One of our astute readers contacted us to ask if we had noticed that SCE had just increased their rates—and dramatically. That got our attention so we decided to spend some quality time amidst SCE’s tariffs. The news is mixed: terrible news for people who are going to have to pay these crazy rates, but great news for everyone who can install solar. In fact, SCE’s new domestic rate is about all anyone would need to be convinced to finally make the switch to solar.
In case you did not know it, every SCE tariff—that is, the rate structures under which they bill their customers such as the Domestic tariff for most residential customers or GS-1 and GS-2 for most commercial customers—can be found on their website. If you know where to look. (Hint: look here!) Of course, when you do find what you are looking for, you are rewarded with something that looks like this:
This is one half of SCE’s Domestic rate (the delivery portion)—and this is about the simplest rate structure that they use! So it is not surprising that most normal people don’t really examine these things to see what is going on—they just groan and pay the bill.
But we suspect people will do more than groan when they look at their bills this summer.
We had been working on a solar proposal for a prospective client in SCE territory when we learned about the rate change. The client’s usage was relatively high, averaging 55 kWh/day over the course of the year; high, but still far lower than some of our clients. Under the rate structure in effect prior to June 1, this client’s annual bill worked out to $5,100 but after applying the new rates her annual total jumped to $5,750—an increase of a whopping 12.7%!
We will pause a moment to let that sink in.
What about that other potential client we wrote about, the one whose SCE bill already contained an incredibly misleading chart purporting to help her understand her bill. What impact will these new rates have for her? Under the rates in place before June 1, her total bill for the year was an already eye-popping $8,435—ouch! But under the new rates? Her new bill becomes $9,560—an increase of 13.4%!
So what is actually going on here? Turns out that the rates on the high end, Tiers 3 and 4, are the culprits, increasing by 16.4% and 14.8% respectively. Live in Tier 4 this summer and you will be paying 34.8¢/kWh for the privilege!
There is a silver lining here and that is that adding solar pays off better than ever. If your solar power system gets you out of Tier 4 alone, you will save thousands of dollars a year. For our prospective client who averaged 55 kWh per day, her savings come to $4,171 in Year 1. Even without a rebate from SCE (which for now at least has gone the way of the Dodo), her payback is in Year 5! After 10 years, thanks to these new rates, she will have saved an additional $25,000! And by avoiding a lease (this client is planning on using HERO financing), those benefits all go to her!
We have said it before and we will say it again: utility rates are only going up. While this example pertains to just SCE’s residential customers, guess what? You commercial customers are about to see your rates go up as well (more on that soon). And muni customers, now is not really the time to feel smug as your rates are going up too (and yes, PWP folks, we mean you!).
Give us a call and let’s see if we can’t help—contrary to the song, we’ve got a cure for these summertime blues!
We have been waiting quite a while, but the good news is that HERO Financing for residential solar has finally arrived in Los Angeles County!
On Friday, May 23, the HERO Financing program formally launched in LA County after being a huge success in Riverside and San Bernardino counties, helping fuel explosive growth of solar installations in those counties.
Here is how they describe the program:
The HERO Financing Program provides homeowners a unique opportunity to make home energy
improvements through property tax financing. Benefits include 5-20 year terms, tax-deductible interest,
transferability when the property is sold and consumer protections.
To learn more go to heroprogram.com
Unfortunately, not every city in LA County is (presently) participating—most notable laggard from our perspective? Pasadena! Come on, Pasadena, what is up with this? Pasadena was signed on to the PACE program years ago, so what is holding you back now? (Oh, and the City of LA is not signed on yet either, but no shock there.)
