Mike Howells's Blog

Tag: time-of-use

  • Why Your Electric Bill Is About to Get Weirder

    Why Your Electric Bill Is About to Get Weirder

    Part 4 of a series on what I learned by accident when I started paying attention to my electricity bill.

    I started this series four weeks ago with a story about my dishwasher. About switching to Ameren Missouri’s Ultimate Saver rate plan, about figuring out that 10 PM was a meaningful number, about the small habit shift that came out of it.

    Then I spent three posts pulling at the thread that started with my dishwasher. I wrote about how a continental-scale power grid actually works and how it almost broke in 2003. I wrote about how a new category of customer is now creating conditions that look uncomfortably similar to 2003, on purpose, at scale, with the explicit acknowledgment of the regulators that they cannot keep up. Along the way I told you about megawatts and gigawatts and the May 2026 NERC alert, about hyperscalers building their own private power generation outside the regulated planning process, about an honor system that depends on data center operators picking up the phone when grid operators call.

    I want to bring all of this back to where it started, which is my electric bill. And yours. Because the buildout I described in Post 3 is not happening in some abstract national context that doesn’t affect ordinary residential customers. It is happening, and it is going to show up on your bill, and the question worth asking is what that looks like and what, if anything, you can do about it.

    That’s what this post is about.

    Capacity prices, and why they matter to you

    The first thing worth understanding is that your electric bill is not just paying for the electricity you used last month. It is also paying for the capacity that has to exist in order to serve you when you need it.

    This works like an insurance pool. The utility, and the regional grid operator, have to maintain enough generation and transmission capacity to meet the worst-case demand on the worst possible day, plus a reserve margin in case some of that capacity fails. That capacity costs money to maintain whether you use it or not. The cost of maintaining it gets recovered from customers, spread across everyone, embedded in the rates you pay every month.

    The wholesale market that determines how much that capacity costs is called the capacity market, and in MISO, the regional grid operator for Missouri and 14 other states, the capacity market runs annual auctions to determine prices. For most of the past decade, those prices were stable, low, and not particularly newsworthy. As recently as the 2024 to 2025 planning year, MISO’s capacity cleared the auction at about thirty dollars per megawatt-day.

    In the auction for the 2025 to 2026 planning year, capacity prices jumped to six hundred sixty-six dollars per megawatt-day. That is a twenty-two-fold increase in a single year. The capacity market is, in effect, screaming that the system is running out of margin.

    There is no version of that increase that does not, eventually, find its way into retail electricity rates. The math is unavoidable. Utilities buy capacity through these markets. They pay the cleared price. They recover that cost from customers. A twenty-two-fold increase in wholesale capacity prices does not stay wholesale.

    What it means in practice is that even if you used exactly the same amount of electricity this year as you did last year, even if your behavior did not change at all, the underlying cost of keeping the grid available to serve you has gone up dramatically. Some of that cost is already showing up in rate cases being filed by utilities right now. Most of it has not arrived yet. It will.

    Who pays when the biggest customers leave

    There is a second, more subtle problem that I want to spend a moment on, because it explains something that I think most residential customers are about to start noticing without understanding why.

    In Post 3, I described how hyperscalers are increasingly building their own behind-the-meter generation rather than relying on the public grid. Roughly forty gigawatts of announced private generation, dedicated to specific data center projects, going up outside the regulated utility planning process.

    When a large customer leaves the grid, or never connects to it in the first place, that customer stops contributing to the cost recovery base that the utility uses to maintain its infrastructure. The transmission lines, the substations, the distribution network, the customer service systems, all of these have fixed costs that have to be paid for somehow. The utility traditionally recovers those costs across all of its customers, with the largest customers paying the largest share.

    If the largest customers leave, the fixed costs don’t go away. They get redistributed across the customers who remain. Which is you and me.

    This is not hypothetical. It is already a contested issue in rate cases in several states with significant data center buildout, where residential customer advocates are pushing back against rate increases that effectively transfer infrastructure costs from large commercial customers to residential ones. The legal and regulatory mechanisms here are complicated, but the basic dynamic is simple: when the biggest customers exit, the remaining customers carry more of the fixed cost burden, even if their own electricity usage hasn’t changed.

    The Trump administration introduced something called the Ratepayer Protection Pledge in March of this year, which is intended to push some of the infrastructure costs back onto the hyperscalers that are driving demand growth. Whether it actually accomplishes that is going to depend on how state regulators interpret and implement it, which is going to vary state by state. The fundamental tension, that the public grid is increasingly being asked to socialize costs that benefit private corporations, is not going away.

