Keeping Warm This Winter: Here's An Idea

I'm not very impressed with anyone's proposals to help low-income Vermonters deal with the high cost of heating their homes this winter. 

First we have the usual:  Our Congressional delegation and everyone in Montpelier is pressuring the federal government to increase LIHEAP funding.  That may or may not work.

Then we have the idea of using locally produced wood or wood pellet stoves.  That sounds environmentally correct and makes for good press but will probably do almost nothing to help low-income Vermonters.

I think the solution is sitting out there in broad daylight.  Here at Vermont Tiger we usually comment on what's going on.  We don't usually make proposals for change.  Today I do.  Here's my plan, a realistic one,  for keeping low-income Vermonters warm this winter:

According to the Vermont Department of Public Service's Fuel Price Report, at current market prices (as of May) the cost per million BTUs of fuel oil, kerosene, propane, and electricity are about the same, roughly $40 per million BTUs.  Wood, coal, and pellets are about half the price, but the logistics of getting those fuels into homes is difficult.  It's not cheap, nor fast, to build a chimney and buy a wood or pellet stove.

But the DPS report ignores the fact that although electricity currently averages 13 cents per kwh, electricity is much cheaper to produce at night, when the demand for electricity is low and there is excess capacity in the system's cheap baseload sources of electricity (Hydo-Quebec and VT Yankee and others). 

If people could use cheap electricity produced at night to heat their homes during the day, they could be warm and save a few bucks.  There are (and have been for a long time) electric storage heaters that heat up ceramic bricks at night when electricity is cheap, then distribute the heat during the day. 

Both Green Mountain Power and CVPS have off-peak rate structures that would allow customers to take advantage of this at rates that are around 7 cents per kwh.  That's nearly 50% less than the DPS price analysis, which means that the cost of off-peak electric storage heat would be equivalent to that of wood.   If we're talking about people spending $3,000 to heat their homes this winter, that's a $1,500 savings. 

How much do these units cost?  Approximately $4,000 for a whole house unit, less for individual room units.   How would low-income people pay for these?  The state could offer people low or no interest loans which would be paid for with a four or five year surcharge of 1 cent/kwh on their electric heat rate.  That would reduce the savings, but would pay for the cost of the heating unit.

Why isn't this being promoted?  Vermont has adopted an anti-electricity mentality.  The state has essentially adopted a goal of  reducing the use of electricity, not to encourage it.  Yet off-peak electricity is cheap and readily available.  Moreover, Vermont's electricity sources have a much lower carbon footprint (for those who are concerned about carbon footprints) than fuel oil, which is what most homes in Vermont use for heat, so the substitution of off-peak electric heat for fuel oil is an environmental improvement. 

What's not to like about it? 

Comments

[G. Cross]

This is surely a much better plan than a previous one to use a bunch of small space heaters! A friend years ago had such a system in his house and it worked very well even when oil prices were much lower.

[Cairn Cross]

Good idea Art...so why don't you buy a few thousand of these units and offer a turn key solution to homeowners including helping them switch their current electric service to the Rate 9 (CVPS) or comparable GMP solution. You could probably even partner with a bank or credit union that would provide financing to the homeowner to purchase the units from you. It's a free market Art, and you are the first one to think of it so get out there and enjoy it. Way more fun than teaching and writing for a living too.

[Greg Decker]

Free market? Really? So if/when nobody buys Art's heaters because they'd rather get government heating fuel assistance is this also part of Vermont's free market? To be really competitive he'd better budget for a few lobbyists too.

[Cairn Cross]

Art: Steffes even has a page for dealer inquiries. I think it's time for you to truly become a free market guy instead of just talking about it. I'm waiting for the business plan. http://www.steffes.com/offpeak/dealer.aspx

[Art Woolf]

Cairn: People can order these units and pay for them themselves and reap the fuel savings. There's no need for me to get involved. My point in suggesting this is that the low income Vermonters who would benefit from this may not have the access to credit to afford it. Nor do they have the information, since no one in the state is suggesting it as a solution. If the state is going to be subsidizing or helping to pay to keep low income Vermonters warm this winter, the state ought to try to do it at the lowest possible cost so it can help the most people with its limited resources. Hence this suggestion.

