OUC wants to charge you more to use electricity at peak times

The Orlando Utilities Commission proposes to revamp its rates to charge residential customers more during peak times of electricty usage and less during off-peak times. This is an OUC substation near the utility's Orlando headquarters.
(Ricardo Ramirez Buxeda/ Orlando Sentinel)

By Kevin Spear | kspear@orlandosentinel.com | Orlando Sentinel

May 31, 2024 at 9:53 a.m.

The Orlando Utilities Commission wants to send residents and small business customers a new kind of power bill that shapes their electricity use by charging more at peak times and less when power is plentiful.

OUC is rolling out that idea amid a proposed bundle of changes to rates and billing practices pointing to a future in which the utility phases out fossil fuels in favor of mainly solar energy.

The municipally owned power and water provider says it intends this revamping of charges to be revenue neutral, meaning it won't amount to an overall hike in rates. But it would be a new way of doing business for OUC, with some customers paying less and some more than now, depending on when they consume electricity, and how much.

The proposed overhaul of rates and billing also contains a recommendation by OUC executives to gradually reduce what the utility pays for extra electricity from residential customers' rooftop solar systems. That's likely to be a hot-button item.

The Orlando Utilities Commission is proposing a bundle of changes to rate and billing practices to align the utility with its greener future of energy. (Ricardo Ramirez Buxeda/ Orlando Sentinel)

"Rapid population growth, increasing power demand, advancing customer-driven technologies and changing preferences are prompting utilities throughout the nation to implement similar pricing changes," said Clint Bullock, OUC's general manager and chief executive officer.

"OUC must evolve to meet customer demand as we implement cost equity, preserve system reliability, and meet our CO2 reduction goals while delivering price signals that provide cost saving opportunities for customers," Bullock said in a prepared statement.

The nitty-gritty details on dollars, watts and dates are yet to come, with some to be unveiled at a public workshop on June 13 and a fuller slate appearing in August when utility leaders vote on the proposed changes.

OUC is owned by the city but governed independently from city hall. It is regulated indirectly by voters and is beholden to open meetings and records rules. The utility has 250,000 customer accounts in the Orlando and St. Cloud areas.

For most of its century of existence, OUC has based its bills on two items: the cost of power plants and related infrastructure, and the varying cost of natural gas and coal that run the plants. Now that's poised to change.

Of the proposed changes, one would reduce current billing rates but then introduce what OUC is calling a "distribution charge," which assumes that the more electricity a residential customer uses, the more they put a burden on electricity infrastructure.

A distribution charge currently estimated at $5, $10 or $15 would be tacked on to monthly bills, depending on a customer's electricity use.

The intention, says OUC, is "to ensure that customers pay their equitable share for infrastructure."

"OUC anticipates 90% of residential customers will see a change ranging between a $5 increase and a $15 decrease in their monthly bill," the utility said in its prepared statement.

A second major new element has been around for a long time at some other utilities and already is in place for OUC's big commercial accounts.

OUC would charge more for electricity during peak times of the day when the overall demand for electricity is highest – and the cost of producing electricity also is the highest – and charge less during off-peak times when demand is lower. The utility calls that price signaling.

During an OUC pilot study of price signaling in 2021 and 2022, the peak charge was nearly 16 cents per kilowatt-hour of electricity – that's enough electricity to keep 10 old-fashioned 100-watt bulbs on for an hour. The off-peak charge was seven cents.

The Orlando Utilities Commission building at 100 West Anderson Street in downtown Orlando, on Thursday, May 30, 2024. (Ricardo Ramirez Buxeda/ Orlando Sentinel)

The Orlando Utilities Commission will hold a public meeting in June to discuss proposed changes to its rates and billing practices.(Ricardo Ramirez Buxeda/ Orlando Sentinel)

What that proposed change envisions, Bullock said, is that residential customers and small businesses will learn that it makes financial sense to charge electric cars, run dish and clothes washers, and set pool pumps to operate during off-peak hours, often overnight.

"I envision a day when most homes will have an energy management system that understands the utility's tariffs, understands your usages and sends you alerts," Bullock said. "As appliances get smarter, as utilities get more intentional, you can see it coming."

A third rate proposal aims at solar. OUC, like many utilities nationwide, has long wanted to roll back how much it pays for the extra electricity produced by residential rooftop solar arrays that flows back into the utility's system.

OUC currently pays the full price for that extra electricity and says that's not equitable for customers who do not have solar panels. That's because, the utility stresses, solar panel owners are getting full compensation for their extra power without having to contribute to costs of OUC's electricity distribution system.

It's a proposal likely to bring pushback from homeowners and the solar industry, who assert that rooftop solar panels are a vital contribution toward OUC's quest toward clean energy.

"The change will be made gradually over seven years to ensure that solar array customers and rooftop solar installers have ample time to prepare," OUC said in its prepared statement.

The Orlando Utilities Commission also plans to revive an option for customers to subscribe for a portion of their electricity to be generated by OUC's solar plants, which, in the past, has come with a premium pricing. The utility also intends to offer incentives for the purchase of big batteries that can store excess energy from rooftop solar for use during peak times when OUC charges the most for its electricity.

It might take some time before OUC customers can digest the totality of what's ahead.

Bryan Jacob, solar program director at the Southern Alliance for Clean Energy, an advocate and watchdog for more sustainable utility practices, has not examined OUC's proposal.

But he said that many studies show that extra electricity from residential rooftop solar should earn full retail price "if you properly value all of the benefits that all of society is getting from people's investment in solar."

He encouraged OUC to consider grandfathering rates for residential customers who now have solar panels.

Jacob added that rates set according to peak and off-peak times work best for smart homes with modern, programmable appliances.

"Not everybody has sophisticated technology in their house and might not be able to respond to the price signals," Jacob said. "So you have to kind of balance that as well."

Jacob said OUC has been thoughtful in the past about its approach to solar energy and other practices. "I'll trust they will be thoughtful now."