    What rate design is going to look like

    The combination of rising capacity costs and shifting fixed-cost recovery is going to push utilities toward more aggressive rate designs for residential customers. Not because utilities are villainous, but because the math of running a grid in this environment forces it. There are a few patterns that I expect to see become more common, and that I think are worth understanding now rather than being surprised by later.

    The first is the expansion of time-of-use pricing. Right now, most residential customers are still on flat rates, where you pay the same per kilowatt-hour regardless of when you use it. The Ultimate Saver plan I’m on, which differentiates between on-peak and off-peak hours, is still a minority choice in most utility territories. That is going to change. As the difference between peak and off-peak costs grows, utilities will increasingly push customers toward time-varying rates, sometimes by making them the default option and requiring customers to opt out rather than opt in.

    The second is the introduction of demand charges for residential customers. Demand charges have historically been a commercial and industrial customer concept. The Ultimate Saver plan applies them to residential customers, which is unusual today but probably not unusual in five years. As more customers shift to time-of-use rates, the utility’s incentive to also charge for peak demand, not just peak energy usage, grows. Expect to see this spread.

    The third is dynamic pricing, sometimes called critical peak pricing or real-time pricing. This is where the price of electricity varies not just by time of day on a fixed schedule, but in response to actual grid conditions. On extreme demand days, when the grid is genuinely stressed, the price spikes, sometimes dramatically, for a few hours. Customers who can shift their usage during those hours save significant money. Customers who can’t, or who don’t pay attention, get hit with bills that can be five or ten times what they would have paid otherwise.

    The fourth is more granular metering and pricing in general. Smart meters, which have been deployed across most of the country over the past decade, enable rate structures that simply were not possible before. Most utilities have only begun to take advantage of what those meters can support. That’s going to change.

    None of this is automatically bad. The reason these rate structures exist is that they more accurately reflect the actual cost of serving each customer. A flat rate hides the cost of peak capacity behind an averaged price. Time-of-use rates and demand charges make those costs visible. For customers willing to engage with the structure, the result can be a lower bill. For customers who don’t engage, the result can be a higher bill, sometimes much higher.

    What you can actually do

    I’m going to be honest about this part: the things ordinary ratepayers can actually do to manage what’s coming are limited. The fundamental dynamics of capacity prices, infrastructure cost recovery, and grid stress are not going to be solved by individual residential decisions. But there are a few things that are within your control, and they’re worth doing.

    The first is to actually look at the rate plans your utility offers. Most utilities have several rate plans available, and the default plan is almost never the optimal one for any specific household. If your utility offers a time-of-use plan or a demand-charge plan, look at it carefully. Estimate what your bill would have been under each option, using your actual usage data, which most utilities will provide on request. The right plan for your household depends on your specific load profile, and you cannot pick the right plan without looking.

    The second is to learn your own load profile. When does your house actually use the most electricity? What’s running at 7 PM on a hot Tuesday in July? What’s running at 11 PM on a Sunday in March? Most people have no idea what their actual usage pattern looks like, and they are surprised when they look. Your utility’s customer portal almost certainly provides hourly usage data going back at least a year. Spend an hour looking at it. You will learn things about your house that you did not know.

    The third is the behavioral shifts I started this series with. If your utility’s rate structure rewards off-peak usage, the shift is small and the savings are real. Running the dishwasher at 10 PM instead of 7 PM. Doing laundry on weekends. Pre-cooling the house before peak hours in summer. None of this is dramatic. None of it requires equipment upgrades or lifestyle compromises. It just requires paying attention.

    The fourth, and the one that I think most residential customers will never do but that genuinely matters, is to engage with the regulatory process. Rate cases happen in every state, multiple times per year, with very little participation from residential customers. The people who do show up, ratepayer advocates, large commercial customers, environmental groups, are the ones whose interests get represented in the final outcome. If you have strong opinions about how the costs of the grid should be allocated, the place to express those opinions is in your state’s public service commission proceedings. They publish notices. They accept public comment. Almost no one reads the notices or submits the comments.

    Bringing it home

    I started this series with a small thing. A rate plan. A dishwasher. A question about why 10 PM specifically.

    What I learned in the process is that the grid is bigger and more delicate and more interesting than I had any idea, and that the system it has to serve is changing faster than it can adapt to. The story I told across these four posts is not a hopeful one, exactly. It is not a hopeless one either. It is a description of a complicated piece of infrastructure trying to handle a new set of demands under regulatory rules that were not designed for them.

