 Aloha and hello, and welcome to this week's edition of Power of Hawaii, where Hawaii comes together for a just and clean energy future for the islands. I am your host, Raya Salter. I'm an energy attorney, clean energy advocate, and community outreach specialist and principal of Imagine Power LLC. Today, we're going to talk about how we buy electricity and the way it is charged. Most of us open our bill from the utility and, one, do our best to pay it. That's how we do our part. Then, we flip our light switches and turn on our appliances and expect the power to come on when we want it, and when we need it, every time we want it, and every time we need it. That's the utility's role to play. Unless there's some kind of power outage, that's really the end for most of us, the most that we think about it. What should that be the end of us thinking about it? Maybe it's a good idea to think about this some more. Why? Well, we'd all like the opportunity to lower our electricity bills. If you're like me and are the one who actually pays the bills in the house, you are very unhappy when you come home, nobody's home, and the air conditioner is blasting and all the lights are on. I can think a lot of things that are more fun than seeing energy wasted, and I can think of just about anything is more fun than paying a high energy bill. Especially during holidays, I can think of several things that I would rather do with my money than give it to the utility. What about the utility? What about the utility's role? Are they doing enough to keep prices low? Are they doing enough to give me the opportunity to save money on my electricity? Well, the utility in Hawaii has taken some first steps to give consumers more options to use energy and potentially save money while doing so. Today, it is in the news, Pacific Business News, to be exact, that 1,000 electricity customers in Hawaii have signed up for HIKO's time of use rate program. So that is what we're going to talk some about today. What are time of use rates? What do they mean for you, and why are they important? Well, we know that electricity costs are high in Hawaii. Utilities and regulators have made great strides in promoting renewable energy, increasing the efficiency of the power grid, and reducing harmful pollution. However, customers too can be part of the solution by better managing our use of electricity, especially during those times when it's most expensive to produce it. Now, the cost of producing electricity and the carbon emissions associated with it, which can be damaging to both the environment and also can be damaging to human health, very significantly throughout the day, depending on electricity demand at any point in time. So what do I mean by that? I mean that it is all hours of the day, and all amounts of electricity are not equal. Sometimes it costs more to produce electricity, and sometimes it costs less. And I think it's going to make sense that when is it going to cost the most? When most people need to use it. You see electricity, until we have more technology, until we get better storage options. It needs to be used as soon as it's generated. It's difficult to save and store. So the electric grid and the operators at the utility and the regulators have to look at and be prepared for when are people going to want to use energy, and then they have to be ready to provide it at those times, and it has to be exactly when you want it, exactly the way you want it, and fulfill all the needs that you may have for that energy. So what does this mean? When the energy is needed the most at peak times of day, this is when the utility needs to spend money to make sure that there is a reserve of energy that if for some reason there is a spike in demand that they can have, there can be more resources added. And this is expensive. For example, when a heat wave occurs and many customers begin cooling their homes after work, demand skyrockets and creates what is known as a critical peak. Now again, in order to meet this increased demand, the most expensive power sources, which remain unused for most of the year and generally tend to be more polluting, are turned on. So enabling customers to turn their electricity use down during a heat wave could offset the need for these more expensive sources of power, resulting in lower prices and in many places less harmful pollution. Customers could, for example, set their air conditioner at a temperature to a few degrees warmer or run large appliances such as dishwashers, washing machines, and dryers outside of the times most people are using electricity. Now I've got an interesting example of how this can be a really, really big issue and how it truly is related to how we behave. So this example is from Great Britain. Now even though, as we know, there are a lot of TV shows to choose from in Great Britain, they love their soap operas. So think of the absolute most popular show that occurs, say, in the United States. And imagine what would happen if everybody decided that they are going to tune in and watch that show at that time. So that would be a lot of people coming together to watch TV. Now another thing that we all know about the British is that still to this day, they love their tea. So there's a soap opera in Britain that's called the EastEnders, actually my mother is British and it's something that I also grew up watching from time to time. It's kind of a funny quirky show about working class people in a working class neighborhood in London. So this show is extremely popular. So what does almost the entire