive in and learn more and provide feedback. This is an issue we need to solve as co-op together.
Perhaps a better solution would be a pricing structure more akin to water companies that are trying to encourage conservation by having “tiers” of pricing that increase per unit the more you use? OPALCO’s “service access charge” could include the right to purchase 1000 KWH every month at 12 cents. If you use more than “your share”, you pay 15 cents/KWH for the next 1000 and 20 cents for the next 1000, etc. (I don’t know what the actual numbers should be, those given are just an example) That ought to encourage conservation and force large users to fund the additional infrastructure their usage requires. I guess what I’m proposing is a system of rationing, with each OPALCO membership being allotted the right to purchase a certain amount of electricity per month at a certain rate.
Bonneville’s absurd penalty charges for unusually high usage due to weather events are not the fault of a few “mansions”; it’s just the weather. An efficient system, which we would hope the PNW electrical grid is at least be trying to become, cannot be built to readily accommodate rare ‘peak’ events. Any system built to accommodate massive but rare usage is going to be horribly overbuilt 99+% of the time and will therefore be wildly expensive and wasteful.
What if all the summer houses that are unoccupied for the winter and are thus theoretically winterized (pipes drained, etc.) get shut off when Bonneville is unable to keep up with demand? It’s not a perfect solution but there really are plenty of houses that are closed for the winter that still have the electric heatpump going to keep the house at 50 degrees or more. Frankly it’s a waste, but electricity is still cheap enough that people that can afford a second home or to winter in the south seem willing to waste that energy and pay that expense to keep their house warm while they are not using it. Doubtlessly there are complexities to this notion that would have to be worked out but surely this would help.
Energy rationing and peak-load shedding is both rational and inevitable, so why not be early adopters?