Illinois’ Exelon demand charge could be ‘largest rate hike in US history’
Illinois utility groups Exelon/ComEd are attempting to pass a legislative energy bill that would implement a mandatory demand charge that could result in “the largest rate hike in US history”, according to Dave Lundy from the BEST Coalition.
The provision for mandatory demand charge to solar users in Illinois is contained as an amendment to energy bill SB 1585. Exelon and its Chicago utility affiliate ComEd attempted to pass it last session to no avail. Now it is back this session, with its fate remaining highly uncertain despite ardent opposition from solar advocates.
Unpredictability
Traditionally, electric bills are based on the aggregate energy used by customers throughout any given month. Under this rate structure, customers pay more if they use more, creating an easy to understand incentive structure for customers to control their demand. Therefore, demand charges effectively eliminate the value of rooftop solar. One of the many reasons solar is an attractive proposition is because it allows consumers to reduce their electric bills. But with demand charges, a particularly high period of electricity use would result in a much higher monthly bill.
“They are taking the distribution credit out of the value metric charge; it would not be bundled together. So the distribution credit would make up part of the demand charge – the peak fee that you would be charged depending on your highest 30 minute use each month,” Amy Heart, policy director at TASC told PV Tech.
“The solar on your roof is not going to help manage that demand charge. It could wipe out all of your savings you’ve made that day, that same evening, if you have a party or do laundry and make dinner at the same time.”
But the proposed demand charge would not only result in a rate hike for individual solar consumers, it actually has the leverage to wipe out Illinois’ nascent solar industry. Whilst it ranks 27th nationally for installed capacity, it is 12th in the nation in terms of solar jobs, and 18th for solar-powered homes.
Total wipe out
A mandatory demand charge for residential customers would have the power to wipe out Illinois’ emerging industry in one fell swoop.
“It would basically end a small but growing solar market,” said Heart. The Illinois solar industry is very small; there are only 700 solar installations in the entire state.
“The ability for homeowners or potential solar customers to estimate what their savings might be with solar is no longer possible when you have demand charges because you have no idea what your bill will be every month.”
“That’s what it comes down to at the end of the day; for ComEd and Exelon, they no longer have to worry about that competition. We’ve seen this around the country as a trend; trying to maintain that control and ownership.”
Indeed, across the country so far, 13 states have rejected or withdrawn demand charge proposals. No regulated utility has been successful in implementing a demand charge over all residential customers. Currently, three Arizonan utilities are having demand charge proposals reviewed, along with Oklaoma Gas and Electric, according to TASC data.