nation of Britain do when EastEnders is about to come on? Well, guess what? They fire up the television and then they fire up their oven and put on the tea kettle to make tea. So the fact that this many people watch that same show at the same time and light up their tea kettle actually has extreme consequences for the electric grid in Britain. It's actually described as an electricity nuance completely unique to Great Britain. And it refers to the fact that massive swaths of the nation's population will all get up at the same time at the end actually of this popular show and cause a surge in electricity usage by boiling a kettle full of water to make that cup of tea. So what happens? People sit down and watch the EastEnders, they enjoy themselves, and then exactly after, ah, you know, I could really use a cuppa. All of those people has huge consequences. And when that popular show, the EastEnders, comes to an end five times a week in Britain, the grid has to deal with around 1.75 million kettles requiring power at the same time. That's an additional three gigawatts of power for the roughly three to five minutes it takes each kettle to boil. So big is the surge that backup power stations have to go on standby across the country. And there's even more additional power made available in France just in case the UK grid can't cope. At this moment in time, the operator, and I've actually seen a video I wanted to actually download this video to show because it's extremely compelling. So what you've got is this picture of this, you know, man sitting behind this massive, complex, you know, grid infrastructure with lights and everything is going off and what is he doing? He's got a little television that's next to him on the side. What is he waiting for? He's waiting for that song that they play at the end of EastEnders because at exactly at that moment he's going to have to wait and see what happens to the power and what types of reserves he's going to have to call on and it's actually fascinating when you see the actual footage because some of the power is hydro. So you end up because of these tea kettles, you know, this person behind this grid operations has to turn on some dials that send signals to let this massive amount of water energy just fall. I mean, it is really incredible. So this person stands at the ready and arranges to release massive stores of power to bring online when people fire up those kettles. So you can only imagine the cost that's involved in making sure that the country manages to stay online just because folks want to have their cup of tea. So this is, I think, an excellent example of how human behavior really does affect the energy system. Why don't we have more ways that we can change our behavior and we can start to alleviate some of these problems and the costs that they bring? Well, unfortunately, most customers aren't provided with the type of information on when these critical times occur and have little to no incentive to curb their demand during these times because they're neither rewarded for doing so, no penalized for when they don't. Instead, we all pay the same price for electricity used at all times of day, irrespective of a heat wave or another period of high electricity demand, like the need to fire up our kettles for EastEnders. I don't think there's, I would love to know if anyone out there listening knows of an example here in the United States where some type of particular cultural event actually causes this phenomenon, I would love to hear it. Actually, if there's anyone out here listening in Hawaii or anywhere in the world who is interested in joining this conversation, please feel free to pick up the phone and call our studio live. So, what it is when we all pay the same amount at all any time of day, they call that just a flat rate. Now, many utilities have begun to realize that this type of pricing is hardly efficient. Pricing electricity in a way that reflects its true cost, the actual cost that it is required to make the energy, can help utilities reduce overall costs and pass these lower prices on to customers. So in the example of the EastEnders Kettle example, if the utility, now interestingly enough, this kind of poses an interesting question. What would it take for you, say you imagine yourself as a British person looking forward to your kappa at the end of your favorite show? What would it take for you to decide, hmm, you know what, I like having that kappa tea after my show, but I realize now it's a big cost to the grid and maybe I shouldn't turn on my tea kettle at that time because it costs huge amounts of money for all of us when I do. So that's kind of the question, what would it take to make you change that behavior and what would that mean for you? It could mean that just knowing that it causes this problem would be enough for you to turn off your, to decide to defer that enjoying your wonderful hot cup of tea, or you could say hey, if I could save five or ten cents on my electricity bill at that moment, I'd do it for that five or ten cents because you know, that adds up. Or it could be you think five or ten cents really isn't going to matter, or quite frankly, and I wouldn't blame you, you may think, you know what, I'm having my cup of tea, I pay my electricity bill, and I want to have my cup of tea and enjoy it after the East Enders whenever I want, and that would be extremely understandable. What if they created in Britain some type of penalty? What if they said everybody who turns on their cup of tea at the end of East Enders is