Here is the list of participating cities in LA County as of the program rollout:
|Alhambra||Hawthorne||Rancho Palos Verdes|
|Azusa||Hermosa Beach||Rolling Hills|
|Baldwin Park||Inglewood||Rolling Hills Estates|
|Carson||La Cañada Flintridge||San Dimas|
|City of Industry||La Verne||San Gabriel|
|Diamond Bar||Monrovia||South El Monte|
|El Monte||Montebello||South Pasadena|
|El Segundo||Monterey Park||Temple City|
If you would like to encourage Pasadena to get with the program, here is some contact information for you:
Bill Bogaard, Mayor (626) 744-4311
Margaret McAustin, Vice Mayor (626) 744-4742
Jacque Robinson, Council Member - District 1 (626) 744-4444
John J. Kennedy, Council Member - District 3 (626) 744-4738
Gene Masuda, Council Member - District 4 (626) 744-4740
Victor M. Gordo, Council Member - District 5 (626) 744-4741
Steven Madison, Council Member - District 6 (626) 744-4739
Terry Tornek, Council Member - District 7 (626) 441-4802
We are looking forward to participating in the HERO program. We hope it will help more homeowners finance solar power projects with little or no upfront costs, and in a way that is far more financially beneficial to them then other financing mechanisms, like solar leasing.
SCE has devised an extremely complicated rate structure designed for residential customers who drive electric vehicles. Instead of having a separate meter for EV charging, this rate structure is designed to replace the Domestic rate and apply to the entire household’s energy use—presumably at a savings. But does it? What we discovered may come as a shock…
SCE has long offered a rate structure that was designed for separate meter charging of EVs. But as more and more people acquire EVs there were relatively fewer consumers looking to go through the hassle of installing a separate meter just to charge their EV. SCE’s combined household and EV charging rate, known by the unmelodious monicker of TOU-D-TEV ("EV Rate,” for short), is designed to provide a lower-cost option for customers who were previously on SCE’s standard, Domestic rate structure.
As the acronym implies, the EV Rate is a time-of-use rate structure which means that what you pay for a kilowatt-hour of energy is directly tied to when you use it. There are three time classes: On-Peak (weekdays, excluding designated holidays, from 10 a.m. to 6 p.m.), Super Off-Peak (everyday, midnight to 6 a.m.) and Off-Peak (all other times). In addition to the time of use component, the EV Rate includes tiers. While Domestic rate customers are used to four tiers at which energy gets progressively more expensive, the EV Rate has only two tiers. Put this all together and you have the potential to pay wildly different amounts for your energy, as this table shows:
Stay within Level 1 and use your energy during Super Off-Peak and you pay just 9.4¢/kWh. But make the mistake of using energy during the middle of the day in the summer in Level 2 and you will be pay a shocking, 46.4¢/kWh! Yikes!!! Sure hope you aren’t at home during the day running your A/C.
EV owners are not required to take service under the EV Rate structure (at least not yet), so why switch? SCE advises customers that they can save money using this rate and we wanted to see if that was really true. We decided to model two different users and see how their bills would change between the Domestic rate and the EV Rate. The first user, our “average” user, consumes roughly 1,000 kWh per month (probably on the low end for most EV owners), or a little more than twice the baseline allocation. The second user, our “large” user, consumes more like 2,500 kWh per month and reflects a large home with heavy A/C use.
Let’s start with the average user:
This graph compares what our average user would have paid under SCE’s Domestic rate (the constant, orange line) against what she would pay under the EV Rate (the blue line) as a function of what percentage of the total monthly usage occurs during On-Peak hours. (Throughout we assume that 20% occurs during the Super Off-Peak hours of midnight to 6 a.m., and the balance occurs during Off-Peak).
Under the Domestic rate, our average customer would pay $3,200 for the year. If she manages to keep her On-Peak usage down below 30% of the total energy consumption, she will save money—as much as $355 or 11% off her bill, if her On-Peak usage is jut 5%.
But those “savings” can quickly disappear if she isn’t careful (or her children aren’t). Let her On-Peak usage climb to 60% of her bill and she will get hit with a 12% penalty and end up paying $388 more than if she had not switched.
What about our “large” user, how does he fare?
Most likely, better.
While his overall bill is much higher—he would be paying $8,500 on the Domestic rate—his potential savings versus penalty comparison is much more forgiving. He can save as much as 13% ($1,100) compared to a penalty of only 6% ($478). Plus, his breakeven point is higher, as he doesn’t start losing money until his On-Peak usage gets to 45%.
(This actually continues a trend with SCE’s residential rates where increases are highest at the lowest end of usage and the very highest users are actually getting a bit of a break. What an odd sort of mixed message.)
Bottom line—it is possible to save money, even significant money, if you are very careful about when you use energy.