    The dishwasher decision is still a small thing. It saves me maybe twenty dollars a month, on a good month. The grid is going to keep working, mostly, for most people, most of the time. The buildout I described will probably resolve into something stable eventually, although the path between here and there is going to be bumpier than most people expect, and the costs are going to be distributed in ways that are not particularly fair.

    What I take away from writing this series is that paying attention is genuinely useful, both to my own bill and to my own understanding of the world I live in. Most of us are connected to a continental-scale machine that we know almost nothing about, that is going through the biggest stress test in its history, and that we are nonetheless going to keep depending on for everything we do. The least I can do is know what’s on the other side of my wall outlet.

    That, in the end, is what my electric bill taught me.

    Thanks for reading.

    This concludes the four-part series. If you want to revisit any of the previous posts: Part 1 is here, Part 2 is here, Part 3 is here.

  • What My Electric Bill Taught Me About the Coming Grid Crisis

    What My Electric Bill Taught Me About the Coming Grid Crisis

    Part 1 of a series on what I learned by accident when I started paying attention to my electricity bill.

    It started with a dishwasher.

    Earlier this year, I switched my Ameren Missouri service over to a rate plan called Ultimate Saver. The pitch was straightforward: pay less for electricity if you can shift your usage away from peak hours. I’m not particularly frugal, but I’m curious about systems, and the structure of the plan was interesting enough that I wanted to understand it.

    What I didn’t expect was that trying to figure out when to run my dishwasher would pull me into a rabbit hole about how the entire North American power grid works, and into a slowly unfolding crisis that I think most people don’t realize is happening.

    This is the first of four posts about what I found. It starts small, with my own electric bill, and gets progressively bigger from there. By the end of the series I’ll be writing about why the AI data center boom is colliding with physical reality, and what that means for everyone who pays an electric bill.

    But first, the dishwasher.

    The plan that made me think

    Ultimate Saver has two parts that work independently of each other, which took me a while to untangle.

    The first part is time-of-use energy pricing. On weekdays, electricity costs more during two on-peak windows, 6 to 8 AM and 6 to 8 PM, and less during all the off-peak hours in between and around them. Weekends are entirely off-peak. So far, so simple: don’t run the dryer during dinner on a Tuesday.

    The second part is a demand charge. This one is weirder. Once a month, Ameren looks at every single hour of my electricity use between 6 AM and 10 PM, every day of the month, weekends included, and finds the one hour where I drew the most power. Whatever that peak hour was, in kilowatts, gets multiplied by a per-kW rate and added to my bill. One bad hour can dominate the demand charge for the entire month.

    When I first read this, I thought it was a gimmick. After spending some time with it, I think it might be one of the more honest pricing structures a utility has ever offered me.

    Here’s why. The cost of providing electricity isn’t really about how much energy you use over a month. It’s about how much capacity the grid has to maintain to serve you when you need it. A house that uses 1,000 kilowatt-hours spread evenly across a month is much cheaper to serve than a house that uses the same 1,000 kilowatt-hours but spikes hard for a few hours every evening. The first house lets the utility size its infrastructure to a steady average; the second house forces the utility to build for the peak and let that capacity sit idle most of the time.

    A demand charge takes that hidden reality and makes it visible. The price signal it sends is, basically: please don’t all hit the grid at once.

    Figuring out my own house

    Once I understood the structure, I started thinking about my own appliances. The big draws in a house like mine are the air conditioner, the electric dryer, the dishwasher (especially the heated dry cycle), the oven, and to a lesser extent things like the microwave.

    The AC was the puzzle to start with, because in summer it runs almost constantly. But here’s the thing about my thermostat: it’s set to 74°F during the day and drops to 70°F at 10 PM, when we go to bed. That means the AC’s most intense work, the pulldown from 74 to 70, happens right at 10 PM, the exact moment the demand-tracking window ends. The AC’s biggest single hour of the day falls outside the window that gets billed.

    So my real demand exposure during cooling season is the AC holding 74°F somewhere in the late afternoon, plus whatever else I happen to run on top of it. The pulldown is free.

    This made everything else simpler. If the AC’s contribution to demand is roughly fixed during the day, then the question becomes: what else am I stacking on top of it, and when?