going to have to pay five dollars extra on their utility bill? Would that be fair? Would that be enough? Would it be the right thing to do? So that is sort of some of the issues that really are at hand when we talk about charging different amounts for electricity at different times of day. And there are several ways to do this, for example, utilities can charge customers different rates at different types of times of the day or throughout the month. And this is what's known as time variant electricity pricing. This type of pricing allows customers to have greater control over their utility bill. So by reducing electricity use during the times when it's more expensive to produce, they can take advantage of cheaper electricity being offered at other times. Furthermore, environmentally conscious customers can reduce their carbon emissions by timing their electricity use. Essentially, time variant pricing empowers electricity customers by bringing them into the market and allowing them to affect it with their behavior. If we would all shift away from periods of high demand, electricity prices would fall for everyone. So if everyone in Britain decided that they were going to defer that cup of tea, it could save a substantial cost to energy users in Britain overall. So we're going to take a break and when we come back to power up Hawaii, we will continue to talk about time of use rates, what's happening with them here in Hawaii, and why there may be an important option for you to consider. Okay, this is Hawaii, the state of clean energy, a wonderful show we do four to four thirty every single Wednesday. And the progenitors of this show, Sharon Moriwaki and Ray Starling to my left. So how's it going? How's it going Sharon? Do you like the show? I love the show and I hope everybody watches the show and joins in and gives us their comments on clean energy every week. Every week with incredible guests and topics and discussion and mostly candor. This month is all renewable energy and next month we're going to look at procurement. Each month we have a different series and so it's going very well. We learn so much. We keep the public so well advised, the best we can. Ray, what do you think? Well, I think this is the place where it's happening. This is where we discuss the latest of what is going on in the energy world and it's a great place to be, a great place to meet some new people that are into the energy world that we haven't talked to before. So I'm happy to be here. Okay, this is a, you know, energy is the biggest thing happening in Hawaii where they realize that it's not going to affect all of our lives, it's affecting all of our lives and it's like a million things are happening in energy. How could you possibly understand what's happening unless you are informed? This is your way. This is the deal. Hawaii, the state of clean energy every Wednesday at four o'clock, right? Join us. I knew you'd say that. Aloha and hello and welcome back to Power Up Hawaii. I am your host, Raya Salter, and today we're talking about time of use pricing, what that means for Hawaii, who was signed up for a year and why it may be an important thing for you to consider. So before we went to break, we were talking about how expensive energy is at certain times of the day and how energy, it does not cost the same to deliver to you, the customer, at all times of day and how changing behavior, changing our behavior as customers, can actually help lower cost for the utility that could also be passed along to us as energy savings. And this is why Hiko's new time of use rate program is so important. So time of use, or TOU, is the most commonly utilized form of time variant pricing. TOU pricing breaks up the day into two or three large intervals and charges a different price for each. Rates can be divided into off-peak prices, off-peak generally being in the middle of the night to early morning. So why would off-peak be in the middle of the night of early morning? Because, especially in Hawaii, maybe not as much as where I'm from in New York, but where I'm from in New York City, yes, there too. We don't do as much stuff in the middle of the night with our electricity. Our lights are turned off. That's not when we're thinking about doing our laundry, using our video game machines or even our computers. However, so this is a time when electricity is generally cheaper to bring to your home because there's less demand. However, if you think about it, depending on what kind of washer and dryer, what type of appliance, dishwasher that you have, many of these appliances have time settings. If you're like me, you need to call your daughter or your teen to help you figure it out. But they do have these settings. And actually, I know myself at home, especially when I'm doing laundry, both the washer and the dryer, as it can be kind of warm in Hawaii, I don't really like in the middle of the day to have my clothes drying because it just makes my whole home just hotter. I need to turn the fan on. So actually, if I could put a load or two on and actually arrange to time it so that it's sort of, it washed in the middle of the night, that would actually be something that could be potentially convenient for me. And if I could have a different and cheaper rate at that time, all the better. So that sometimes these things can be win-win. So that tends to be the off-peak time. So when is semi-peak? Semi-peak is usually daytime and evening. And when is peak? Now peak is the time of the highest demand. Now this is usually the afternoon or early