Innovative Technologies Change the Costs of Electric Power

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By Justin LaBerge

Advances in technology are bringing major changes to the energy industry. We are generating a growing portion of our electricity with renewable resources, and advances in automation and communications technology are making our power grid smarter and more reliable than ever.

These advances are exciting news for American energy consumers, but they’re also changing the cost structure of the industry. Since electric cooperatives use costs to determine their rates, changing costs require corresponding changes to rates.

Not-for-profit electric cooperatives work hard to ensure their rates are fair to all members. To accomplish this mission, cooperatives design their rates so that the bill each member receives matches the cost of serving that member as closely as possible.

But just because your local electric cooperative’s rates are designed to be fair doesn’t mean they’re always easy to understand. In fact, rate structures that do the best job of fairly assigning costs are often the hardest to understand.

Here is a quick look at three of the approaches electric cooperatives are trying.

Time-of-use rates
With time-of-use rates, when you use electricity is just as important as how much you use. Rather than charging the same price for electricity at all times, time-of-use rates charge different prices based on the time of day when the energy is used. The goal of this system is to encourage consumers to reduce their energy use at the times when demand for energy is highest.

For most electric cooperatives, demand for electricity spikes in the afternoon and early evening hours as heating units and air conditioners battle outdoor temperatures and families return home from school and work and began evening routines.

When demand for energy spikes, electric cooperatives must purchase extra electricity to meet the demand. That extra power typically comes from more expensive power plants.

A time-of-use rate ensures there’s always power available when consumers need it but provides price incentives to shift certain activities — such as running the dryer or dishwasher — to times when demand for electricity is lower.

When co-op members embrace this model, they can lower their monthly bills and help the cooperative reduce its costs — which can save members even more money in the long run.

Demand charges
Perhaps the most confusing concept in energy billing is the demand charge.

Historically, most residential consumers have not paid demand charges. But as our power grid becomes smarter and our network of generation resources gets more complex, it’s likely that more electric cooperatives will incorporate demand changes into their residential rate structures.

Demand measures the highest amount of electricity you demand from the system at one moment in time. The higher the demand, the more it costs to build, operate and maintain the equipment delivering that energy to you.

To understand demand charges, imagine you’re at a party chatting with two guests and you ask them how they got to the party. Betsy tells you she drove 150 miles per hour to get to the party. David says he drove 150 miles to attend the party.

There’s a big difference between a car capable of traveling 150 miles and a car capable of traveling 150 miles per hour. Any car can take you 150 miles. But if you want to go 150 miles per hour, you’ll need an expensive car with extra horsepower.

The same thing is true with electricity. If you demand large quantities of electricity be delivered to you all at once, the electric cooperative has to build larger, more expensive equipment to accommodate that demand.

Even if you only demand that much energy every once in a while, the cooperative still has to ensure its system is capable of handling that request when it comes.

If Betsy and David use electricity the same way they use their cars, Betsy is going to be paying a lot more than David each month, even if their total energy use is the same.

As the energy sector continues to move through this unprecedented period of innovation and change, cooperatives across the U.S. are experimenting with new rate structures to figure out the best way to recover costs and pay for the electric grid in a manner that is fiscally responsible and fair to all members.

Fixed monthly charges
Most electric cooperatives charge a fixed monthly fee to be connected to the co-op’s lines. Common terms for that fee include customer charge, service availability charge or access charge.

No matter what it’s called, the goal is to recover the cost of the poles, wires, bucket trucks, computers, switches and employees that bring electricity to your home or business. Those costs are the same every month whether you use a lot of electricity or turn off everything in your house and go on a month-long vacation.

Most utilities, including electric cooperatives, have never charged the full monthly cost of service as a flat fee. Often, the fixed portion of a member’s bill is only a fraction of the actual cost to build and maintain the power lines to his or her home or business. The rest of that cost is made up with a separate delivery charge that varies based on how much energy you consume.

