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BPU debates timing for time-of-use rates and demand charges as Foxtail Flats project advances
Summary
At a Los Alamos Board of Public Utilities work session staff outlined a proposed time-of-use rate and conversation focused on whether to phase in demand charges later or adopt both at once. Staff asked for board guidance; the draft ordinance includes an implementation window tied to billing-system readiness and the Foxtail Flats resource.
Los Alamos Board of Public Utilities members discussed a proposed redesign of electric rates that would add time-of-use pricing and could include demand charges, with staff asking the board for guidance on timing and implementation.
The issue matters because the board’s choices will change how customers are billed, affect credits to distributed solar producers, and influence how the utility recovers costs as new resources (including the Foxtail Flats solar-plus-storage project) come online. Staff presented a draft ordinance with an implementation window that would not put the new time-of-use rates into effect before July 1, 2026, and asked whether the board wanted to formally authorize preparation of that ordinance or give more general direction for staff to ready the billing system.
Staff and board members framed the decision around two tensions: (1) the operational nature of the Foxtail Flats resource — utility-scale solar paired with batteries — which makes daytime energy cheaper but battery discharge periods expensive; and (2) longer-term industry trends and local distribution needs that make demand charges a likely future component of rates. Utility staff explained the technical tradeoffs and the planned billing transition. "Okay. Chair and members of the board, we're here tonight to talk about rate design and, you know, what we'll present to you in 2 weeks," said Pablo, a utility staff presenter, describing the forthcoming two-week presentation and the billing changes staff is preparing.
Board members voiced two different preferences. One board member said she was inclined to implement time-of-use and demand charges together to present a cohesive package to customers: "I would kinda do them together, the demand charge and the time of use," said Board member Matt. Another board member said phasing the changes could reduce customer confusion and allow staff to stage the billing rollout. "We may want to bite off a smaller piece of the apple with the time of use charges with demand later," said Board member Karen.
Staff described several specific mechanics under consideration. Distributed generators (customers with rooftop or other local solar) would be credited for exported energy using a 12-month average of pooled avoided-costs; staff said the consultants and their analysis support that approach. Pablo explained that approach to credits, saying the net export payment would be based on the "12 month average of the cost of the pool," a figure staff uses to reflect monthly cost fluctuations.
On implementation timing, staff noted the draft ordinance had an effective-date window tied to the billing-system conversion and the Foxtail Flats schedule. Board members asked for more operational data before committing to a date; one asked staff to bring intraday cost curves showing when the utility currently pays higher market prices for evening energy. "If indeed there is a substantial premium now in power costs for the evening, that would soften my resistance to implementing ahead of Foxtail Flats by quite a bit," said a board member requesting that data.
Staff also described other rate tools being considered, including a Power Cost Adjustment (PCA) to reflect short-term contract or market-price swings and a gradual step-up in the fixed customer service charge (staff noted a multi-step increase to reach a stated endpoint, described in the briefing as a target around $22.50 in service-charge level). Staff cautioned that if neither time-of-use nor demand charges are implemented, the volumetric (¢/kWh) charge would likely have to be higher to recover costs.
No formal action was taken. Staff said it will present a clean draft ordinance and detailed cost curves at the next board meeting in two weeks and asked whether the board preferred a formal ordinance with a specified effective date or general direction that would allow staff to proceed with billing-system work while deferring the final implementation date. The board did not vote; members asked staff to return with the two-week presentation and additional intra-day cost data.
Next steps: staff will bring a draft ordinance and supporting data at the next scheduled meeting for further board direction; the board signaled it could delay a formal vote until it has reviewed the updated cost curves and the draft clean ordinance.