Most EV’s are designed so that you can program them to charge during off-hours and anyone under this rate structure would absolutely want to insure that they use that feature. Indeed, there may be other energy users that could be similarly re-programmed such as pool pumps, dishwashers and washing machines, to run during the Super Off-Peak window. Unfortunately, it is very difficult to avoid running your A/C during the day if anyone is at home from 10 a.m. to 6 p.m. on weekdays—and doing so could be very expensive.
It should be obvious, but adding solar to the mix here could be huge since On-Peak hours directly coincide with the greatest production from a solar power system. Put most simply, if you own an EV and are considering making the switch to this EV rate structure, you need solar.
In our first two posts this week recapping the state of solar feed-in tariffs in the Run on Sun service area, we focused on what is happening with the biggest FiT around, that run by LADWP. But that isn’t, nominally at least, the only game in town so this post will summarize the progress, or lack of same, at the other FiT programs around: Glendale, Anaheim and Riverside.
We have written at great length about the problems with the FiT program that Glendale Water & Power designed to meet their state mandate. We noted that the prices being offerred—which were actually even 10% lower than what was presented to the Glendale City Council when they approved the program—were way too low to pencil out for a project, and that other uncertainties made it highly unlikely that anyone would participate. In other words, as we told the Glendale City Council, they were approving a program that was designed to fail.
Nine months into the experiment, where do things stand today? Let’s take a quick look at the FiT queue as of today:
All that empty space is just hard on the eyes.
In nine months, GWP has not received a single application for their FiT program—and contrary to how GWP officials refer to their defunct commercial solar incentive program as a “victim of its own success,” this program is a victim of GWP’s design.
Given the failure to attract a single project application, you might think that GWP would take steps to address their failure by increasing the offer price for energy, but you would be wrong. This table summarizes the progression on GWP’s FiT offer price for energy:
The “City Council” price is what GWP suggested to the City Council the offer price might be when the program went live and that is the price the Council had before it when they approved the program. The “Program Start” price is what was actually offered to potential project developers when the program went live last July.
The “Q214″ price is what is being offered today—a reduction of 5.5% for Peak and 4.8% for Off-Peak deliveries. That’s right, in response to offering a price that was already so low that no one was willing to put forward an application, GWP has responded by cutting its offer price by 5%. Genius.
GWP will no doubt say that they have no choice, that the formula approved by the City Council for setting the offer price mandates this result, but that’s merely self-referential nonsense. GWP designed the formula and the City Council confessed that they had no way to assess the technical merit of what was before them. The formula is supposed to be based, in part, on avoided costs—but guess what? So is the offer price for the LADWP FiT and yet it is twice what GWP is offering. Are we to believe, therefore, that GWP’s costs are half of those incurred by LADWP? If so, we suspect the customers of GWP would be surprised then that there rates are as high as they are.
It is high time that the Glendale City Council call GWP to task and insist that they re-create this FiT program so as to achieve what the state law intended—the actual installation of solar power in the City of Glendale.
The representative from Anaheim Water & Power had told us last year that their program to date, despite being started in 2010, had yet to attract a single application. Checking in on Anaheim’s FiT website confirms that unbroken string of failure continues to this day with no projects in the queue.
Anaheim’s offer price tells us why: it ranges from 3.883¢/kWh for Off-Peak to 6.472¢/kWh for Mid-Peak to a summer On-Peak price of 9.708¢/kWh.
Last year Riverside’s representative told us that they knew that their price was so low no one would bite and that was fine because they didn’t want solar installed in Riverside anyway. Today, Riverside’s “we don’t want anybody to participate” price for energy is 6.2¢/kWh—exactly the same as GWP’s off-peak price. Looks like GWP is playing follow the (non)leader.
Which brings us to our friends at Pasadena Water & Power. At a meeting yesterday we learned that PWP is considering a Feed-in Tariff program of its own. Now we are fans of PWP, indeed, we think they are the easiest and best utility around to work with (and for, for that matter). So that begs the question: What sort of FiT will PWP create? They could base their program on what has been done at LADWP (with necessary tweaks to make small projects viable) and thereby insure a successful program that reduces pollution, creates local jobs and helps to green PWP’s energy mix. Or they could follow the misguided path of GWP and its ilk, creating a program in name only, that guarantees that not a single kWh of clean energy will ever be generated.
