LIPA Residential Time-of-Use Rates Are Unfair

COMMACK, N.Y. - Sept. 26, 2013 - PRLog -- Environmental attorney Frederick Eisenbud announced his discovery that LIPA residential rates ostensibly designed to provide an incentive to rate payers to shift as much of their usage to off-peak hours as practicable may actually result in those customers paying more than standard rate payers for the same amount of electricity.

“The purpose of having different billing rates for usage during peak hours (defined by LIPA to mean 10:00 AM – 8:00 PM) versus off-peak hours (8:00 PM – 10:00 AM and weekends) is to drive usage into off-peak times,“ Eisenbud explained. The peak charges for energy, particularly during the summer months, are significantly higher than the charges for energy during off-peak times. As explained by LIPA on its website, “These rates could work for you if you can shift a high percentage of your electric usage to ‘off-peak’ hours.” The benefit to LIPA is that the more customers shift usage to off-peak times, the easier it is for LIPA to meet Public Service Commission requirements that they have sufficient power available to meet anticipated peak usage available at all time.

Eisenbud recently had a large solar voltaic system installed at his house in Fort Salonga, and had to decide whether to stay on LIPA Rate 184, one of two principal “Time-of-Use” residential rates offered by LIPA, or switch back to the standard 180 Rate most LIPA customers are on. “While 180 rate payers are charged $0.36 per day, those who went into the 184 Time-of-Use rate category are charged $1.65 per day – a difference of $470.85 per year”, Eisenbud learned. He then wondered whether the electrical rates charged to Time-of-Use customers were sufficiently below standard rates so that he still saved money by shifting his electrical usage to off-peak hours.

First, Eisenbud analyzed twelve consecutive months of LIPA bills. He learned that his total usage for the year was 23,712 kWhs, and 67% of his family’s usage was during off-peak times. Surely, he was saving money, right? Wrong.

Based on Eisenbud’s actual energy usage, he found that his family paid $225.00 more than they would have had they never switched to the 184 Time-of-Use billing rate. When he brought this to the attention of LIPA, he was told that the reason may be that his total usage was too low. LIPA’s summary of its residential rates, published in 2012, and available on LIPA’s website, states that “Time-of-Use rates require a special meter that records usage during peak and off-peak hours. These rates are available as an option to customers who use, or are expected to use: more than 39,000 kilowatt hours (kWh) annually or 12,600 kWh for the months of June through September.” When Eisenbud first switched to the 184 billing rate twenty years ago (when LILCO provided the electricity), his family consumed 33,660 kWh during the year before he switched rates, of which more than 19,000 kWhs was used June through September (the summer months). Clearly, his household fell within the guidelines for who would be eligible for 184 billing rates. Now, however, his family’s usage fell to 23,712 kWh (by doing most of the things recommended to reduce electrical consumption). Summer usage, however, was 12,564 kWh, so the 184 rate seemed as if it should have been appropriate.

To make certain the problem was not that his total usage was too low, Eisenbud then ran the 180 and 184 billing rates against a hypothetical usage of 39,000 kWhs. Percentages based on Eisenbud’s actual usage were applied to the 39,000 kWhs assumed usage to arrive at total kWhs during peak and off-peak times, and during summer months and the rest of the year. Again, after applying this hypothetical usage against LIPA’s published 180 and 184 rates, the result was that the Time-of-Use rate category would have cost Eisenbud $134.21 more than what he would have been billed under the standard 180 rate.

LIPA’s response to this news was to suggest that perhaps its alternative Time-of-Use category, the 188 rates, would work better. LIPA’s online summary of residential rates state that Rate 188 is “An optional ‘off-peak pricing’ rate for customers whose usage does not qualify for Rate 184.” While the fixed daily Service Charge for Rate 188 is the same as for 180, $0.36 per day, a $0.10 meter charge per day is added on. Still, the total fixed daily charge of $0.46 is far less than the daily charge under Rate 184, $1.65 a day. The peak charge for electricity during the summer months under Rate 188, however, is even higher than that charged under the 184 rate ($0.2364 per kWh under 184, and $0.2735 per kWh under 188). Running Eisenbud’s household’s actual usage through the Rate 188 schedule led to the conclusion that he would  have paid even more under the 188 schedule than he was  billed under the 184 rate. Assuming he used 39,000 kWhs instead of what his family actually used only made things worse – they would have paid $461.74 more by being in the 188 Rate category than they would have had they been in the standard 180 category.

Eisenbud brought all of this to the attention of everyone at LIPA who should care, from the COO down to the Director of Regulatory, Rates and Pricing, asking that they go to the LIPA Trustees to change the fixed daily charges and the billing rates in the Time-of-Use billing categories so there would be an actual financial incentive instead of a penalty for those customers who shifted to Time-Of-Use billing. Thus far, he has received no indication that LIPA is willing to change the rate structures.

“There can be no excuse for the current situation. The typical rate payer who switches to Time-of-Use billing, thinking they will save money while helping LIPA reduce the need for more generating plants, must be told that they probably are paying more than they would have had they remained in the standard 180 rate category,” Eisenbud said. Based on Eisenbud’s analysis, it would seem obvious that most if not all ratepayers who shifted to residential Time-of-Use billing are paying more than they would have. “After twenty years of only washing clothes and dishes at night and on weekends, it is really frustrating to learn that regular rate payers who can do these things whenever they want paid less for the same amount of electricity” Eisenbud said. “If LIPA won’t change their rates voluntarily, 184 and 188 rate payers should write to LIPA and demand to be put back into the regular 180 rates. Then LIPA will be forced to address the issue.”

In a blog published today at http://fredeisenbudlaw.blogspot.com/2013/09/lipa-residential-time-of-use-rates-are.html, Eisenbud and his associate Lilia Factor provide greater details on his analysis of the LIPA residential Time-of-Use rates, and propose a modification that would seem to solve the problem.