Battery storage helps customers adapt to new rate structure

Educating customers about how their electricity use impacts the wider electric grid is an important part of developing more locally-controlled energy. Last year, a municipal utility in Kentucky initiated an effort to do just that.
The Glasgow Electric Plant Board (EPB) provides electricity to the 14,000 residents of Glasgow, Kentucky. It recently completed the free installation of 165 batteries as well as 345 hot water heaters and smart thermostats on customers’ homes. This could serve as a model for other utilities who want to lower their energy demand, as well as those who want to adopt more distributed energy resources such as solar.

Storage and energy efficiency systems were offered to Glasgow residents and small businesses that had the worst ratio of energy usage to contribution to peak demand, i.e. those with electric water heaters and electric heat, and other appliances that often were being utilized during the EPB’s monthly peak demand hour. “Some were still hesitant because we’ve all become accustomed to the idea that if it’s too good to be true, there’s probably a catch,” Shelia Hogue of EPB said. The utility paid for the systems through a grant.

The utility initiated a wide-ranging public engagement campaign about the effort. It put information about it on customers’ electric bills, was active on social media, and ran radio ads. EPB is also the local cable and broadband provider, so it used that as a broadcast medium as well.

EPB’s broadband system allows it to receive electricity usage data that is updated every 15 minutes. This gives the utility a wealth of information about the way its customers use electricity. The data it collected showed EPB that its customers’ peak demand usage was incurring the utility additional charges from the Tennessee Valley Authority (TVA), its electricity provider. Under the new retail rate implemented by EPB, these costs were being passed along to customers in the form of utility bills based solely on the actual cost to serve each customer. One goal of the storage and energy monitoring projects was to help customers better manage their contribution to peak demand load.

“Customers save on their electric bill by using these smart technologies,” said Joey Anderson of Sunverge, the company EPB worked with to install the batteries. “On the surface, the new coincident peak charges seem higher, but these tools allow their bills to reflect how much they were contributing to the utility’s cost.”

As EPB rolled out the energy storage and management project, it was also in the process of changing the new rate structure. This new rate structure includes a significant residential demand charge EPB says is designed to pass along the true cost of customer energy usage during peak demand times. Typical utility rates are 5-8¢/kWh. During the utility’s highest demand hour each month that rate jumps to approximately $10/kWh. The utility says this was done to mirror rates it was paying to the TVA.

The batteries, thermostats, and hot water heaters are all connected to EPB’s broadband. This allows the utility to remotely manage them when electricity demand increases. The utility is able to charge the batteries during low demand times and have the batteries discharge when usage is high. It can use the water heaters to heat water prior to times of high demand and it is able to adjust the thermostats four degrees higher in the summer and four degrees lower in the summer to reduce demand.

Utility customers are able to monitor their usage through a real-time on-line portal developed by the utility. The portal allows customers to modify their energy usage habits in ways that save them money.

Hogue believes EPB is on the forefront of where utilities are going. “We’ve become a delivery system,” Hogue said. “We are providing a customer with a grid and information. It’s up to them to determine the methods they prefer, if they are exploring conservation options, be it solar or whatever.”

EPB is still in the process of gathering data to see how effective the project has been. It is working with the University of Louisville to analyze the data. So far EPB says it has seen significant shifts in electricity demand as well as the highest system load factors ever recorded for the utility. This high load factor indicates that customer power usage is becoming more constant.