Good afternoon,
For today’s entry we will cover utility billing, time of use rate schedules, Net-Energy-Metering (NEM), and the California Public Utilities Commission, as these are key factors when deciding on solar. Let’s start, as there is bit to cover and it is kind of dense, and we do have to start with the basics and the first step is your current utility bill that covers your electricity usage. As surprising as it sounds, for solar we only use your electricity consumption, so what’s covered in your electricity bill? A few things for starters, such as the generation costs, the transmission costs, local clean energy access programs if applicable (such as Clean Power SF, or Peninsula Clean Energy, or similar), and as always taxes and fees. I strongly recommend reviewing your current bill before going solar because the bill itself may change in appearance, and it is good to know how much your property is consuming so that you can better review solar proposals.
Moving on, since this is a State-wide policy that deals with energy, the California Public Utilities Commission (CPUC), is the regulatory body that manages the overarching policies and framework. Your local interaction with the Net-Energy-Metering (NEM) policy will be through your utility provider and each utility provider has a different relationship with their customers, however, each utility charges a monthly interconnection fee of around $10-13 per month when you go solar. In the Greater San Francisco Bay Area, the largest utility provider is PG&E, and then there are some local municipal providers like the City of Alameda Utility (AMP) and City of Palo Alto Utility (CPA) and each of them has different tariffs for electricity and different buy-back agreements with their renewable energy producing customers (solar and wind). Let’s take PG&E as our example, as they are the largest utility provider locally, and we can easily access their NEM documents and rate schedule documents. For PG&E, when you add a photovoltaic system to your property you are asked to choose a Time-Of-Use (TOU) rate schedule. TOUs, create a price schedule with varying costs for electricity throughout the day, with the current price per kWh ranging from 17cents to 47cents depending on what time you are using those kWh. For PG&E, the TOUs rates, are split into off-peak, partial peak, and peak rates. In general, you will have lower rates in the morning hours that are considered off-peak rates, and then the mid-day generally overlaps with partial peak rates. Peak rates are generally in the afternoon until evening, and the rates drop again at night, and those specific hours and cut-offs depend on the TOU plan you select. As you can see from this, how much, and when you use electricity will impact your bill and this is also important element when it comes to solar design as well.
Part of the NEM agreement, states how much the utility provider will be crediting you for the energy that you produce, so if you have a system that produces a lot more in the afternoon to evening hours and your consumption is primarily in the morning and you consume the same amount as you produce then you would have net credits for the month under the current PG&E version of the agreement. However, if the situation was flipped, where your property was consuming primarily in the peak hours and producing in the off-peak rates your bill would show a negative balance as the energy that you produced was cheaper than the energy that you consumed. Importantly, this is not always true for all utility providers, as the amount credited can differ from utility to utility.
All the utility providers have their own way of accounting for how much they’re charging their customers initially for electricity and then for how much they are purchasing it from their customers who have solar. Let’s continue with PG&E, as our example, as they still are the largest utility provider in the Bay Area. When you add solar to your PG&E serviced property, your electricity billing cycle will change to a twelve-month period rather than the traditional one-month period. Your billing cycle will begin after your system installation has been approved by PG&E and a notice for permission to operate (PTO) has been granted. The date of the PTO creates the date for an annual billing cycle, with monthly updates and an actual bill at the end of the twelve-months. The true-up bill will tell you if PG&E owes you or if you owe them. One reason for the twelve-month period, is that there is potential for over-production and under-production in comparison to property usage and the annual billing cycle reflects the average usage and consumption for the property. In the true-up bill and in the monthly statements, you will be told how much you consumed from the grid, and how credit for production you are receiving. Additionally, you will see the monthly charge for the interconnection fee as well, and again the true-up is paid at the end of your billing cycle. When it comes to designing a system, it is important to understand how much a property consumes and when to be able to take advantage of TOU as much as possible.
For example, if my property produces what I consume, what are the potentials for an increase to my bill? Currently, if you have system that is designed for 100% off-set the main potential for an increase in bill size is change in consumption habits and a change to NEM interconnection charges. Currently, NEM interconnection charges range about $10-$13, however, there is currently a proposition going through the CPUC to raise the monthly interconnection rate to $70 per month for rooftop solar providers, which would be a 700% monthly increase.
CPUC Inter-Connection Rate Discussion:
How Rates May Change by the Desert Sun
As always let me know if you have any questions and have a great one!
Best Wishes,
Piotr Uchman