Study found with time-of-use rates households could cut bills and ease grid strain
BOSTON, MA — New research released today by Advanced Energy United finds that smarter electric rate design could significantly reduce energy bills for Massachusetts households that switch from gas furnace heating to clean electric heat pumps.
The report, prepared by Advanced Energy United and Demand Side Analytics, “Massachusetts Study on Time-Varying Rate Design to Enable Electrification,” found switching to “time-of-use” electric rates, where electricity costs less during off-peak hours when demand on the grid is low, can eliminate cost-barriers to electrification, and even save households money.
“By pairing time-of-use rates with a heat pump and efficiency upgrades, households can save over $1,000 each year,” said Advanced Energy United Director Shawn Kelly. “A time-of-use rate also reduces strain on the grid and the need for costly infrastructure upgrades, benefiting all ratepayers.”
“Smarter pricing paired with high-efficiency equipment is key to making home electrification work better,” said Advanced Energy United Director Sarah Steinberg, “especially in an era of escalating gas bills. Our report should give regulators confidence that clean heat really can be affordable.”
“Thoughtful near-term rate design that goes beyond simple volumetric pricing is critical to remove the economic barriers to electrification in Massachusetts,” said Demand Side Analytics Partner Jesse Smith. “Once New England’s electric system becomes winter-peaking, rates must help limit the peak load contribution of new winter electric loads and contain capacity expansion costs.”
The report comes just days before the New England Conference of Public Utilities Commissioners symposium, where state regulators, utilities, and stakeholders will gather to consider next steps for rate design and other emerging trends in energy markets.