Needless to say, we will follow FiT development at PWP closely. Watch this space.
Yesterday we provided a recap of the results from the third tranche of LADWP’s Feed-in Tariff (FiT). Today we are going to look at the status of the program overall, based on the newly instituted FiT Dashboard found on DWP’s FiT website.
We are often critical of issues with utilities, whether its undue roadblocks to installing solar or outright hostility to the entire concept of net metering. So it is equally important to give credit where it is due, and the introduction of the solar “Dashboards” that are now featured at the DWP website is a great step forward in transparency and one that deserves to be widely imitated by DWP’s peers. Here is how DWP explains the purpose of their FiT Dashboard:
LADWP is implementing the largest FiT program of any municipal utility in the nation. As it goes through growing pains, we continually work to improve the experience of customers and businesses who participate in it. The goal is to achieve the target level of solar energy, catalyze the solar industry and create jobs, and streamline the process to increase efficiency. This Dashboard outlines the issues, actions taken, and plans for improvement. The graphs show the current and targeted FiT processing timelines, schedule, and status of projects from each allocation.
The data discussed below is from the Dashboard update as of April 7, 2014.
While the complete flow chart for LA’s FiT program is more than a shade Byzantine, the Dashboard highlights processing times associated with three key bottlenecks in that flow: the initial Technical Screening that takes place when a project application is first submitted, the interconnection study which determines the cost for the proposed project to tie into DWP’s grid, and contract execution for the PPA between the project developer and DWP. For each of these milestones, DWP has a goal of completing the work in four weeks. In each case, DWP is missing those targets by a lot.
As of this writing, DWP is taking, on average, 6 weeks to complete the initial technical screening, 12 weeks (3x the goal) to complete the interconnection study and 14 weeks (3.5x the goal) to execute the contract! Unfortunately, the Dashboard does not reveal how much of that delay reflects internal DWP processing times versus delays caused by the developer—breaking these delays down to reveal how that works out would be an important modification to the Dashboard.
While we can understand how incomplete applications and general, technical complexity could add delays to the first two milestones, we are baffled by the 14 weeks of delay in executing the contracts. These are standard form contracts which, at least according to the program guidelines, are not subject to negotiation. What could possibly cause a three-and-a-half month delay in getting those contracts signed? Alas, the Dashboard does not reveal an answer to that question.
Which brings us to the status of all project applications in the queue. Here’s DWP’s chart (click for larger):
The chart shows all 22 applications from the third tranche in the initial technical review as would be expected. Shockingly, there are still 13 projects from the first tranche, over a year ago, that are still hung-up in that initial review!
Missing from this chart is the number of projects that are designated as cancelled. By our count, there are 47 projects that made it through the lottery but have been cancelled for whatever reason. (The most likely reason would be due to learning that the cost to interconnect to DWP’s grid—the major wild card in the whole process—turned out to be too expensive. However, according to the data, only 21 of those 47 projects ever had the interconnection study completed, which means the majority of the cancellations had to be due to other, unreported, reasons.)
Seven projects from the first tranche are still waiting for the interconnection study to complete along with 37 from the second tranche. Thirty-four projects, 17 each from the first two tranches, are undergoing the mysterious contract review process. Only 9 projects have managed to get contracts executed and just two, both from the first tranche, have been commissioned. (The blue bars represent projects from the demonstration phase.)
That’s a lot of solar in the pipeline—hopefully DWP can get the cancellation rate down and the completion rate up in the coming months.
Again to its credit, the Dashboard acknowledges that the program’s overall status is: “Needs Improvement” and steps are underway to improve the process. Perhaps the most significant development is that DWP has assigned seven additional engineers to help work through this backlog. But the Dashboard makes clear that to get to target goals, DWP needs to climb a very steep hill: “To achieve target turn-around schedule, staff must complete 10 interconnection studies per week over the next 7 weeks and 10 contracts per week over the next 10 weeks.”
Bottom line - DWP is working on a big and complex program and the performance to date has been less than desired, but the institutional attitude seems better than expected. Hopefully DWP will be able to deliver on its targets in the next 10 weeks.
Of course, DWP looks positively stellar compared to the FiT performance of its neighbors, a topic we will return to tomorrow.