To understand the difference between these structures, imagine a new vehicle with a sticker price that would require a monthly car payment of $500. Now, imagine if instead of charging $500 per month, the car company structured your payment so it was $250 per month, plus an additional 25 cents for every mile driven. If you drove 1,000 miles per month, you’d end up paying the same amount. If you drove more than that, your payment would be higher, and if you drove less than 1,000 miles, your payment would be lower.

That’s how cooperatives traditionally charged for the delivery of electricity to your home. But as renewable technologies become more popular and consumers make better energy choices, the old model doesn’t fully cover the cost of maintaining the grid.

Electric cooperatives are generating a growing portion of our nation’s electricity with renewable resources, and advances in automation and communications technology are making the power grid smarter and more reliable than ever.

As not-for-profit, member-owned organizations, electric cooperatives want to help their members find the best energy solutions to meet their needs. If members want to install solar, cooperatives want to help. If members want to reduce their energy use through home improvements and efficient appliances, cooperatives are eager to give advice. But even if we all consume less energy, we still need the power grid, and it costs a lot of money to operate and maintain that grid.

By lowering the variable delivery charge and increasing the fixed charge, electric cooperatives can keep the grid running safely and reliably while allowing members to make the energy choices that work best for their lives.

This system does a better job of fairly charging each member for the actual cost of their service. The total amount of money raised by the cooperative remains unchanged, but some members end up paying a bit more, and some a bit less.

Looking toward the future
The coming years will bring many changes to the way we generate, deliver and use electricity, and advances in energy technology promise to greatly improve our quality of life. America’s electric cooperatives are working hard to ensure that whatever the future may bring, you’ll be connected to that future through a modern energy grid that is safe, reliable and fairly priced for all.

Justin LaBerge writes on consumer and cooperative affairs for the National Rural Electric Cooperative Association.

Batteries are Changing How You Receive Electricity

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By Paul Wesslund

Batteries will soon be part of a huge change in how you will receive electricity from your electric cooperative.

Utilities are currently running into electricity supply challenges, and batteries are stepping up with solutions. Here’s what electric utilities are currently facing:

• High-tech equipment can fail during a power interruption of even a few milliseconds.

• Interest in renewable energy is increasing, but solar power won’t work when the sun doesn’t shine and wind turbines won’t spin when the wind doesn’t blow.

• Consumers want electric service to be restored more effectively after outages. Even if a storm leaves a large number of homes and businesses without power for several days, consumers want plans in place to quickly restore power to essential services, like gas stations and pharmacies.

A solution for these dilemmas lies in the emerging technology of battery storage, which could provide additional power when the demand for electricity is high. Currently, these large batteries are extremely expensive.

But the demand for better smartphones, laptop computers and electric cars fueled a frantic race for batteries that are lighter, smaller, longer lasting and less expensive. These demands are being met through research into technical improvements and by the economics of mass production.

The lithium-ion battery breakthrough
What’s behind all these developments is the 40-year-old lithium-ion battery technology, named for the lightweight metal lithium it’s made of, and ions, which are pieces of atoms that move back and forth inside the battery to produce and store electricity.

“One of the breakthroughs has been the adoption of the lithium-ion battery for vehicles as well as consumer products,” says Andrew Cotter, a program manager for the National Rural Electric Cooperative Association’s business and technology strategies group. “A lot more lithium-ion batteries are being produced so there are a lot of companies able to package them much more cheaply. And that has spurred more companies to start investigating and investing in research.”

According to a 2016 report titled “Welcome to the Lithium Age” from Germany-based international financing giant Deutsche Bank, “Lithium-ion battery costs are falling rapidly as global battery producers expand manufacturing facilities, unlocking economies of scale.”

The next step for the battery industry, says Tom Lovas, a technical liaison and consultant with NRECA, is scaling up for applications in the electric utility industry.

Working through the hype curve
Right now only a handful of utilities are making significant use of batteries, but one industry research group predicts that number will grow eight times by 2020, for a market value of $2.5 billion. That kind of potential leads to some bold claims as battery companies compete for their share.

“There’s a lot of hype out there,” Lovas says, as marketers tout batteries as the linchpin of putting together the smart grid to modernize the flow of electricity.

