Diagnosis: utilities are overcharging heat pump customers for the grid

Problem: when gas homes get heat pumps, energy bills often go up

Impact: heat pumps become cheapest way to heat most NY homes

Solution: charge heat pump customers fairly, using heat pump rates

Why are utilities overcharging heat pump customers for electric delivery?

Because they rely on volumetric rates to collect delivery costs.

grid upgrades

more cooling

from peak usage

How to create a HP rate...

1. Cost allocation: measure a utility's true electric delivery cost of service of heat pump customers

2. Rate design: design any rate that collects this amount

With a tech-specific rate, cost allocation is what actually removes the cross-subsidy!

NYSEG HP cost-of-service: $60M → $32M

Simplest NYSEG HP rate: 10.5 ¢/kWh

46% reduction!

→ 5.6 ¢/kWh

If we remove overpayments from heat pump customers, what's the impact on other customers?

Non-heat pump customer electric bills would go up by an average of $2.00 a month, statewide.

What if we also remove overpayments from electric resistance customers?

Fossil heating customers electric bills would go up by an average of $10.00 a month, statewide.

This is a one-time adjustment.

If new heat pump customers enrolled in the heat pump rate, they wouldn't overpay to begin with.

What's the impact on low-to-moderate income customers of installing heat pumps under heat pump rates?

Could we remove the cross-subsidy by fixing the default rate instead?

Which kinds of households already save when switching from natural gas to heat pumps?

What about the winter peak?
How long will heat pump rates work for?

The seasonal rate removes the cross-subsidy, by collecting electric delivery revenue from heat pump customer equal to their costs

Could make the rate more cost-reflective, so that prices change to reflect the underlying costs?

Fairness

Economic Efficiency

That way, customers have an incentive to load shift...