DTE’s new Time of Day rate will be here in March. Here’s what you need to know.

If you’re a DTE electric customer, you recently received a mailer from DTE informing you that the company is shifting to a new rate structure called Time Of Day starting in March. 

In a nutshell, the electricity you use between 3 p.m. and 7 p.m. will start costing more than other times of the day. Does that mean your electric bills will go up? 

Planet Detroit asked for your questions and dug into the details to help you prepare for this change.

What is DTE’s new Time of Day rate?

Starting in March, DTE will implement a new rate structure that charges more for electricity from 3 p.m. to 7 p.m. on weekdays relative to the other 20 hours of the day and all day on weekends. 

The 3 p.m. to 7 p.m. is termed the “peak” time because energy demand is highest. Peak rates will also vary by season, with higher rates in summer and lower rates in winter, but peak rates will always be higher than the base rate charged during off-peak hours and all day on weekends. 

Here’s how DTE breaks it down:

Screenshot from DTE’s website

Here are some things to note:

  • The base rate will decline from what it is today: Under the standard residential rate you’re most likely on right now, you pay 16.9 cents for your first 17 kilowatt hours and 18.6 cents afterward. Under the new Time of Day rate, the off-peak hour rate will be less, at 15.45 cents per kilowatt-hour.
  • On-peak rates will vary by season. During the cooler months (October – May), the on-peak rates will be lower than during the warmer months (June-September). The on-peak winter rate will be 16.75 cents per kilowatt-hour, and the on-peak summer rate will be 20.98 cents per kilowatt-hour.
  • This means a significant price hike for the hottest hours of the day during weekdays in summer. You’ll pay an extra 15% during winter and 36% more during summer to run your air conditioner, laundry, refrigerator, and other electric devices during those hours. 

Why is DTE adopting this Time of Day rate? 

The Michigan Public Service Commission, which regulates investor-owned utilities like DTE in Michigan, ordered DTE to adopt this new rate structure as part of its 2022 rate case decision

It’s part of a larger effort by the MPSC to implement time-based pricing as part of its MI Power Grid initiative to improve grid stability and resilience across the state. At the MPSC’s direction, Consumers Energy implemented a Time of Day Rate – called the “Smart Hours Rate” – in 2021 with a longer peak rate window; increased rates begin at 2 p.m. and end at 7 p.m. on weekdays for Consumers customers.

“The goal of time-based pricing is to align utility rates with the actual costs of producing it at different times, in a revenue-neutral way (the utilities will not make additional profit off these rates), with the aim of reducing overall peak demand,” MPSC spokesperson Matt Helms wrote in an email to Planet Detroit.

The new rate structure’s design disincentivizes electricity use during peak hours by giving a strong price signal to customers. The main goal is to reduce peak demand, decreasing the risk of exceeding capacity and destabilizing the power grid. 

“The time of use rates have been tested in pilot programs and have shown a reduction in peak demand during critical summer daytime peaks, and that saves customers money in the long term because utilities do not have to procure additional energy resources at their most expensive to prices to produce,” Helms added. “These rates encourage an overall shift to spread electricity use over a greater number of hours, flattening the peak.”

Decreasing peak demand also has environmental benefits. Less demand means less need to fire up dirty peaker plants to cope with increased demand. Peaker plants are among the dirtiest and least efficient power plants, according to the advocacy nonprofit Clean Energy Group. About a dozen peakers across metro Detroit burn gas or oil, and 40 percent of local peaker capacity is older than 50 years. They are highly polluting, emitting an annual average of over 375,000 pounds of NOx and 27,000 pounds of SO2.

What choices will I have under this new rate?

All customers under DTE’s standard base rate (known as D.1) will automatically be moved to the new Time of Day rate in March. However, DTE has several other optional rate structures, including dynamic peak pricing, SmartCurrents, CoolCurrents and others depending on your unique needs. DTE also offers a senior citizen credit to customers ages 65 and up, allowing them to save up to $51.00 per year, and a low-income program for income-eligible individuals.

How can I avoid paying more for electricity under this new rate?

The 3 p.m. to 7 p.m. timeframe is typically a busy – and energy-intensive – one for most households. Kids get home from school, adults get home from work, and everyone starts firing up the computer or the TV. Most of us cook dinner during that time frame, using electric ovens or stoves. We may throw in a load of laundry. We may be tempted to crank up the A/C on a hot day. And all that is in addition to baseline electrical use that can’t be turned off, like refrigerators and medical equipment.

So will you end up paying more? Not necessarily, according to vice president and chief customer officer for DTE Angie M. Pizzuti.  

“You’re getting a lower rate for 20 hours daily, Monday to Friday and on weekends. If you shift a couple of things, there are savings there,” Pizzuti told Planet Detroit. She claimed the Time of Day rate structure is projected to be revenue-neutral for DTE, meaning the company does not expect to make more money on the new rate. 

But adjusting electric usage may be difficult for some households, particularly those who work non-traditional hours. “They may have no choice but to do stuff from three to seven because maybe they work nights, get home at two in the morning, and sleep in. So they may have to do some stuff during the peak hours, in which case they’re actually paying more for electricity,” said John Freeman, executive director of the Great Lakes Renewable Energy Association.

The new rate may also create hardship for those dependent on power-intensive medical devices like oxygen concentrators.

Pizzuti said DTE would send customers a package of tips for saving energy and money under the new plan. She suggested the following options to save money and energy under the new rate:

  • Don’t run the dishwasher until after 7 p.m. Hit delay if that’s an option on your dishwasher.
  • Avoid doing laundry between 3 p.m. and 7 p.m. on weekdays.
  • If you have an electric water heater, avoid bathing or showering between 3 p.m. and 7 p.m. on weekdays.
  • Turn off lights and electronics when you’re not using them, especially during peak hours.
  • Use a programmable thermostat to adjust the temperature in your home based on peak hours. Run the air conditioning during the summer to pre-cool the house before 3 p.m.
  • Make sure your home is as energy efficient as possible. DTE offers these resources.
  • Use DTE’s monitoring app to understand your energy usage and identify opportunities where you can save energy.

Energy consultant Rick Bunch sees time-based pricing as an overall benefit. He signed up for DTE’s dynamic peak pricing rate, which offers lower rates outside of 11 a.m. and 7 p.m., and says his electricity bills have decreased by a third. “It’s saving an amazing amount of money for very little difference in service,” he said.

When can this Time of Day rate change again?

Pizzutti said DTE has no plans to change the rate. As with all rate changes, the utility must seek approval from the MPSC to alter its rates. So far, only Consumers and DTE Energy have moved to a Time-of-Day rate.

Do you have any additional questions? Send them to [email protected]. We’ll do our best to answer them.

2/3/23 This story was updated with additional information provided by the Michigan Public Service Commission.

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