Category Archives: Electric

Dual Fuel: What is it, and do I need it?

Every industry has it’s own inside lingo that can sound Greek to the outside world.  Most, if not all, electric utilities have a special “dual fuel” rate that allows consumers to have a reduced rate for part of their electric load.  What does this actually mean for the average electric user and what are the other alternatives?  I’ll address these questions and shed some light on this from a geothermal perspective.

What is Dual Fuel Anyway?

Dual fuel is rate classification given by electric utilities for customers that primarily use an electric heat source but have the ability to switch to a secondary heat source during times of peak demand.  Most secondary heat sources are fossil-fuel burning sources; there are others, but we’re not heading down that road right now.  The utility is always trying to provide electricity in the most cost-effective manner possible, but when demand peaks beyond what they can normally supply, the price skyrockets.  The utility may have to turn on backup diesel generators or buy energy on the open market, both of which are very costly.  If the utility can reduce their overall load during these times, they can avoid these extra costs.  Dual fuel electric rates are typically much cheaper (per kWh) than retail rates, but usually only apply to your electric heating load.  They are also under the stipulation that the utility can initiate a transfer from your electric heat source to your backup heat source.  This trade off allows the utility to control their peak, and you can save quite a bit on your electric bill.

How Does Geothermal Fit In?

Geothermal systems operate on electricity, and for this reason, they qualify for dual fuel rates.  One of the most common misconceptions with geothermal is that a backup source is required.  This is far from the truth!  Geothermal systems can provide all the heating and cooling you need with no need for a backup heat source.  Often times, dual fuel rates can lead people to believe that geothermal systems need to fall in this category.  The fact is that there are usually completely separate rates for customers that on a purely electric heating system with no fossil-fuel installation.  In our area, Wright-Hennepin offers a controlled and uncontrolled option for ground-source heat pumps.  Xcel Energy does not have an uncontrolled option, but they do offer a substantial rate reduction.  For more information on specific rate reductions and other rebates, visit your local electric utility online, or get in touch with us, and we can help you find the information you need!


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Heat Pumps and the Cost of Electricity

Diverse Heating Options

Electric utilities understand that you have a choice when it comes to heating your home, and they will typically reward you for choosing electric heat as a primary or secondary source of heat.  Electric providers base their rates on how much electricity you use, the time of day that you use the most electricity and the time of day that the utility needs to supply the most electricity.  Large commercial and industrial operations that use more electricity are typically billed a lower rate for their usage (kWh), but they are charged per kilowatt for their monthly peak demand (kW).  Most residential users pay a flat rate for each kWh and do not pay a demand charge.  Some utilities are starting to pass along their fluctuating cost structure to residential consumers in the form of time-of-use or time-of-day rates.  These rates will charge residential customers more per kWh during times to peak demand.  This helps the utility recover more cost during peak times and encourages users to shift their usage to off-peak times.  Why does any of this matter for geothermal?

Electric Rate Incentives

Home heating electric usage in the winter months typically uses the most electricity overnight and in the early morning, when the outside temperature is the lowest.  Many utilities in the northern states peak during the mid-morning in the winter and in the late afternoon in the summer.  This means that the geothermal heating systems are not usually coinciding with the peak demand for the utility, which is great news for the utility and the consumer!  For this reason, the electric utilities will typically offer discounted rates for consumers with electric heating options.  If the electric source is backed up by a fossil fuel heating system, the rate is usually slightly discounted, but the electric heat source can be disabled by the utility (load control) during peak times.  If the electric source is the only heat source, then a larger discount is usually offered and the control stipulations are removed.  This is big driver for rural residents that are currently using propane to make the switch to electric.  Here in Minnesota, local utilities offer rates as low as 6 cents per kWh, which is almost half of the retail rate.

Utility Rebates

Although up-front rebates are not as common, many utilities will offer rebates to help offset the initial cost of installing a geothermal system.  Check with your local electric utility to see if rebates are offered in your area!  Your local utility can also provide you with the discounted rate information and other local requirements for the discount.  If you have any questions, please visit our contact page or drop us an email at