Georgia Power advertised a rate structure, called “Smart Usage,” as a way for customers to “take control” and “reduce your monthly energy bill,” but real-world data shows that the rate is creating higher bills to customers, not savings. 61% of all customers on the new rate are paying more for the same service than they would have under the traditional residential rate for electricity. 90% of customers who use less energy than the median Georgia Power customer are paying more. Those figures come from an analysis of data that solar advocates submitted to Georgia Power’s regulators in the company’s current rate case.
Georgia Power sought to enroll new customers on the plan beginning in 2021, having received approval from regulators to default all new residential premises onto the plan in 2019. Georgia Power also marketed the plan to existing customers not already defaulted on to the rate.
Georgia Power did not respond to EPI’s questions about the Smart Usage rate.
EPI previously reported that Georgia Power attempted to justify its new residential demand charge by arguing that the rate would better align customer behavior with the needs of the grid. However, the demand charges are non-coincident, which means that customers pay for their own period of maximum power demand during the month regardless of the stress, or lack thereof, on the grid at that time. When regulators gave Georgia Power approval to default new residential premises to the Smart Usage rate, it required the utility to “report back to the Commission” about the uptake and use of the rate at its next rate case, however, the utility did not do so when the utility filed its rate case in June, only referring to the rate in passing when discussing its plan to eliminate the traditional residential rate structure.
Georgia Power is now asking the Georgia Public Service Commission (PSC) to eliminate customers’ ability to opt out of the Smart Usage rate and return to the traditional residential rate, despite the utility submitting data to regulators that the rate is not aligned with system costs and that it charges most customers more than they would be charged under the traditional rate. Currently, customers can leave the Smart Usage rate, even if they were defaulted into it, and data and analysis filed by clean energy advocates and a solar industry trade group show that customers are actively leaving the rate by the thousands. Georgia Power’s proposal to eliminate the traditional residential rate structure could lock these customers into the Smart Usage rate against their will.
How does the Smart Usage rate work?
The Smart Usage rate consists of three components: A fixed customer charge based on the cost to connect a customer’s house to the grid, an energy charge based on the total amount of energy a customer uses in a given billing period, and a demand charged based on one hour in a billing period in which the customer used the most power at once, known as a peak demand. A peak demand is often set when multiple appliances in the home are running simultaneously, such as heating and cooling equipment and a dryer or an electric vehicle charging in the garage.
Georgia Power isn’t entirely clear in its communications with customers about the exact duration of the time that determines the demand charge. The utility’s online Smart Usage tool states that the demand charge is set for the highest 30 minute use, while the customers’ actual bills, and the rate on file with regulators, says it’s the highest 60 minutes.
The utility’s Smart Usage tool shows the maximum demand period as 30 minutes, rather than an hour.
Testimony by a trade association for the solar industry and solar advocates estimated that an electric vehicle owner could be charged $80 to $150 per month in demand charges, in addition to the energy charges, even if the owner charged their vehicle at night when the grid had plenty of excess capacity.
Actionable billing information not shown to customers or collected by Georgia Power
For customers to be able to use demand charges to manage their bills effectively and to reduce the peak load to any given customer, they have to know when and how they’re using electricity so that they can effectively change their behavior to flatten that 30- or 60-minute period of highest usage per month. If the utility is trying to lower the monthly peak load that it is delivering to each household as it purports to be doing, it should want customers to have their own detailed usage data too.
Georgia Power’s bills to customers on the Smart Usage rate lack the basic information a customer would require to alter their usage and save money, based on a review of Smart Usage bills provided to the Energy and Policy Institute (EPI). Smart Usage customer bills reviewed by EPI provided only the size of the one-hour peak demand but did not provide the date of the peak, the time of the peak, the cost of the peak demand, the cost of the peak energy, or the cost of off-peak energy. Smart Usage bills only refer to the demand charge as the “Pk kW 1 Hour” charge, likely adding to customer uncertainty about what they are being charged for.
Georgia Power claims that its billing software does not retain the date or time of the customer’s peak demand.
Advocates ask for calculator while Georgia Power’s website tells people not to sign up for Smart Usage
Clean energy advocates and the solar industry have urged regulators to force Georgia Power to make a rate plan comparison tool available on its website to help consumers understand which rate might be best for them. But that too can be fraught with pitfalls if not carefully monitored and regulated, especially when the utility may have an incentive to recommend rates to customers that earn the utility more money, rather than maximizing customers’ savings When Arizona Public Service instituted residential demand charges, protests erupted and an investigation later revealed that the utility’s online tool – which was supposed to help customers find the best rate plan – provided bad advice, putting some 12,000 customers on a rate plan that charged them more than their previous rate plan.
Georgia Power does not have a Smart Usage calculator on its website but it does have a simple questionnaire. EPI tested various inputs and no scenarios recommended Smart Usage unless the home used gas heat, which outlines the challenge the Smart Usage rate poses to encouraging electrification of heating and transportation, a tool most experts agree is vital to tackling climate change.
Residential demand charges have generated controversy for other utilities
Demand charges aren’t new, but historically utilities had mostly offered them to industrial customers that would have sophisticated tools and resources to manage their energy usage. They also used enough electricity that keeping their monthly peaks down might provide some benefit to the broader grid.
In recent years, utilities have started to offer – and in a few ill-fated cases, mandate – demand charges to residential customers. Utilities seeking to add demand charges say that in place of the new costs based on that highest period of usage per month, they are reducing the rate that customers have to pay for the overall amount of electricity they consume in the full month.
