New Time-Of-Use Rates
- sales
- Feb 22, 2018
- 4 min read
Since January, SCE has been notifying customers in this first wave of transitions that they’ve been randomly selected to participate.
These customers will receive multiple communications before the actual transition in March. They will have the option to either remain on their current rate, transition to a specified Time-of-use rate or switch to a different Time-of-use rate offering.
The switch to time-of-use rates comes after the California Public Utilities Commission directed the state’s major utilities companies to default their customers to time-of-use plans by 2020.
The goal behind implementing the time-of-use plans is to lessen the strain on the electrical grid during its peak hours, when use of renewable energy is at its highest. This should help the grid adjust later in the day, when it switches to more conventional sources of power, such as natural gas.
While time-of-use plans can benefit some customers, many consumer advocates, like myself, warn it can raise rates for many others. Southern California Edison has rolled out six different time-of-use rate structures, each with their own purpose.
I’m going to go over one of the six time-of-use rate structures and show you the impact it has. The time-of-use rate structure that I selected to talk about is TOU-D-A this rate structure is intended for low and medium energy users.
Typical homeowners that use less than 700 kilowatt-hours a month. The average cost per kilowatt hour is 29 cents when you factor in the off peak rate.
In this diagram you can see the rates are at their cheapest when utility demand is at its lowest, 10PM to 8AM. With rates changing from 28 cents between 8AM and 2PM to 48 cents between 2PM and 8PM.
Comparing TOU-D-A to SCE’s Tiered Rate Plan you can see the dis-advantages of time-of-use. Most notably the average cost per kilowatt-hour.
The Tiered Rate Plan has an average cost per kilowatt-hour of 25.6 cents overall versus time-of-use average of 29 cents.
If you are someone who uses less than 700 kilowatt-hours a month in energy, and between the hours of 8AM to 10PM then this time of use plan will drastically effect your wallet as the average cost per kilowatt-hour during this time frame is 38 cents.
Here’s an example:
Lets say you used 700 kWh for the entire month of February, and during the month you used
200 kWh between 8AM and 2PM
300 kWh between 2PM and 8PM
100 kWh between 8PM and 10PM
100 kWh between 10PM and 8AM
Don’t focus too much on when the power was used just yet and I’ll show you why in a second.
So lets break this down.
The cost between 8AM and 2PM is 28 cents per kWh giving you $56
The cost between 2PM and 8PM is 48 cents per kWh giving you $144
The cost between 8PM and 10PM is 28 cents per kWh giving you $28
The cost between 10PM and 8AM is 12 cents per kWh giving you $12
This brings your total bill, before miscellaneous fees of course, to a whomping $240. And all you used was 700 kWh’s of energy!
Now I’m sure you’re about to say, well you but 300 kWh during the peak demand time. So lets back up and refer back to the average cost between 8AM and 10PM, which is 38 cents per kilowatt-hour!
What this means is, unless you plan on NOT running your AC when you get home, or eating at home, or watching tv at home, or turning on the lights when you’re at home. Hell if you plan on doing anything at home between 8AM and 10PM you’re pretty much going to pay 38 cents per kilowatt hour on average.
In the example I just provided that puts your bill at $228 before factoring in the energy used between 10PM and 8AM, which puts you right back at $240 a month.
Under the tiered rate structure for someone using less than 700 kWh a month, you won’t even get into the High Usage tier 3 rate. You’ll average a monthly payment of $147, or 21 cents per kilowatt-hour and you don’t have to make any changes to your routine. That’s a price increase of $100 a month!
I hope you’re starting to get the picture, time-of-use is very expensive and it’s clearly more expensive than the Tiered Rate Plan. But there is of course hope, because no matter what, everyone, regardless of your utility provider will be switched to a time-of-use rate plan throughout 2018 and 2019.
So what’s this glimmering hope you ask? Well it’s a solar plus storage system, yes, PLUS storage. Because even when you go solar you’re placed under a time-of-use rate structure, this took affect in July 2017. I’m not going to go into details, we can save that for another video.
But the good news is your can drastically reduce your demand from the utility company during peak hours of 8AM to 10PM with a properly designed system.
The utility company has basically given you a reason to go solar.
You’re either going pay a higher cost for the energy you use, to live the way you want; or invest in a solar plus storage system.
There is of course a third option, you could become a vampire and sleep during the day, inside a coffin and live how you want at night, but lets be serious here, that’s not a real option for anyone.
There’s one more thing, the federal investment tax credit is going to start winding down this year. Which means this is the last year for you to receive a 30% federal tax credit when you purchase or finance a renewable energy system.
So unless you don’t care about saving money, you should probably drop us a call and setup a free energy consultation. www.pacificsuntech.com We’ve helped thousands of homeowners reduce or eliminate their utility bill, and I know we can help you too.
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