Most of us don't think about how much electricity costs at different times of the day. But the state's two largest utilities are planning to change that.
When it's really, really hot and humid out, what do lots of people do when they get home? They turn on, or turn up, the air conditioning.
There are big spikes in electricity demand on the hottest summer days, between 2:00 in the afternoon to 7:00 in the evening.
And that electricity is really expensive to produce. DTE Energy and Consumers Energy have to fire up gas-burning peaker units that sit idle most of the year.
Now they're figuring out ways to get customers to use less energy when it most counts.
Michael LeHaye is a DTE Energy customer who lives in Ann Arbor.
He's enrolled in a program DTE has had for a long time. It lets the utility cycle his air conditioner compressor off for roughly 15 minutes an hour on the very hottest days.
He gets a discount on his bill - and it's pretty painless.
“You know, I have never noticed them interrupting my meter or when they have, it's been such a short period, it hasn't really allowed the temperature in my house to change.”
LeHaye likes the savings, and also likes knowing he's doing something good for the environment.
"And then hopefully stop them from having a build another power plant or bring other power plants on line,” he says.
Incentives to change
Other kinds of demand response plans require customers to change their behavior.
Derek Kirchner is principal supervisor of demand side management at DTE. He's also enrolled in his employer's Critical Peak pricing plan.
The plan offers you a carrot in the form of a very low rate on weekends and after 11:00 p.m. And a stick on those very hottest of days.
“The on-peak price of energy goes up to .95 cents per kilowat hour,” says Kirchner.
That's more than ten times the usual rate. So, when DTE sends Kirchner a "Critical Peak" event notice, he and his family go outside and enjoy a summer day.
Kirchner notes that those very high rates don't happen often. At most, it's a total of 80 hours a year.
Consumers Energy has a similar plan, but it also has a kinder, gentler version that just offers you the carrot. You may not save as much money.
The utility's Clay Engel explains: “You'll receive a notice from Consumers that'll say please reduce your energy usage between 2-6 p.m. tomorrow, and depending on how much you reduce as a customer, you earn back bill credits.”
Consumers has only about 4,500 customers enrolled in various demand response programs. But the utility plans an aggressive push to enroll up to 400,000 in the next five years.
DTE already has more than 340,000 in its plans, but it is expanding enrollment too. The utility offers a time-of-day pricing plan that can save money for customers who spend more than $250 a month on electricity, as well as programs designed for manufacturers and other businesses.
While the utilities sell less electricity, they get credit for their demand response plans when they buy electricity at auction.
And changes in state law will soon reward them when they boost participation.
Michigan is ready to track energy consumption
None of this would be possible if Michigan didn't have one of the biggest deployments of smart meters in the nation.
Those meters allow the utilities to know exactly when a customer is using energy.
J.R. Tolbert is with Advanced Energy Economy, a clean energy think tank.
“Michigan is poised to lead the way in this area," says Tolbert. "Poised to lead the way in managing its energy consumption and energy demand probably better than any other Midwest state is.”
Tolbert's group estimates demand response could save everyone a lot of money in Michigan - as much as $1.2 billion over the next decade.
And as the threat of climate change becomes more urgent, Tolbert says maximizing demand response is an important tool in the arsenal to fight it.