Test-Driving LIPA’s New Rate Structure
The Long Island Power Authority is dramatically changing the way customers pay for electricity in 2024, and ratepayers can get a glimpse now of how changes to rates can affect them.
The electric company’s new Time-of-Day rate plan, adopted by LIPA’s Board of Trustees on March 29, 2023, will officially begin to be phased in at the start of 2024, and through 2025, according to LIPA. Customers will then be automatically enrolled in the Time of Day rate unless they manually pick either a flat rate or a super off-peak rate, which discounts electricity used between 10 p.m. and 6 a.m. even further.
Peak hours on Long Island, when people usually use the most electricity, are between 3 and 7 p.m. on weekdays. LIPA’s goal is to encourage rate payers to adjust their electricity use toward off-peak hours. The utility estimates that more than 80 percent of its customers will pay either the same or lower rates under the new plan before they change the way they use electricity, and will save even more as they adjust their electric use to off-peak hours.
“Time-of-Day Rates are an important rate modernization reform that will help lower customer bills and advance clean energy,” said Thomas Falcone, Chief Executive Officer of LIPA, in a press release announcing the new program. “By moving to Time-of-Day Rates, we can reduce carbon emissions and take the burden off the electric grid during the highest times of demand.”
Because peak power depends on aging, fossil-fuel peaker plants to provide the electricity delivered during peak use times, LIPA estimates electricity generated at non-peak times emits up to 50 percent less carbon than during peak hours.
Peaker plants are less efficient than plants that run all the time, and need to be warmed up well before peak power is needed. LIPA officials have said they hope the new rate structure will keep the utility from having to expand the electric grid’s capacity.
Without changing their routines, LIPA estimates customers will save on average $3.50 per month on the regular Time of Day plan, and $5.50 per month if they shift to the super off-peak plan before they make changes to their electric use.
The utility recommends customers shift their routines toward running equipment that uses large amounts of electricity, like washing machines, dishwashers and electric car chargers, during off-peak hours. LIPA estimates customers could save $4 per month doing their laundry and 43 per month charging electric vehicles during off-peak hours.
PSEG-Long Island, LIPA’s service provider, has a tool that can give customers an idea of how these types of rate plans work. On existing customer online “Dashboards” that they see when they log into their accounts, there’s a new button under the “Usage” box that says “Compare Rate Plans.”
By clicking on that button, you can compare how much money you can save with the utility’s existing “Time of Use” plans without changing your electric use, by switching from the “basic flat” rate most customers have now to an early peak, late peak, short peak or overnight rate plan.
The new “Time of Day” plans are similar to the short peak and overnight plans, though they are slightly different. The “Time of Day” plan would break the day into just two rate times — with peak hours between 3 and 7 p.m. and an off-peak rate for the remaining hours. The “super-off-peak” plan would break the day into a super-low overnight rate from 10 p.m. to 6 a.m. and a slightly higher day rate from 6 a.m. to 3 p.m. and from 7 to 10 p.m., and a peak rate from 3 to 7 p.m. The current “overnight” plan charges lower overnight rates between 11 p.m. and 6 a.m.
PSEG-Long Island will be sending notices to customers of the new rate plan program, which will be called the ”Time of Day” plan, beginning 90 days before the change goes into effect on their bill. The notice will include information on the different plans, how to optimize your rates and information on the bill protection guarantee.
For more information on the new rate structure, visit www.lipower.org/time-of-day.