More than 3,000 of Northern Virginia's heaviest residential users of electricity will begin an experiment next year in "peak-load pricing," in which they will receive simulated bills computed according to electricity use during peak demand periods.
The State Corporation Commission last week approved a one-year experiment for 14,000 customers of Virginia Electric and Power Co. (VEPCO). The keystone of the plan is a mandatory program in which 9,000 heavy users statewide, including 3,200 in Northern Virginia, will receive both their regular and "peak load pricing" bills for a year. After a year, the company hopes to bill solely on the peak-load pricing method.
Though VEPCO officials say they are unsure howpeak-load bills will affect usage, the plan is intended to induce customers to use electricity before or after the daytime peak hours, and to spread out usage during the day.
Under peak-load pricing electricity will be cheapest to customers who do not use their appliances all at one time during the day, and who use them between 10 p.m. and 10 a.m. or on weekends.
VEPCO officials acknowledge that consumers could end up paying much more peak-load pricing if they do not change their habits.
William Berry, senior vice President for commercial operations, said that if a residential customer who used more than 700 kilowatt-hours per month in a summer month did not change his electricity use patterns, his bills under peak-load pricing could be anywhere from 13 per cent lower to 100 per cent higher than normal.
The 9,000 homes in the mandatory test group consistd of users of more than 3,500 kilowatt-hours per month. VEPCO officials said that this group of heavy users, who have many electrical appliances, would be best able to achieve savings by spreading out their electricity demand.
"Most of these (high use) customers will be able to significantly reduce their electric bills without drastic changes in life-style," Berry said. "These customers have a larger inventory of appliances and equipment and hence more options for changing usage patterns (and thus) contribute significantly to our summer peak load."
Another 1,000 customers will be in a voluntary group of small and average users of electricity, who will contract with VEPCO to be billed on the peak-load pricing method. VEPCO officials will solicit participants for this plan later this year. Finally, 4,000 more customers will be in a special plan where only the water heater is shifted to offpeak operation.
Special meters are required for the experiment, so that electricity use can be measured for each half-hour interval during the day. The meters will be ordered next month and installed by mid-1978, when the experiment is slated to begin.
Under the pricing scheme approved by the State Corporation Commission, VEPCO customers in the experiment will receive a peak-load pricing bill with four components:
A flat $11.30 monthly customer charge, which includes the $200 cost of the special meter.
A "kilowatt demand charge" of $4.65 per kilowatt from June to September and $1.65 per kilowatt the rest of the year. Customers will pay according to their greatest kilowatt demand during any half-hour period.
An "energy charge" of 2.15 cents per kilowatt hour between 10 a.m. and 10 p.m. on weekdays, and 1.5 cents on weeknights and weekends. This charge will encourage customers to shift their electricity demand to weekends and weeknights after 10 p.m.
A fuel adjustment charge computed the way it is on current bills.
Customers in the mandatory group of heavy electricity users will pay the normal electricity rates during the one-year period, but they will also receive informatory bills computed on the peak-load method. VEPCO officials hope they will change their habits in anticipation of the peak-load method being accepted after the experiment is completed.
In the voluntary group, by contrast, the participants will sign a special one-year contract with VEPCO and be billed under the peak-load method immediately.
The idea behind peak-load pricing is that it will benefit both the utility and its customers, since VEPCO's marginal costs of providing electricity - and its rates - go down as peak load demand goes down. By reducing peak load demand, the rate structure helps reduce the company's long-term need for additional generating facilities.
The VEPCO plan, which has been in the work for three years, is reportedly the largest such experiment in peak-load pricing in the nation. Company officials say they expect it to be formally adopted after the one-year experimental period is over mid-1979.