[Cairn Cross]

See Art that's the problem. you're thinking the wrong way. There is a profit to be made here and you can make it. People can order a wood stove and install it themselves too but people are looking for a turn key solution and so they go to a stove shop where it is taken care of for them. So there is a business model here for you, a real opportunity particularly if you solve the financing problem for them which you can do by partnering with a bank. The banks all want to be able to finance some legitimate solution for home heating, heck they had a VBA meeting about this a couple weeks ago. Think like a business guy Art...stop thinking like a policy guy. You can even create a job for GreggB in the process.

[Cairn Cross]

Whoa I missed Greg D's comment. Look Greg I think Art's idea is so good that he could have his new dealership up and running and have hundreds of these things installed while everyone else is wringing their hands wondering what they will do about their first oil fill up. The sales guy he hires (GreggB perhaps?) can make a compelling case to the homeowner based on the economics of the situation. Surely there are hundreds of folks who when presented a no money down fully financed retrofit to their present heating system with a short payback period will be happy to sign on the dotted line and take delivery. And Art will even fill out the forms and guide you through changing your rate. And even better he will make a profit by providing the product and the service. No need for lobbying because he will be rolling in clover before the first lobbyist buys you lunch at the Thrush after you win your senate race.

[Greg Decker]

Cairn, I could use a little of your optimism - wanna trade for some cynicism?

[GreggB]

Hey I don't like this at all-apparently there is a job in there for me somewhere and I've embraced the VT do as little as possible to squeak by lifestyle. A job would impinge upon my fishing and beer drinking. Besides as already pointed out the folks that need this don't have the upfront $$$. And VT has at best enough venture capitol to buy 2,500 units in a state with 300,000 houses. Of course a venture capitalist would be daft to fund such an idea- long before the state is converted to electric heat Yankee would be closed and Hydro-Quebec will have told VT to bleep off. But no worries I have a business idea for heating VT this winter and every winter- I call it 'drop furniture' we go around and pick up discarded furniture then smash it up for firewood. The wood(and plastic and sofas) is free, already dry and acquiring it has no trespassing issues. I'll get started as soon as the state throws me 100 grand.

[G. Cross]

Optimism is in the gene pool! If you don't have, you can't get it! Sorry, just the way of the world.

It is disturbing to read these comments.

Through them, one witnesses our culture's reflection.

It's Sad; Just Sad.

[GreggB]

George are you saying that some behaviors have a purely genetic basis?

[Dennis Lukas]

Nice Idea, but you would need a seperate meter for the off peak demand. These are no longer available.Leave Vermont for the winter!

[Cairn Cross]

Greg D. I'm only cynical when I am actually reading a business plan as my business partners will tell you. George...your comments about genetics are scaring me. GreggB...am I the only one who has trouble understanding you?

[G. Cross]

You missed the humor, Greg. Maybe that's genetic, also.

[D.K]

As a side bar to the original post, I must bring up an interesting occurance in grid tied residential renewable energy. Similar to what Art describes, some have observed that there may be some financial gain in leveraging the rate structures for grid tied systems. Simply put; sell when high which is typically during daylight hours, and store when low, which is typically at night.

This is basically what happens in a solar panel based system, not the case for wind of hydro. The interesting question is why have panels, wind, or hydro at all? Depending on rates and cost and life of batteries, it could be possible to get your power for free from just leveraging rates...at least until rate structures changed.

[Jim]

Hi,
I like your idea and called GMP to find out about off-peak electricity. I was told by their customer service department that they no longer offer off-peak metering. They did say that they have some old meters still in the field, but don't offer them any longer. I was also told that the current on-peak rate for customers that have off/on peak metering is $.23/kwh. If you have any different information it would be greatly appreciated.

Thanks,
Jim

[Art Woolf]

GMP rate codes 11 and 61 seem to be geared toward off peak heat. There's no indication on their site that they are no longer available. If so, that's too bad.
(http://www.google.com/url?sa=t&ct=res&cd=4&url=http%3A%2F%2Fwww.greenmountainpower.com%2Fdata%2FUnsorted%2FRatesServices-Jan08-20543-1.pdf&ei=ZgizSO2bG4ye8gTX8PFq&usg=AFQjCNH9F1hBl4_GbOJI8j42yneD8KZl5Q&sig2=-8YMFv-CZz3M_ntyFRzEHA)

CVPS has rate code 9 and they used to have code 11, which appears to be unavailable to new customers.
(http://www.cvps.com/CustomerService/ResRates.shtml)