That part of the bill – the kWh charges in the Georgia Power example above – is the part that customers can do the most to control via energy efficiency or by adding rooftop solar power. If a customer’s highest-demand period occurs in the evening, for instance, as is frequently the case, then rooftop solar can’t defray that portion of their bill.
When Salt River Project, another Arizona utility, forced mandatory demand charges onto its rooftop solar customers, environmentalists and solar advocates charged that it was a naked effort by the utility to make rooftop solar less profitable for SRP customers.
Whether that was the intention or not, it happened. One solar installer said it saw new installations plummet by 96 percent in SRP territory after the utility launched the charges.
Other utilities outside of Arizona who have attempted to instill mandatory demand charges have also encountered stiff public resistance. When a municipal utility in Kentucky tried to mandate demand charges on residential customers in 2016, the town grew outraged at the sudden unpredictability of their bills.
Kentucky’s Attorney General slammed the new rate, saying that “We are aware of customers who forgo a hot lunch, make their children sit in the dark, leave home to seek out relief, or who turn the air conditioning off on 90-degree days to avoid these excessive charges.”
“The Lexicon Project,” a public relations effort spearheaded by the utilities’ trade association, the Edison Electric Institute (EEI), outlined a plan to rebrand “demand charges” as “efficiency rates,” EPI revealed in 2017. Utilities did not appear to adopt the “efficiency rates” nomenclature, but other elements of the PR files are evident in Georgia Power’s marketing of its Smart Usage rates.
“For example, you’ll be able to save money by running appliances one after another, instead of at the same time,” EEI’s public relations firm suggested as recommended messaging.
Georgia Power’s Smart Usage questionnaire advised customers that “Avoiding the use of large electric appliances at the same time can lower your monthly demand and cost you less. Simple changes can make all the difference.”
Customers opting out of Smart Usage
A Georgia Power spokesman told the Atlanta Journal Constitution, “Many customers who have been on the Smart Usage rate option for a number of years have reported high levels of satisfaction with this rate plan. We are always happy to work with any customer to evaluate and determine the best rate for them.”
But data filed with the PSC shows that many customers are instead fleeing the Smart Usage rate quickly after joining it, suggesting many customers are not happy with their experience.
One of those customers was Zoe Eisenberg.
Eisenberg first joined the Smart Usage rate in June 2022 when she signed up for electricity service after moving into a new apartment. Eisenberg told Georgia Power customer service that she wanted to be on the plan that would allow her to save the most money considering she worked during the day and was rarely home. She says Georgia Power recommended Smart Usage, and she agreed.
But it only took four months for Eisenberg to realize something was wrong. She noticed that despite very low consumption of energy in her new apartment, her bills were substantially higher than years earlier when she had the traditional residential rate plan. One month she used 400 kilowatt hours (kWh) and was billed about $130. The next month, she used less than 240 kWh and was charged almost $200.
Eisenberg called Georgia Power customer service. “They were extremely unhelpful,” she told EPI about her early discussions with the utility. She requested a copy of the contract she signed to put her on the Smart Usage rate. “Georgia Power told me that I would need to subpoena them to get a copy of my contract even though I was a party to the contract. I knew something was not right. They think most people would give up right then.”
Eisenberg said she then contacted Sterling Spainhour, senior vice president, general counsel and corporate secretary for Georgia Power. She filed a Better Business Bureau complaint. She reached Spainhour’s secretary who Eisenberg said was “very helpful”. A day later, she says a customer service representative with Georgia Power called her and played the phone call where Eisenberg agreed to be on the Smart Usage rate. Eisenberg said she agreed to be on the rate but contended, “it was clear from the call recording that I wanted to be on the rate only because Georgia Power told me I would save money. It was a false pretense,” she added.
The Georgia Power representative offered Eisenberg a $25 credit and said she would be removed immediately from the Smart Usage plan and put back on the traditional residential rate. “I told her that a $25 credit was not good enough considering I had overpaid by about $100 per month. I may not be living paycheck to paycheck,” Eisenberg said, “but this is wrong to do to anyone. People that live lavishly are the only ones winning from this rate.”
EPI asked Georgia Power how it trained customer service representatives to respond if a customer asks for a copy of their contract but did not receive a response from the utility.
An analysis filed by clean energy advocates and the solar industry, using a year’s worth of customer data collected by the PSC staff, backed up Eisenberg’s suspicion, showing that customers on the Smart Usage rate that consume three times as much electricity as the median Georgia Power customer are almost all saving money compared to the traditional residential rate. Residential consumption of energy at such high levels most often denotes large homes.
Eisenberg says an executive customer relations analyst with Georgia Power contacted her next, and asked how she wanted to resolve her case.
“I wanted refunds for everyone that had overpaid Georgia Power on this Smart Usage rate,” Eisenberg told EPI. “She told me that Georgia Power could not do that for everyone.”
Georgia Power did end up refunding Eisenberg for slightly more than the $400 that she said she overpaid, Eisenberg said.
“Georgia Power could refund everyone’s money, but they just don’t want to,” Eisenberg said.
She asked the PSC to act on behalf of other customers. “They [the PSC] need to take a seat, humble themselves, and put themselves in the shoes of a regular Georgian who doesn’t have as much money as they do. The PSC needs to do their job and stop this greed. People need energy and they [the PSC] shouldn’t let the private corporations take advantage of people over a basic necessity like electricity.”