OG&E Smart Hours / Time of Use Pricing - Part 2

How do you like it?

I like it fine. To be honest, most days it does not have much of an effect on my life. I like that I get to be more involved and knowledgeable in the utility process and I feel as though I’m helping the community and myself while I’m at it. But generally, it seems normal by now, and it is not a hassle so I don’t think much about it.

Is it saving you money?

OG&E guarantees that for the first year of sign-up to the program, they would compare my flat rate cost to my Smart Hours/time of use cost for that billing period and would never charge more than what I would have paid on the flat rate. So right there, I’m promised that I will either save money or pay the same as I would have paid otherwise. For each billing cycle during the time of use season, they show the difference in what I would have paid; my bills show that I saved something in the neighborhood of $23 the first month and $29 the second month from using the new pricing system. This is a pretty decent percentage of my bill.

In addition, I feel like being on the program makes me more aware of what I’m doing, so that I likely also have some savings from overall reductions in use. These are harder to quantify since we’ve been working on the energy efficiency in our home through home improvement projects as well. Some of this reduced load is from home improvement, some of it is from increased awareness due to Smart Hours, and some of it is from my personal race to try to get my weekly myogepower summary to say “Efficient” or less. (I don’t know why I like to do this, but I feel like I win a cyber-award on weeks that I meet that goal. I have been known to hold my arms in the air and exclaim, to my husband’s confusion, “Hooray! We beat the neighbors!” Yep. I can’t explain this weird urge. Or the frown I make the next week when my neighbor theoretically beats me and I am no longer “Efficient.”)

How do you know how much you’re paying every day – does the thermostat work?

I think I would have to bury my head in a sandbox to miss all of the price signals OG&E sends. The day before, I get an email, an automated phone call, AND a message on my thermostat about the next day’s rate. I probably could opt out of some of these alerts if I tried, but to be honest, I kind of like to be banged over the head like this in case I’m just not paying attention that day. On top of all of these alerts, our Smart Hours thermostat has lights on it that indicate price changes and stay on during the duration of the ‘price event.’ And I thought these would be little LEDs or something, but let me tell you, my friends: these lights are BRIGHT. I have no choice but to notice them!

This brings me to the second part of the question; yes, the thermostat works very well. I like the lights on it. I like the price messages on it. I like the instantaneous price display on it. I was extra impressed that the representative who installed my thermostat stood there and asked about our schedules and programmed it for us… but my husband has no problem re-programming it when he wants to, so it must be pretty easy to understand. (We have had programmable thermostats in the past that were such a pain, we quit using them!) I also like how the thermostat programming is integrated into the price signals. It really does do most of the work for us in a simple and understandable way, and since we’ve had it set up the way we like it, we haven’t had to mess with it again.

So, you just don’t use electricity?

Um, no. I might be a crazy hippie compared to some people, but I’m not that much of a crazy hippie. In fact, my husband might divorce me if he couldn’t play the Xbox anymore. At the very least, I’d never see him again if he had to go over to friends’ houses to play Halo and Fallout.

But I digress. Let’s think about this question for just a second. The peak periods are only Monday-Friday, 2-7. These are the only times the rate is ever increased. Some of these weekdays we’re at work, and it is a simple matter to just wait a small period of time after we get home before we start up the oven or the TV, resting secure in our knowledge that the thermostat takes care of things while we’re gone. On weekdays when we are at home, it’s still pretty easy to run the appliances we need to run prior to 2pm, and then either switch them off and do something else for a few hours (time to fold all the laundry I just washed!) or go do errands.

You also have to remember that some days, if we are lucky, it is the low rate all day, so we can do whatever we want without paying extra. And – I have to remind my hubby of this all the time – AND – we have the option of using electricity between 2-7pm. No one is stopping us! We just have to keep in mind that we may be paying more at those times, and make the decision as to how much we *really* have a burning desire to play Halo or run the dishwasher right away. Do we really need to do that now, or would we be perfectly happy waiting until after 7? Usually we have no problem at all shifting our activities around peak times. 

Some people handle higher temperatures better than others; this is a fact. I like it warm and I usually don’t mind the house being warm, within a reasonable range. My husband on the other hand likes cooler temperatures and is less tolerant. We want us both to be comfortable, so when he’s at home during high or critical rate days, we try this technique:

If it is a high rate day and we will be home between 2-7, we kick our a/c up in the morning. We pre-chill the house so that it is a little cooler than we would normally have it under ideal conditions (I will usually do 2-4 degrees lower depending on the forecast), then we bump the a/c back down to conserve energy during peak.  At 2pm we close the drapes and try not to open the doors, just like gramma taught us. You may be surprised how long the comfort lasts, especially in a well-weatherized home (at my house – which is not uber weatherized - it usually stays in the comfort range until at least 5:00). If we start to get too warm, we turn on some fans to make up the difference, because these use less energy than an air conditioner. If and when we get too warm again we will turn the a/c back up… but even going through this whole process, chances are that we still will have used less energy than if we’d just left the a/c on. Many days the pre-chill is good enough to last until peak is over.

OG&E Smart Hours / Time of Use Pricing

One of the things I get questioned about in my personal/offline life is OG&E’s “Smart Hours” program. If you aren’t a customer of Oklahoma Gas and Electric, this is their “time of use” pricing program.  I have heard all sorts of interesting, creative theories about time of use pricing, so let me give you the low down.