“The technology is available, people are interested but no one knows the flaws yet,” Cotter says. “As utilities gain experience using batteries in routine operations, they will learn the imperfections and start figuring out what are the most conventional uses. Vendors, in turn, will start developing batteries for those specific applications.”

For example, one of the most likely of those applications will be to resolve the problem of intermittent power flows created by renewable energy. Since solar and wind power can be generated during times when people don’t need it, batteries could store the excess energy for future use. While beneficial in theory, in practice it is not clear whether there is a broad economic case for this. Each utility will have unique factors that will play into this decision.

Another use of batteries could be to smooth out power fluctuations from renewable energy. Solar and wind energy can come from a variety sources: independent vendors and even homeowners selling power back to the utility from their relatively small sets of solar panels or wind turbines in ways that are hard for the utility to predict. The result can affect the quality of power and even damage equipment as transmission and distribution lines are used in ways they weren’t designed for. But again, the economics of such an application are unique to each utility.

In time, utilities will become familiar with the best uses of the technology. Storage applications will become commonplace, and vendors will sell optimized products for them. Until then, NRECA’s business technology and strategies group is using cases that provide methodologies for a storage assessment.

Like all things in the energy industry, it is not all economics. Some state governments are getting into the act, passing laws requiring utilities to use batteries in their operations to encourage renewable energy and provide immediate power to essential businesses after storm outages.

This new utility world holds great promise and could start taking shape in as soon as one to three years, Cotter says. But first, he says, the utility battery industry needs to mature and show the effectiveness of the products.

Paul Wesslund writes on cooperative issues for the National Rural Electric Cooperative Association.

Electric Cooperative Gets New, Energy-Efficient Lighting

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La Plata Electric Association, with offices in Pagosa Springs and Durango, works with members — both residential and commercial — to change out their lighting to new, energy efficient lamps. The cost to purchase new lighting all at once can be cost prohibitive, so the electric cooperative has been prudent with its members’ money as it too worked to change out lighting in all of its buildings.

Ray Pierotti celebrates the appearance of “daylight” in LPEA’s warehouse.

“This has been a steady process beginning in 2010,” says Ray Pierotti, LPEA’s project specialist who focuses on lighting technology. “We’ve got a number of buildings and different lighting applications, such as parking lot and exterior lights, in addition to regular office lighting. I’ve been keeping up with the technology and, as it made sense from a technology and budgeting perspective, we initiated the projects.”

LPEA’s administrative offices were steadily replaced and are now 100 percent LED. With the office light retrofits, energy-saving controls were also installed, including dimmers and motion sensors. Work lighting for office employees is greatly improved even with the energy savings.

Pierotti is perhaps most excited about the projects that replaced the lighting in the warehouses. Previously dimly lit with old technology, the warehouses now appear to be illuminated by daylight. “The difference is just amazing,” Pierotti says.

The total reduction in kilowatts with all the office space, warehouses, truck barns, exterior and other lights changed out is nearing a combined 100 kilowatts, which, according to Pierotti, saves the cooperative more than 260,000 kilowatt-hours in both locations and more than $30,000 annually going forward.

Just like all of LPEA’s commercial members who opt to change out their lighting and reduce their energy consumption, LPEA benefitted from rebates provided by its wholesale power supplier, Tri-State Generation and Transmission. Tri-State benefits by encouraging members to reduce energy consumption so the company doesn’t need to build additional generation facilities.

Innovation Rampant in Co-op Territories

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Want to know what Colorado electric co-ops are doing to bring more renewable energy online for member-owners? Find out by viewing the Colorado Rural Electric Association’s video on energy and innovation.

Titled “Innovations. Power. Community: Colorado’s Electric Cooperatives,” the video, which premiered at CREA’s annual Energy Innovations Summit, includes information on co-op solar gardens, a biomass plant, small hydro facilities, a methane capture project, a landfill gas plant and other renewable options.

View is at http://bit.do/CoopInnovations to view the video.

