How Xcel Energy and MN utility regulators want you to use less power when wind and solar don’t show up to work

Last week, I wrote about how Minnesota Public Utilities Commissioner Joseph Sullivan warned that a large blackout would cause the public to “absolutely revolt.” Sullivan correctly noted that the power grid’s reliability becomes more difficult to maintain because the “margin of error gets tighter” as old fossil fuel plants are replaced with renewable power.

In an article published in Energy News Network, a subsidiary of our dear friends at Fresh Energy, Sullivan is quoted as advocating for “demand response,” which is utility speak for getting electricity customers to reduce their energy consumption.

Commissioner Joseph Sullivan said utilities will need more resources than just solar, wind and battery storage to maintain a resilient grid as fossil fuel plants close. Demand response is a flexible resource that can be an alternative to a gas power plant, he said. Sullivan said he has been surprised by how little Xcel uses demand response. Xcel tested but did not use demand response once last summer, he said.

“I think there is a tremendous opportunity for Xcel to be doing more,” Sullivan said.

Reducing electricity use during times of unforeseen grid stress or storms is a good thing that helps keep the system afloat during rare events, but approving the retirement of reliable coal-fired power plants and expecting Minnesota families and businesses to routinely serve the role of a battery is, in my opinion, a failure of utility regulators to provide abundant, affordable electricity for everyone.

Unfortunately, the people who will be most impacted by the strategies deployed to reduce electricity demand will be the low-income households liberals pretend to care about, which is exactly how these programs are playing out in California.

For example, the most well-known demand response programs include voluntary programs designed to reduce energy consumption during peak demand, like smart thermostats and other technology that remotely switch off customers’ air conditioners when the grid is under stress.

Other “demand response” programs include installing smart meters, as Xcel Energy has done in earnest, to allow utility companies to charge more money for electricity used during times of high demand or low supply. Prices rise so much during these periods to shift energy consumption to different hours.

It doesn’t take a rocket scientist to see how this would negatively impact the poor.

Imagine a single parent, 29 percent of whom live in poverty, getting home from working one or two jobs and needing to wash clothes, cook dinner, or run the dishwasher. These activities will probably occur sometime between 5 pm and 9 pm, when the sun is setting, meaning electricity prices will be highest like they are in California. Families with less free time to shift consumption, which will disproportionately fall on the people who actually have to go to work and cannot work from home, will be hardest hit.

Not only will demand response produce suboptimal outcomes for residential electricity customers struggling to pay their bills, but it will also reduce income for hourly workers. According to the Energy News Network article:

In Minnesota, Xcel Energy operates one of the country’s largest demand response programs. A 2019 analysis by the Brattle Group ranked its portfolio eighth in the country as a percentage of peak demand. More than half of that capacity comes from its “interruptible tariff” program, in which commercial and industrial customers are offered bill savings in return for committing to curtail electricity use if called upon by the utility.

Making electricity so expensive that factories and businesses are compelled to shut down rather than continue to be productive players in our economy is a surefire way to make them reconsider how much longer they want to remain in the Land of 10,000 Lakes. Unfortunately, hourly workers won’t make money when these businesses shut down.

All in all, demand response is a dream cooked up by comfy, white-collar liberal wind and solar advocates to make their unworkable energy policies look less insane on paper. In reality, it means energy shortages and rationing, with all of the ill effects described above.

Just remember, demand response is the opposite of Motel 6, “We’ll turn the lights off on you.”