States cut winter electricity rates to make heat pumps cheaper
Massachusetts and Minnesota are requiring most major utilities to offer discounted winter electricity rates for customers who heat with heat pumps, and Colorado is moving toward similar rules, the New York Times reports. Officials say the discounts respond to the fact that much of the U.S.
grid is built for summer peaks: when air-conditioning drives high demand in summer, utilities size their systems for that stress, leaving spare capacity in winter. Heat-pump customers buy more electricity in winter without forcing the same grid upgrades, so some regulators concluded they were effectively overpaying and can be charged lower winter delivery rates.
The new winter discounts range roughly from 4 to 7 cents per kilowatt-hour and apply to all electricity used in the winter. The Times notes a typical household uses just shy of 1,000 kilowatt-hours per month, so a 7-cent discount could amount to hundreds of dollars over the winter.
National Grid’s new winter rate in Massachusetts would raise the share of households that save by switching to a heat pump from about 40 percent to nearly two-thirds, according to the paper’s analysis. Examples in the Times: under normal rates a typical house in Beverly, Mass., that replaces a gas furnace with a heat pump could see winter bills rise by about $50 per month, while under the new rate that same house’s total winter bill would be significantly lower than with a furnace.
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