Going Green in Northern Colorado is Cost Effective

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Member-owners of Fort Collins-based Poudre Valley Rural Electric Association who want to go green but can’t build a wind turbine in their backyard or don’t have enough sun exposure to buy solar panels can opt to participate in the electric cooperative’s Green Power Program.

The Green Power Program is a way for members to support the use of renewable energy resources with the help of PVREA. The Green Power Program is a subscription to buy renewable energy credits (RECs) on a monthly basis.

RECs are proofs of purchase from electricity generated by renewable energy resources. Through the Green Power Program, subscriptions buy RECs from wind or solar facilities. The program is a great way for members to help expand an existing renewable energy footprint.

Members can opt in to invest in green power in 100-kilowatt-hour blocks for 9 cents per block. For the average residential consumer that uses around 1,000 kWh a month, going 100 percent green costs less than $1 a month. PVREA has been providing this green power option to its members since 1999.

Community Solar Provides a Lasting Impact

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One partnership plus 70 community solar panels adds up to average annual savings of $485 on electric bills for seven local families in Empire Electric Association’s territory. These qualified subscribers are receiving savings from EEA and GRID Alternatives Colorado because of a new solar garden as it brings the benefits of solar to the families who need it most — those who spend more than 4 percent of their income on utility bills.

Last year, EEA collaborated with GRID Alternatives and the Colorado Energy Office to build a solar garden solely dedicated to income-qualified subscribers. The partnership between GRID and CEO was formed to achieve two objectives: to lessen the energy burden for the most financially-strapped households and to assist electric utilities in achieving their renewable energy goals. The groundbreaking in Cortez marked the first of many historical projects around Colorado.

The solar garden will provide an estimated 36,749 kilowatt-hours annually and is located at Empire’s main office in Cortez. It is easily viewable by members being served by or interested in photovoltaic systems.

“As a member-owned cooperative, Empire is concerned about the best interests of our members,” EEA General Manager Josh Dellinger said. “We see this low-income community solar project as an opportunity to positively impact the communities we serve. Empire is providing a hand up rather than a handout to the subscribers — everyone benefitting contributed through sweat equity and will continue to contribute financially through a monthly energy payment.”

Qualified families agree to lease their allotted panels from EEA for five years. They are billed monthly for grid connectivity, demand charges and energy consumption while receiving a bill credit for the production of their panels. Subscribers of the solar garden can live more affordably in their homes as part of this hand up opportunity.

GRID initiated a barn-raising model for assembling the 70 solar panels and engaged members of the community to come together to install the system. It was accomplished with the help of 30 volunteers, which included trainees, EEA staff and other community members.

Eleven of the volunteers helping to install the solar array attended Navajo Technical University in New Mexico and were taking courses on photovoltaic system design and installation. They travelled 150 miles to access the invaluable field experience offered by this project.

“This is a big hands-on project for me,” said Clifford Allen, an NTU student. “In school we usually work on one or two panels, but this time we worked on 70 panels. It is definitely a good experience to actually work from the start to finish.”

Another volunteer working on behalf of her mother, an applicant subscriber, said, “I have learned so much. I think any program like this would be good for anyone, not just my mom. It helps offset some of the expenses that can be taken on when you’re older or low income, and any little bit helps.”

The project’s size allows for easy operation and maintenance. The system hosts a web-based monitoring portal that provides real-time monitoring. This information helps EEA’s staff better understand photovoltaic system performance, operation and maintenance at a location that is convenient and on a scale that is manageable.

The lasting impacts of the EEA and GRID Alternatives Solar Garden project include energy production valued at $147,545, the equivalent of 15,859 trees being planted, and 100 percent assistance for deserving families. For those directly involved, the lasting impacts include a clearer knowledge of how a photovoltaic system is assembled and how it is bringing the benefits of solar to the families who need it most.

Empire Electric is one of six electric co-ops in Colorado with a solar garden dedicated to assisting income-qualified members.

Free Energy Resources for Colorado’s Rural Schools

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Outdated lighting, heating and cooling can cost rural schools, on average, 30 percent more on their energy bills, according to a recent study by the U.S. Environmental Protection Agency. To combat this problem, the Colorado Energy Office’s Energy Savings for Schools program is under way and able to support up to 12 more schools this year.

