A client of ours noted that Pasadena Water and Power (PWP) offers, in addition to its regular, Residential tiered rate structure, the option to switch to a Time-of-Use rate structure, and he asked if he would derive additional savings from making that switch. Turns out that is not an easy question to answer, and there certainly isn’t a “one size fits all” result. We decided to take a closer look into these rates both for PWP and for the folks in Southern California Edison (SCE) territory.
SPOILER ALERT - The following is pretty much down in the weeds. You have been warned!
Let’s start by defining our terms. Most residential electric customers, of both PWP and SCE, are on a tiered rate structure. That means that there are two or more cost steps - called tiers - for the energy that you use. Tiered rates assume that there is some minimally expensive charge for the first allocation of energy per billing cycle, and that as you use more energy your cost for energy increases. For example, SCE’s Domestic rate has three tiers and in the first tier the charge is 8.8¢/kWh, in the second tier the charge is 16¢/kWh, but the final tier is 22.4¢/kWh! (There is also a non-tiered component that adds another 6.9¢/kWh to the customer’s bill.)
PWP, on the other hand, has a somewhat perverse tier structure in that the lowest tier is very cheap, 1.7¢/kWh, the second tier is significantly higher, 13.5¢/kWh, but the final tier actually goes down to just 9.9¢/kWh! Since the whole point of tiered rates is to provide an incentive for heavy users to reduce their usage, PWP is actually rewarding those who consume more than 25 kWh per day with lower rates! Very odd.
Time-of-use rates, on the other hand, are generally not tiered. Instead, the day is broken up into segments and the cost of energy varies depending on the segment in which it is consumed. PWP refers to these segments as “On-Peak” (from 3-8 p.m.) and “Off-Peak” (all other hours). But PWP’s TOU rate retains the tiered element as well, making it a truly odd hybrid rate structure.
SCE’s approach is more involved, dividing the day into three, more complicated segments: “On-Peak” (2-8 p.m. weekdays - holidays excluded), “Super Off-Peak” (10 p.m. to 8 a.m. everyday), and “Off-Peak” (all other hours).
For both PWP and SCE there is a seasonal overlay on these rates, with energy costs increasing in the summer months (defined as June 1 through September 30).
(It is important to note that both PWP’s and SCE’s TOU rates put the most expensive energy in the late afternoon to evening time period - pricing energy to offset against the “head of the duck.” Ultimately, these rates will create the energy storage market in California, but that is a post for another day.
Assuming that one can create a spreadsheet to model these different rates (not a small task in and of itself!) there is one more hangup - data. Both PWP and SCE report total monthly usage to customers on their tiered rate plans - but in order to analyze your potential bill under a TOU rate, you must have hourly usage data for every day of the year! (Because there are 8,760 hours in a [non-leap] year, such a usage data collection is typically referred to as an 8760 file.)
The standard meters that PWP has installed simply do not record that data, so the average PWP customer has no way to know whether they would save money by making the switch.
On the other hand, most SCE customers do have access to that data and they can download it from SCE’s website.
After you create an account, login to it and go the “My Account” page. On the left-hand-side you will see some options - click on “My Green Button Data” (the too cute by half name for the interval data you are seeking), select the data range for the past twelve months, set the download format to “csv” and check the account from which to download. Then press the “download” button and cross your fingers - in our experience, the SCE website fails about as often as it actually produces the data that you are seeking!
Given that PWP doesn’t have data available, is there any way to estimate what the results might be? The answer is, sort of. We took an 8760 data set from an SCE customer and used that as our test data for both PWP and SCE. (The data file does not identify the customer.) Since the data file has an entry for every hour of every day, we can segment the usage against the On-Peak and Off-Peak hours, and using a pivot table - probably the most powerful took in Excel - we can summarize those values over the course of the year, as you see in Figure 1.
Figure 1 - Usage Profile for PWP
Summer months are highlighted in orange. For this specific energy usage profile, Off-Peak usage is more than twice that of the On-Peak usage (9,806 to 4,009 kWh respectively). So how does that work out when we apply the two different rate structures? The table in Figure 2 shows the details of the two rates:
Figure 2 - PWP Rates - Standard Residential and TOU
Under both rate plans, the distribution is tiered (with the perverse reverse incentive for usage above 750 kWh). Added to that is either the seasonally adjusted flat rate for energy, or the seasonally adjusted TOU energy charge.
Applying those rates to the Usage Profile in Figure 1 allows us to see what the energy and distribution components would be under both approaches. Given the hybrid nature of these rates, you might expect them to be similar and you would be correct. The distribution charge - which applies to both - comes to $1,180 for the year. The flat rate energy charge comes to $893, whereas the TOU charge is $985. Meaning that someone electing to use the TOU rate would have a yearly total of $2,165, whereas the flat rate user would have a total bill of $2,074, making the TOU rate - for this specific energy profile - 4% higher.
Beyond that, PWP has a number of other charges - such as a public benefit charge, an underground surtax, and a transmission charge - that are only tied to total usage, so the ultimate difference between these two rates is even smaller.
