Public Service Company of Oklahoma just announced they're implementing mandatory time-of-use rates for all residential customers starting January 2011. The new rate structure has peak hours from 2 PM to 7 PM on weekdays with summer peak rates of $0.1847/kWh versus off-peak at $0.0654/kWh. That's a pretty significant differential - almost 3:1 ratio. They're saying it's needed to encourage conservation during system peak, but I'm skeptical about the cost justification. Anyone else seeing similar TOU implementations in their territories?
PSO's new time-of-use rates starting 2011
Westar Energy here in Kansas has been talking about TOU for years but hasn't pulled the trigger yet. That peak/off-peak differential seems extreme for Oklahoma. Our current analysis suggests a 2:1 ratio would be more appropriate based on actual system costs and avoided capacity investments. PSO might be using TOU as a backdoor rate increase rather than true cost-based pricing.
LG&E here in Louisville has been piloting voluntary TOU for two years with much smaller differentials - about 1.6:1 peak to off-peak. The key is whether the rate design actually reflects the utility's cost structure or if they're just trying to shift usage patterns. Ed, did PSO provide cost-of-service studies supporting those specific rate levels? That seems like the kind of detail that would come out in a rate case proceeding.