evening. What's happening in the afternoon and early evening? Well, if your family is like mine, that's when you're coming home from work, the kids are coming home from school, you're turning on, the kids are firing up the video games or hopefully they're computers for homework. You're starting to fire up the appliances to cook, maybe turn it on the TV so you can watch a little television while you cook. This is the time when people come home and we do all the things that we need to do in our busy lives. So this tends to be the highest time. Now these rates tend to remain fixed day-to-day over the season. So this means, well, here in Hawaii, we have less variance in the season, but this is something that can be studied. The utility will put a lot of time of work into saying, can we predict on any given day what these periods will be? And absent a big event, like a big extreme event, a hurricane or a big power outage, the utility tends to know what the demand will be. So the simple method of pricing encourages customers to shift their electricity use away from times of day when demand is higher. However, it does not necessarily encourage reduced electricity use during the critical peak times over the year, such as during heat waves. So most utilities throughout the country have a volunteer TOU rate available to customers, although overall adoption has remained low. Although time variant pricing is still not widely available across the country, more utilities and customers are waking up to the benefits of pricing electricity differently by time of day and month and year and realizing the dynamic rate structures are integral to a cleaner, more efficient energy system. Our own utility here has joined them. In the latest adaptation to meet the growth of solar power, the PUC has approved a pilot program designed to shift usage to times when solar power and other forms of renewable energy are abundant and away from times when HECO has to fall back on conventional generation to meet demand. The voluntary program creates three time periods, each with its own rates, midday from 9 a.m. to 5 p.m. on peak, from 5 p.m. to 10 p.m., and off-peak from 10 p.m. to 9 a.m. The midday rates are designed to be lower than the typical customer pays under the current residential rate scheme, while the on-peak rate would be higher than the typical residential tariff. On-Huahu would pay more during the day and others during peak hours. On the big island, customers will also see a swing in those prices, and the same is true on other islands as well. This means that if they wish, people can lower their usage when power is more expensive and potentially save money. The real bang for the buck can happen when lots of people shift behavior and reduce these peak times for power. This is helpful for a couple of reasons. First, the utility will not need to use as much of that expensive peak power. That saves money for everyone. It's extremely important that we get this right, however. If everyone is not able to use time-of-use rates, it will mean if everyone is going to be able to use time-of-use rates, it will mean a big investment in the meters called smart meters that make it possible. A few weeks ago, it was reported in Ontario that time-of-use rates there are not working. It costs $2 billion to install new meters for the customers of Ontario in their households. But the meters and the differentiated prices that are creating are failing to accomplish the cheap objective of curtailing electricity demand at peak periods according to growing research. Now, a series of reports examining Ontario's electricity system indicate that the smart meter project and time-of-use pricing are neither significantly reducing peak hydro demand, hydro is what they use a lot of in Canada, nor persuading customers to shift their energy use to off-peak periods. This was from the Canadian press. The province's rationale behind smart meters and peak period pricing was to give consumers incentives and opportunities to reduce their electricity bills by shifting their time of electricity use. But customers don't appear to be biding. The current time-of-use pricing structure has not provided sufficient incentives for customers to shift away and or reduce use. Concludes a recent review conducted by the Brattle Group Consulting Firm for the Independent Electric System Operator in Ontario. So this goes back to what we were saying before about what is the right package of incentives in order to get this correct. So it's important that we move forward to a clean energy future here in Hawaii. It will require every tool in the toolbox to do this. It's important for a lot of reasons that electricity is clean, but it is equally important that it be affordable. Changing peak behavior is one way to save energy. Energy efficiency is the absolute best way to create a cheaper and cleaner energy system. Energy efficiency makes the grid easier to manage. It makes it easier to integrate solar and other renewable energy, and it makes energy cheaper for you and me. In fact, energy efficiency is not only the least cost and best place to start for saving energy and reducing global greenhouse gas emissions, but it's also the most equitable way, being good for consumers of all income levels. So I hope that I have given you some food for thought about how our behavior as customers can affect the energy system and also our wallets. And I'd like to thank you very much for that. So thank you so much for joining me for another edition of Power of Hawaii. Aloha and I hope to see you next week.