Time-of-day rates are based on the time in which you use electricity. Similar to peak pricing used for air travel, cell phones, hotel stays, etc., time‑of‑day electric rates mean that you pay lower rates during periods of low demand (i.e., off-peak) and higher rates during periods of maximum demand (i.e., peak).
Real-time rates allow customers to purchase energy in the spot market for electricity. Variable Peak Pricing (VPP) is the first real-time rate offered in Connecticut and is currently treated as an additional generation services option.
CL&P offers VPP to all customers while UI only offers VPP to its largest business customers. UI will offer VPP to all remaining customers in July 2010.
Peak and Off-Peak Time Periods
The cost to provide electricity varies throught the day and is generally highest between 12 noon and 8 p.m., on weekdays, the time period in which electric demand is high. This is Connecticuts peak demand period. The other weekday hours, 8 p.m. to noon and all hours on weekends are the off-peak hours. There are 168 hours in each week. So, the peak covers 40 hours or 23% of the time while the off-peak totals 128 hours or 77% of the time.
History of Time-of-Use Rates
Until recently, peak rates were charged from 7 a.m. until 11 p.m. weekdays and off-peak rates were charged during all other times, including all weekend hours. The use of this 16-hour peak time period provided little or no opportunity for customers to shift their electric consumption to off‑peak hours to take advantage of lower rates.
Recently, the Department of Public Utility Control redesigned CL&P and UI's time-of-day rates. Peak rates are now charged between 12 noon and 8 p.m. weekdays. Off-peak rates are charged during all other times, including all weekend hours. Note that for UI's business customers, peak hours are 10 a.m. until 6 p.m., weekdays.
As a result of reducing the number of peak hours, lower off-peak prices are available 77% of the time, providing customers a greater opportunity to take advantage of these rates to lower their cost.
Mandatory Time-of-Day Policy
Optional time-of-day rates have been available for many years. However, very few customers have chosen time-of-day rates voluntarily. As an example, CL&P serves over 1.1 million residential customers. At present, fewer than 200 are served under CL&P's residential time-of-day rate.
In 2006, the Department of Public Utility Control directed CL&P and UI to phase in mandatory time-of-day rates for residential and commercial customers. The phase-in will take place over several years beginning with high use customers in 2008. In each succeeding year, mandatory time-of-day rates will be applied to additional customers based on declining levels (thresholds) of consumption or demand. A timetable for the phase-in is shown below.
Why are Time-of-Day Rates Mandatory?
Time-of-Day rates are designed to reduce Connecticut's ever growing peak demand for electricity. Charging higher prices between noon and 8 p.m. on weekdays and lower prices in all other hours will provide customers with a financial incentive to reduce consumption during the peak period in order to lower their electric bill.
If time-of-day rates are optional, many customers would not select them voluntarily, choosing instead to remain on the "flat" rates that have been charged in the past. While there is no guarantee that customers will change their usage patterns, those that do can lower their bills. Conversely, if customers increase their peak consumption their costs will increase.
United Illuminating - Residential Customers
The following shows the phase-in for UI residential customers:
- Residential customers using more than 4,000 kWhs in a billing period in 2007 will be placed on UI's Residential Time-of-Day rate, Rate RT, beginning January 1, 2008;
- Residential customers using more than 3,000 kWhs in a billing period during 2008 will be placed on Rate RT beginning January 1, 2009;
- Residential customers using more than 2,000 kWhs in a billing period during 2009 will be placed on Rate RT beginning January 1, 2010;
During the phase-in UI and the DPUC will determine whether to apply mandatory Time-of-Day rates to customers with consumption below 2,000 kWhs in a billing period after 2011.
It is important to note that UI customers using more than 2,000 kWhs per month will likely reduce their annual electric bill just by switching to Rate RT. Contact UI to learn more about the potential savings under Rate RT.
Also, please note that the average UI residential customer uses about 700 kWhs per month. So, the policy regarding mandatory Time-of-Day rates is being applied to customers who use well above the average.
United Illuminating - Business Customers
The following shows the phase-in for UI's business customers:
- Effective June 1, 2008, customers with demands of 300 kW or more must take service under UI's C&I Time-of-Day rate, Rate GST;
- Effective June 1, 2009, customers with demands of 200 kW or more must take service under Rate GST;
- Effective June 1, 2010, customers with demands of 100 kW or more must take service under Rate GST.
UI customers can follow these links for more information about time-of-day rates.
Connecticut Light & Power - Residential Customers
Mandatory time-of-day rates for CL&P residential customers was to begin in 2009. However, this requirement has been put on hold until the Department of Public Utility Control can determine the type of electric meter that should be used by CL&P's residential customers in the future.
CL&P customers can follow these links for more information about Time-of-Dayrates.
Connecticut Light & Power - Business Customers
CL&P's business customers currently use meters that track time-of-day consumption. This allows the Department of Public Utility Control to move forward with mandatory time-of-day rates for these customers. The following shows the phase-in of mandatory time-of-day rates for CL&P's small business customers:
- Effective on January 1, 2008, CL&P will begin educating customers that take service under Rate 30 and 35 regarding the mandatory Time-of-Day policy;
- Effective January 1, 2009, customers with demands of 300 kW or more must take service under CL&P's business Time-of-Day rate, Rate 27 or 37, and cannot return to Rate 30 or 35;
- Effective January 1, 2010, customers with demands of 200 kW or more must take service under Rate 27 or 37, and cannot return to Rate 30 or 35;
- Effective January 1, 2011, customers with demands of 100 kW or more must take service under Rate 27 or 37, and cannot return to Rate 30 or 35.
Once a customer is placed on a time-of-day rate, they must remain on that rate. For business customers, the phase in is based on their monthly peak demand for electricity.
Using Time-of-Day Rates to Lower Your Electric Bill
Time-of-Day rates provide a financial incentive to use less electricity during the peak hours of noon until 8 p.m., weekdays. To take advantage of this opportunity, customers can:
- "Wait Til 8" to run high use devices like pool pumps, clothes washers and dryers, water heater and dehumidifiers;
Purchase efficient equipment for the use of electricity that can't be shifted to off-peak;
Install solar systems to produce their own electricity during peak hours or solar thermal equipment to offset peak consumption for heating water and other needs;
Learn about the benefits of net metering;
Conserve by simply becoming more aware of their use of electricty during these times.