“The ESS program builds off many years of the CEO’s programmatic work in the K-12 area,” Michael Turner, CEO’s energy efficiency programs manager, explains. Schools across Colorado saved energy and money through a variety of offerings, and now they are part of this program to bring all available resources to bear on those schools with the greatest needs.” It’s a great opportunity for schools looking to improve their learning environment through more efficient operations.”

Through the program, schools receive:
• On-site energy and water audits from an energy engineer
• Evaluation of renewable energy opportunities
• Technical support and energy coaching
• Implementation support and help identifying existing funding and financing options for completing projects
• Recognition for a school’s efforts and opportunities to engage students
• Connections with peer schools and a platform for sharing ideas and knowledge

When a new school joins the program, the ESS team works with the school to collect and review building utility data (electricity, natural gas and water) before the site visit. “Reviewing utility data before a site visit gives us insight into how a building is performing and highlights potential areas of concern,” ESS energy efficiency engineer John Butler says. “Concerns expressed by school staff are used along with insights gained from the historic utility data to help focus the site visit and assessment on problem areas and to customize our approach for each unique facility.”

After the site visit, the energy engineer prepares a customized report with recommendations for the school. “We understand how limited resources — especially staff and financial resources — can be for these rural schools, so we prepare our reports with the aim to help each school prioritize strategies and next steps,” Butler says. “And the report is only the first step. We work closely with school staff to identify what projects make the most sense and help navigate the process of getting projects done. Many times, this means helping schools identify funding or soliciting and reviewing bids from contractors.”

To help fund recommended projects, ESS staff identify other applicable CEO programs, local utility rebates and other state and local programs for schools to leverage. “There are no direct monetary costs for a school to participate in the ESS program. The only costs are associated with staff time to interact with the ESS team and any costs to implement after all external funding sources have been exhausted,” Turner says. “The ESS program supports, and, in turn, is supported by a number of CEO and other related programs, including the Renewable Energy and Energy Efficiency for Schools loan program, Supplemental Environmental Projects, High Performing School Program, Energy Performance Contracting and the Renew Our Schools Program.”

To date, 23 schools received their energy reports and began implementing projects. The graphic to the left outlines the collective potential savings identified for these schools.

Legacy Academy, a tuition free, K-8 charter school in Elizabeth, is one of these schools. “As an administrator who is not an expert in energy savings projects, it was incredibly valuable to have the support from this team when receiving project bids,” explains Legacy Academy’s principal Kurt Naber. “The comprehensive energy audit, combined with guidance and input from the ESS team, helped me to feel confident and well-informed when presenting options to Legacy’s board of directors.”

Legacy Academy is poised to save $13,420 annually as a result of lighting upgrades, ceiling fans and water fixture upgrades installed this year.

“We have been pleased and impressed with the knowledge and assistance that the ESS program has brought to our school,” Naber says. “The representatives from ESS have been a great resource for us as we have evaluated bids and moved forward with several energy-saving projects. Their input gave us assurance that we are making well-informed decisions.”

In addition, with support from the ESS program, Legacy Academy applied for and was awarded Energy Star building certification in November as a result of its efforts to improve efficiency. Energy Star certified buildings outperform 75 percent of similar facilities across the country.

Don’t let your local school miss out on ESS resources to optimize energy performance and save money. CEO is actively recruiting schools from Colorado’s rural and low-income areas to participate in the program’s second year.

If you know a school that might benefit from the program, share this information with a school representative or contact the program manager, Susan Blythe, at SBlythe@BrendleGroup.com or 970-207-0058 ext. 310. More information is available at bit.ly/CEOenergysavings.

No-Cost Energy Audits Provided by Electric Cooperative

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Fort Morgan-based Morgan County Rural Electric Association offers home and business energy audits to its membership at no cost. MCREA members who have questions about their electric bill or want to find ways to be more energy efficient can schedule energy audits at their convenience.