Under time of use pricing, the price you pay per unit of electricity fluctuates up and down rather than remaining constant. How does this work?

First, you need a very basic understanding of the electric system. Electric companies do not use just one power plant; they have a variety of different types that run on different fuels and create differing amounts of electricity. Another key point is that they can’t store electricity; they have to make it and send it to the grid (and to you) immediately. During normal conditions, electric companies run “baseload” power plants. These types of power plants are usually the cheapest to operate and they run pretty much 24/7. As more people use more electricity at once, they turn on intermediate plants to create more electricity. These cost a little more to operate but they can turn on and off quickly to provided needed power. At the height of power needs, an electric company has to turn on their “peak” production power plants. These are the most expensive to run (and sometimes they are also the highest polluting), so they save these peak power units for last and only use them when they really need them.

The end result of this system is that the more people who use electricity at one time (say, during the heat of the day in the summertime), the more it costs to produce the electricity.  Under a normal pricing plan, average folks like us don’t notice the hourly changes in cost, but the price increases are still reflected in our overall rates. This is because the flat rate is based on a predicted average of the cost of production. You can see where this is going. If you can bring down the peak, you  bring down the flat rate over all, and theoretically you can also prevent the need to construct new power plants.

What Time of Use pricing, or here, “Smart Hours” pricing, does is allow the consumer to see and respond to the hourly changes in the cost of electric generation. It lets the consumer work together with the power company to benefit both parties by lowering the peak.

Here are some myths:

Time of Use pricing is a scheme to make me pay more for electricity.

False – The goal is *not* to make you pay the inflated rate of fifty cents a kilowatt hour (or whatever that high rate is) during peak times. The goal is to get you to use less electricity during those times when the rate is higher. Your immediate reward is a lower rate during off peak hours, so it’s entirely possible that you will pay less. In fact, for OG&E’s Smart Hours program, they are advertising that for this pilot year of the program you try it risk free – they guarantee you will not pay more under this plan than under the flat rate plan during the first year you are signed up. But even if you don’t pay less in your immediate bill, you may affect the overall rates for the next year, and drop those or prevent their rise, but unfortunately you can’t know if you succeed at this for sure.

In the case of Smart Hours, one of the motivators is that OG&E has a goal to postpone their need to build a new power plant until 2020 – construction of such a plant would actually cost ratepayers a considerable amount of money. This goal is no secret; it’s in some of their outreach materials. Partially because it takes so long to recoup the huge cost of building a new plant, OG&E is not itching to build one. If they can decrease use of electricity during the peak times, they are more likely to not need that new power plant any time soon. Smart Hours is one of their ways of working towards that goal.

Time of Use pricing is a scheme to increase the profit margins of the electric company.

False – Rate calculation is complicated and even I don’t understand all the ins and outs, but the generally correct answer is this: Electric companies are regulated by commissions whose job is to protect ratepayers/shareholders while playing it fair for the utility companies, and the profit margins for the electric utilities (at least in Oklahoma) are pre-set and calculated into the rates based on expected sales. So basically, Time of Use, Flat rate, whatever… profit margins should not be much affected. Theoretically. Either way it’s built into the rates.

Time of Use pricing is trying to get me to use less electricity. Weird…

Not really. They’re trying to encourage what is called “load shifting” which means that instead of choosing to handwash your laundry, you just run the washing machine in the morning rather than the afternoon. If this does mean that you learn to use less electricity in the process, kudos to you. That’s good for the environment and your pocket.

Signing up for Smart Hours means my pricing is weird all the time.

Under Smart Hours, your price will only fluctuate between 2 and 7, Monday through Friday, during the summer months. The rest of that time it will be at a constant lower rate. For that 2 to 7 time rate, you will be notified a day ahead what the price will be, allowing some planning time. Why only a day ahead? One of the reasons for this is that by the time they send you the rate for the next day, they have a pretty good idea what the weather will be and how that will affect electric generation.

I think this covers all of the main questions I’ve been getting, except for questions on how Smart Hours has affected me personally (How do you like it? Have you been paying more or less? Is it hard?). I’ll address those questions in my next post (Part 2).

Free Energy Audit Newsflash

 Free Energy Audit

OG&E customers have one week left to sign up for a free home energy audit! You may be aware that OG&E offers a $50 energy audit walkthrough that comes with some simple services such as an air conditioner tune-up and duct sealing. What you may not know is that if you sign up between now and March 4^th, this $50 fee is waived. 

If you’re leery about the term “audit”, don’t be.  During energy audits a contractor generally visits your home and identifies steps you can take that will improve your home’s energy efficiency and save you money on your electric bills. They aren’t trying to figure out what you are doing wrong, they are trying to find out what you can do better. Think more of a doctor’s visit for your house rather than a police raid. The information is specific and personalized to you and your home.  While some of the pricier energy efforts (like new appliances and better insulation) are well known, there are usually some super cheap and easy fixes you can do that will make your home more efficient. Audits range from basic walkthroughs to detailed quantitative analyses using fancy gadgets.  This OG&E one promises to be simple and to the point, with some added bonuses thrown in.

So what have you got to lose? Free is my personal favorite price. Ours is scheduled for March 31^st.

We also had a fancier audit done recently… I’ll tell you about that later.