Head of Research & Development
Head of Sales and Operations
Time of Use Rates – SDGE, PGE, SCE – California Investor Owned Utilities
January 12, 2019
This week’s livestream is relevant to the last livestream “Federal Tax Credit Steps Down this Year!” Let us look at Net Energy Metering (NEM 2.0) and Time Of Use (ToU) rate plans for California owned utilities.
The implication of NEM 2.0 in 2019 brings a change to how electricity bills are calculated. It is necessarily not going to benefit or hurt, depending on how you use your energy, but the change is going to enable customers to save potentially. For some, it might be a complete non-factor but others could save money. It is most-likely expected to see a slight increase in your utility bill.
Basically, there are two ways that utilities are structured. They are either owned by a municipality or owned by investors. By 2020, California’s Investor Owned Utilities will begin default TOU rollout to their 22.5 million residential customers. This recent implication doesn’t apply for LADWP customers.
California Investor Owned Utilities
The biggest investor-owned utilities in California are:
- San Diego Gas and Electric (SDGE)
- Southern California Edison (SCE)
- Pacific Gas and Electric (PG&E)
When Will Utilities Introduce TOU Rate Plans?
SDGE is planning to introduce the new TOU rates a little ahead of the other two utilities. California Public Utilities Commission has granted SCE and PG&E an extension to roll out their new rate plans because the utilities had argued that the delay would help them educate their customers who will likely expect higher electric bills.
- San Diego Gas and Electric (SDGE) – 2019
- Southern California Edison (SCE) – 2021
- Pacific Gas and Electric (PG&E) – 2020
Time Of Use Rate Plans – On-Peak, Off-Peak, Super Off-Peak
- The time of rates is not the same in all the utilities. Some utilities have two peaks and some might have three peaks.
- In general, the tiers consist of Super Off-Peak, Off-Peak, On-Peak slots.
- Essentially, the peaks are divided based on the demand on the grid. When the demand on the grid is at the highest, it would be the peak time for people to use energy. So, utilities charge more during the peak time in order to produce energy to meet the consumption.
- How does the ToU rate plan affect my bill? – It really depends on when you’re home and when you’re using energy. If you’re coming home from work at 6 pm, turn on your TV, and cook dinner, – everything you do would be covered in those kilowatt hours you’re using on that particular day, and you’re charged in tiers. If you’re working from home, working off shifts, or if you sleep during the day, and work during the night, you can see some savings on your bill.
- With the ToU plans, customers will have more choice and control over their electric bills.
- Utilities might have to educate their customers to change their habits by shifting their electric consumption from peak times to Off-Peak Times. They can suggest their consumers start laundry after 9 pm instead of doing it in On Peak Times. This might help them to understand how to save on electricity bills.
San Diego Gas and Electric – Time of Use Structure:
SDGE customers can save by shifting their electricity usage to lower cost hours i.e., before 4 pm or after 9 pm.
- Peak hours : 4:00 PM to 9:00 PM.
- Off-Peak hours : 6:00 AM to 4:00 PM and 9 PM to 12 AM
- Super Off-Peak : 12:00 AM to 6:00 AM
Pacific Gas and Electric – Time of Use Structure:
- PG&E has a two-tiered plan (ToU A and ToU B) and is easy to understand when compared with the other utilities.
- In ToU A plan, the peak time is from 3 pm to 8 pm, Monday to Friday and Off-Peak time is before 3 pm and after 8 pm. All weekends and holidays are considered Off-Peak. This plan gives a baseline allowance to its customers and it has an allotment of energy at a lower price based on your area, your heating source and the season. The customer will receive a discount on kWh until the monthly baseline allowance is reached.
- In ToU B Plan, the peak time is from 4 pm to 9 pm, Monday to Friday and Off-Peak time is before 4 pm and after 9 pm. There is no baseline allowance in this plan which makes it more useful for higher energy customers. This is because your bill might increase in ToU A plan once you have reached your monthly baseline allowance.
- In ToU Plan, as shown in the image below, the price you pay changes based on the time of the day and it would be the same for weekends and weekdays. The peak time is from 4 pm to 9 pm and the Off-Peak is before 4 pm and after 9 pm every day.
Southern California Edison – Time of Use Structure
- The peak time is from 2 pm to 8 pm. This plan can be more beneficial for solar because your peak is starting earlier and it is when you’ll be producing more of the solar energy.
- The Super Off-Peak (green) is from 10 pm to 8 am.
Implications of ToU Rate Plans
The ToUplans helps to make the grid more reliable by reducing the amount of time that everyone is taking the energy from the grid.
The utilities will have to spend some time to help customers understand the rate of bills and the concept of shifting their habits of electricity consumption from peak to your Super Off-Peak Time in order to save money on their electricity bills.
The use of smart devices like thermostats can help customers shift their load automatically from Peak Times to Off-Peak Times. The smart devices like smart meters would become popular among utilities through which they can record customer’s electricity consumption.
Solar and Storage
Solar and battery storage systems will help you make most of the ToU plans. Without Solar, if you’re using energy all night, it is going to be charged at the highest amount. By having a solar system designed to produce the energy that you need will help you to become independent from the grid when the costs are high. Battery storage systems will also play a major role in your super peak hours.
Low – Income Consumers
With the ToU rate plan, the electricity bills will likely increase. Utilities still want to make sure that low-income consumers would be able to manage their bills. Some of the utilities offer discount rates to help low-income consumers to handle their bills during the new time of rate plans.