Bill Annan conducts an energy audit for MCREA member

MCREA Member Services Representative Bill Annan conducts the energy audit by performing a walk-through of the home or business to collect information. An infrared camera may be used to assist in identifying building envelope weaknesses. Annan also reviews the member’s history of electric consumption and discusses the member’s concerns and goals of energy consumption. Once the audit is complete, members can assess priorities in their energy efficiency plan based on recommendations made by the auditor.

Co-op’s Landfill “Brownfield” Transforming to Solar “Greenfield”

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San Miguel Power Association, GRID Alternatives Colorado and the Colorado Energy Office recently announced the development of a community solar array that will lower the electric bills of qualified low-income residents in SMPA’s service territory. The project is not only part of a statewide initiative to reduce energy costs for utilities’ highest need customers, it is also an effort to turn a limited-use site into a clean energy generator.

With an unwavering vision to reclaim a local landfill, San Miguel County worked with its partners in project development to turn a “brownfield” into a “greenfield” and harness renewable energy that will help the local community for decades to come. Project supporters also include Energy Outreach Colorado, the Telluride Foundation and EcoAction Partners.

According to SMPA Chief Executive Officer Brad Zaporski, the rural electric cooperative has been looking to increase its local renewable energy generation portfolio in a way that makes the resource available to a larger portion of its members and keeps utility bills affordable. Turning an old landfill into a site of local clean renewable energy generation adds an additional layer of benefit to the community and the environment.

“SMPA has long been a leader in energy efficiency and renewable energy,” said SMPA Board President Rube Felicelli. “We are now making home efficiency upgrades and local renewable energy readily available to our lower income members through SMPA’s ‘IQ’ or ‘income-qualified’ Weatherization and Solar Programs. We are excited to join with our partners to reduce our carbon footprint while also reducing the financial burden of high electrical bills on local families in need.”

“When we see projects like this, we are filled with optimism,” said Sandy Stavnes, acting assistant regional administrator for the Environmental Protection Agency. “With this project, community partners came together to turn property that had limited reuse potential into something that will provide energy to community members in need as well as significant environmental benefits. A bonus is the solar panels on top of the landfill will assure the landfill cover is maintained.”

This is the sixth low-income community solar demonstration project developed in partnership with local utilities through a $1.2 million grant GRID Alternatives received from CEO in August 2015. Each project is piloting a slight variation on the low-income community solar model to address the unique needs of rural utility service areas and their customers. The projects selected are both affordable and scalable for utility partners and offer great potential to expand across the state.

“This project, with its multiple bottom lines — energy cost saving for families, renewable energy, brownfield reclamation, and local solar job training — is a win for the whole community and a model for the state and the nation,” said Chuck Watkins, executive director of GRID Alternatives Colorado.

Colorado Energy Office Director Jeff Ackermann said, “This demonstration project with GRID and SMPA reinforces our low cost approach to community solar, which blends the delivery of clean-generated electricity and assisting our neighbors in need.”

Electric Vehicle Charging Station Energized in Co-op Territory

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Lake City’s first public electric vehicle charging station was recently energized and available for locals’ use. Gunnison County Electric Association was awarded another grant from the Colorado Energy Office’s Charge Ahead Colorado program, which helped cover the costs of the equipment and installation of the level 2 multi-port electric vehicle charging station.

Charge Ahead Colorado promotes the use of electric vehicles and increasing electric vehicle charging station infrastructure around the state. The Gunnison-based electric cooperative partnered with the town of Lake City on the project. Lake City generously donated two parking spots on town-owned property and poured the concrete slab for the station. GCEA staff installed the station and performed some of the electrical work.

The central location allows electric vehicle owners the opportunity to charge their vehicle and walk short distances to the many shops and restaurants in Lake City and take in the beautiful scenery. The charging station is the same model as the stations located in Crested Butte and Gunnison, which offers ease of use and familiarity for electric vehicle owners traveling in the area. (The city of Gunnison owns the station located in downtown Gunnison and also received a grant to help pay for that station.)

GCEA is proud to offer another resource to allow electric vehicle owners opportunities to travel with confidence between communities, promote clean energy technologies and encourage the use of more electric vehicles in the area.