Chapter Six of Seven

Being There

An Autobiographical Account of My Life and Times at Glasgow EPB

William J. Ray

CHAPTER SIX

It was with the scars from the battles we already fought, and the losses we incurred therein, that were with us as we trudged into the biggest conflict of my career. We were driven by the injustices we found, and the understanding that someone had to confront the problems we discovered. The creation of a new rate structure for electric power was not a fight we went looking for. Rather, it came looking for us. The rate issue arrived in the data gathered by one of our big research projects that tested the viability of advanced energy meters using our broadband network and allowed us to gather several years-worth of data about how Glasgow customers use the energy we sell. Instead of gathering only 5 digits of data from electric meters, once very thirty days, suddenly we were gathering that data every 15 minutes. As exceedingly bright members of the EPB team began to analyze that data by comparing our sales data for nearly 8,000 customers to the wholesale energy data provided by TVA, a story began to materialize – one that could not be ignored – one that held the key to upending the century-old electric power business.

In 2014, the brave Board that existed then (Norma Redford, Jeff Harned, Cheryl Berry Ambach, Jim Lee, and Karalee Oldenkamp) began to delve into the facts that the team was unveiling in the data we mined.  The findings included many inconvenient truths. We discovered that the existing rate architecture resulted in only those customers using the “average” amount of energy, and the average amount of coincident peak demand each month, were paying an amount directly connected to the wholesale cost of delivering that energy. Our discovery showed that very few real customers actually used the mathematical average amounts for a given rate class. Further, the facts revealed that customers using less than the average volume of energy, paid far less for their electricity than the actual cost of purchasing and delivering that energy. Conversely, we found that customers using more than the average volume of kWh (while using an average amount of coincident peak demand), were being forced to pay much more than the actual cost of the power delivered, and those were only the results within the residential rate class. Over the months, the facts also revealed that customers in the large commercial and industrial rate classes, when actual hourly consumption was compared to actual hourly wholesale cost, were paying much, much more than the cost of serving them. 

There were other previously hidden truths discovered. We found that large companies were being forced to subsidize other classes of customers. Perhaps the biggest discovery, and the one completely ignored by my vocal critics, is that there really is no significant relationship between low energy usage and household income. None. The image of cost-based rates bringing hundreds of older folks into a life of misery is conjured from nothing but misguided imagination. Much more common, and where a direct relationship was found to exist, is that a significant number of customers with low household income find themselves living in substandard housing, and those households were found to use more than the average consumption upon which the old rates were designed. The poor, in substandard housing, were paying more than their fair share of EPB fixed costs under the pre-2016 rate design.

These findings were considered by the EPB Board throughout 2013, 2014 and early 2015. I can assure the reader that no one on that Board wanted to be placed in the position of having to deal with this issue that permeates all 3,500 electric utilities in the U.S. They faced the old energy utility habit of ignoring the fact that the rate architecture, the one in place since the early 1900s, did not accurately produce billing that was connected to actual cost of service. They could have adopted that common industry habit and hoped that their terms on the Board would expire before those facts leaked out to the customers who were being treated unfairly, but they did not do that. Instead, driven by their wisdom, integrity, and ethics, they pursued a course of “good trouble” and followed the words of Martin Luther King from his March 1965 speech in Selma, Alabama, “A man dies when he refuses to stand up for that which is right. A man dies when he refuses to stand up for justice. A man dies when he refuses to take a stand for that which is true.” That EPB Board rose up, and they directed my team to develop a rate that brought accuracy and justice to the way people in Glasgow purchase their supply of energy, because anything else would not be right. My team followed their direction and developed what energy and rate experts who have examined it call, the most simple and elegant solution to electric power retail rate design which exists today. Although that move was largely misunderstood, and although that action of standing up for what is right ultimately caused their departure, and mine, I am proud of what the Board and my team accomplished then, and what they are still accomplishing now. If given the chance to go back and do it all again, I would not change a thing, because it was that new relationship between electric power production and the retail sale of the product that revealed the most powerful truth of my career.

For over a century, the electric power systems have operated on the belief that the daily demand curve for electric power was unalterable. This belief drove the industry to over-build generation capacity and over-mine the fossil fuels that have long been used to burn to produce the steam necessary to create the flow of electrons we hold so dear. But our work in Glasgow began to show that the daily peak demand could be flattened. It showed that off-peak power could be stored in batteries, and that our broadband network could be used to organize electric power production, storage, and consumption, into a shape which could be satisfied using mainly renewable energy sources. Before some very angry and backward voices organized to put the kibosh on research projects in Glasgow, using misunderstanding and a shocking disdain for expertise, we gathered enough data to glimpse a world with dew still on it. We discovered and demonstrated how the ratio of energy usage to peak demand could be drastically improved, using technology and cost-based rates. We saw a way toward a sustainable energy system that stole the ideas of energy conservation and storage from nature. We revealed those things before a few misguided people, promoting their local brew of uninformed populism, killed the appetite for research and discovery in Glasgow. Allowing them to do that is my greatest failure.