    The dryer and the dishwasher, it turns out, are completely flexible. Nobody cares whether the dishwasher runs at 8 PM or 11 PM. Nobody cares whether the dryer finishes at 7 PM or 1 AM. These are appliances we treat as “run them whenever,” but their actual draw is significant. The dishwasher’s heated dry cycle and the dryer’s heating element are both heavy loads. Running them on top of an AC that’s already working hard in the late afternoon is exactly the kind of stacking that sets a new monthly demand peak.

    So I started running them after 10 PM. The dishwasher gets loaded throughout the evening and I just start it on my way to bed. The dryer is less convenient but still workable.

    It’s not a dramatic lifestyle change. It’s a small habit shift. But it removes both appliances from demand tracking entirely, and it captures the off-peak energy rate, which is a fraction of the on-peak rate. Two benefits for one decision.

    The question that broke the dam

    After a few weeks of this, a question started bothering me.

    Why 10 PM?

    The number is so specific. Not midnight, not 9 PM, not the time the sun sets. 10 PM, every day, weekends included. It’s the same number that ends the demand window and roughly the same time the on-peak energy pricing ends on weekdays. Ameren clearly chose it for a reason. But what reason?

    The easy answer is “that’s when people go to bed.” But that’s not really an answer. Lots of people don’t go to bed at 10 PM. And anyway, why would a utility care exactly when its individual customers go to bed? Utilities don’t bill at the individual scale; they think in aggregate.

    The real answer, I started to suspect, had to do with the grid itself.

    So I went looking.

    What I found when I looked at the actual data

    Ameren Missouri is part of a regional grid operator called MISO, the Midcontinent Independent System Operator. MISO coordinates electricity across 15 states and one Canadian province, from Minnesota down to Louisiana. They publish real-time operational data on their public website: how much electricity is being generated, where it’s coming from, how it’s flowing between regions, what the forecast looks like for tomorrow.

    I pulled their load curve for a normal weekday this spring. The shape of it is striking. Demand bottoms out around 4 AM at roughly 58,000 megawatts across the entire MISO footprint. It starts climbing around 6 AM as people wake up, grows steadily through the morning and afternoon, peaks around 6 to 7 PM at about 88,000 megawatts, and then, here’s the part that mattered to me, drops fast.

    By 8 PM, load is down 3,000 megawatts from peak. By 9 PM, it’s down 6,000. By 10 PM, it’s down 10,000. By 11 PM, it’s down 14,500 megawatts from the evening peak.

    Between 6 PM and 10 PM, the grid sheds roughly the equivalent of an entire nuclear fleet’s worth of demand. By the time the demand-charge window closes at 10 PM, the grid has genuinely entered a different operating regime. Expensive natural gas peaker plants that had to fire up to meet the evening peak can throttle back. Cheaper baseload generation, nuclear, coal, wind, handles the overnight load comfortably. The system is no longer stressed.

    That’s why 10 PM. It’s not about when I go to bed. It’s about when the grid as a whole stops needing to scramble. The number maps to physics, not to convenience.

    When I saw that, really saw it, in the actual hourly data, something shifted for me. The rate plan stopped feeling like a marketing structure and started feeling like a window into a real system. My dishwasher decision was a tiny instance of a much larger problem the grid is constantly solving.

    And the closer I looked at that larger problem, the more interesting it got. And the more concerning.

    Where this is going

    I want to tell you what I found, because I think most people have no idea how much is changing right now in the systems that quietly power their lives.

    Over the next three Sundays, I’ll be posting the rest of this series.

    Next week, I’ll write about what MISO actually does. How a continental-scale power grid manages itself in real time, what the 2003 Northeast Blackout taught us about how this can fail, and why every appliance you own is connected to a machine spanning half a continent that has to stay in perfect synchronization, every second of every day.

    The week after, I’ll get into what I now think is the most important undercovered story in the country: the collision between the AI data center boom and the physical infrastructure that has to power it. The companies building these data centers are starting to give up on the public grid entirely, with consequences that will eventually show up on your electric bill, whether you’ve heard about any of this or not.

    And in the final post, I’ll bring it back to where this started. What all of this means for someone like me, an ordinary Ameren customer running a dishwasher at 10 PM, and what we can actually do about it.

    I didn’t expect to spend this much time thinking about my electricity. But the more I understand about the system on the other side of my wall outlet, the more I think it’s one of the most important things I’ve ever paid attention to.

    The dishwasher was just the beginning.

    Next Sunday: The Grid Behind the Grid. What MISO actually does all day, and why the lights have to go out exactly as often as they do (which is more often than you think).