Regulators Push Time-Based Rates as Default for Missouri Households

Missouri regulators have ordered the most aggressive electric-rate overhaul in the country, according to a news report published by E&E News on Wednesday. It’s considered a bold step aimed at providing households with more control over their bills and encouraging them to use less energy during peak hours.

Unlike “flat” electric rates, the industry standard for decades where power costs the same no matter what time of day it’s used, Missouri regulators are making time-based rates the default option for households. They carry steep price differentials between peak and off-peak periods, a new standard that will be watched across the utility industry.

The time-of-use rate structure, widely offered by utilities on a voluntary basis, sets a premium price for power used during a four-hour window in the late afternoon and early evening when demand is highest and there are bargain-basement prices overnight and during mornings when electricity usage is low. States and grid officials are interested in giving consumers more control over their bills and reducing demand at peak times to help give operators more wiggle room to prevent disruptions.

Missouri is one of a growing number of states making time-varying rates the default choice for consumers, requiring them to opt out if it doesn’t suit their lifestyle. California and Michigan have done the same. The Missouri plan stands apart because of the aggressive price differentials between peak and off-peak periods that are aimed at influencing consumer behavior.

To read the full article published by E&E News, click here.