SCE rate structures are significantly more complicated that PWP’s. For example, the tier 1 (aka baseline) allocation varies by location. Since SCE covers such a huge and diverse area from cool coastal regions to absolute deserts, customers are allocated more energy per day in their baseline depending upon where they live. In the area around Pasadena that is covered by SCE, a typical daily baseline allowance would be 13.3 kWh in the summer and 10.8 kWh in the non-summer months. The baseline then is that number times the number of days in the billing cycle. Tier 2 applies to every kWh above baseline, but below 200% of baseline. Tier 3 applies to everything beyond that. As with PWP, the tiered rate only applies to “delivery” charges. The energy generation charges are the same all year. Here’s what that rate structure looks like:
Figure 3 - SCE’s Tiered Domestic Rate
The first thing that you notice when you look at this rate is how much higher it is than the rates from PWP, and the end calculation bears that out - the same usage that resulted in an annual bill of $2,074 in Pasadena becomes $3,227 once you cross the border into Altadena, South Pasadena, San Marino, or Sierra Madre - an increase of 56%! (There’s a reason why a growing percentage of our clients are coming from those surrounding, SCE-territory communities!)
So what would happen if this beleaguered client were to shift to a TOU rate? First, we need to re-parse the usage data according to SCE’s more complicated segmentation scheme, which gives us Figure 4:
Figure 4 - SCE’s Segmented Usage Data
Once again, the On-Peak usage is the smallest category of the three, amounting to just 23% of total usage, compared to 42% in Off-Peak, and 35% in Super Off-Peak.
Of course, SCE can’t do anything in a simple fashion, so they have not one but two basic approaches to their TOU rates, Option A and Option B. Option A rates run from a low of 13¢/kWh (in summer Super Off-Peak), to 29¢/kWh (during summer Off-Peak) to an eye-popping 44¢/kWh (during summer On-Peak). However, Option A includes a credit of 9.9¢/kWh on the first baseline worth of energy which reduces the monthly bill by roughly $30.
Option B deletes that baseline credit and replaces it with a “meter charge” (even though it is the same meter!) of 53.8¢/kWh/day, or roughly $17/month. In return, the On-Peak charges are significantly reduced from 44¢/kWh to just 32¢/kWh.
So how does this shake out? The results are quite surprising, as shown in Figure 5.
Figure 5 - SCE Rate Structure Comparison
The two left columns show the month-by-month calculations for both delivery (the tiered component) and generation (the flat component). The two right columns show the month-by-month calculations for the two different TOU rates.
The bottom line is striking: under TOU-A there is a savings of 5% over the tiered rate, whereas the savings jump to 19% by going to TOU-B! That is a savings of $600/year just by changing rate plans - a switch that any SCE customer can make.
MAYOR CAVEAT: YOUR MILEAGE WILL VARY!
The results displayed here are entirely dependent on your actual energy usage and no two usage profiles are alike. It is possible, even likely, that some usage profiles will see an increase in bills under either TOU option.
The good news is, that for a nominal fee, this is an analysis that we could do for any SCE residential customer - we would just need access to your usage data.
So that completes our pre-solar analysis. In our next post, we will look at how these results change when you add a solar power system into the mix.
Pasadena is not only the home for Run on Sun, it is also my home for many years now. Pasadena likes to think of itself as a forward looking, environmentally conscious city. So it was a bit of a blow to see the latest Power Content Label for our home-grown utility, Pasadena Water and Power (PWP), which reveals that when it comes to powering this city sustainably, we still have a long way to go!
Under California law, (Senate Bill 1305, Sher, Statutes of 1997), electricity retail suppliers are “required to disclose to consumers which types of resources are used to generate electricity being sold." October 1 is the deadline for utilities to report this info to the California Energy Commission, and they are then required to disclose it to their customers by way of a flier included in the bill. The disclosure is known as a Power Content Label and it breaks down energy sold by source and compares it to the overall mix in the state.
Here is PWP’s PCL for 2015:
|ENERGY RESOURCES||2015 PWP POWER MIX||2015 CA POWER MIX|
|Biomass & waste||15%||3%|
| Large Hydro
| Natural Gas
Wow, that’s a lot of fossil fuels, with the majority of it coal. Contrast that with the rest of the state where coal is roughly 1/6 of the factor that it is at PWP, and keep in mind that you produce 2.1 pounds of CO2 per kWh when burning coal (on average) compared to just 1.2 pounds from burning natural gas.
Worse still, solar makes up 0% of PWP’s overall mix, compared to 6% for the state overall.
If there is a silver lining in these numbers it is this: 2015 is an improvement over the past. As recently as 2013, coal was a whopping 52% of PWP’s total power. So our hometown utility is getting better, but we are a long way from where we need to be!
(*Unspecified means “electricity from transactions that are not traceable to specific generation sources.")
Going solar isn’t the only thing you can do to reduce your electric bills and your environmental footprint. In fact, the first thing you should consider is how you could make your home more efficient BEFORE investing in solar. Investing in a solar system that is bigger than you really need is just a bad investment strategy since efficiency upgrades are often much more affordable than the solar system required to offset the ineficient loads.
One option is to hire a professional to give you a thorough energy audit which will help to pinpoint where your electrical hogs are and what you can do to improve efficiencies. Alternatively, there are a lot of relatively simple steps you can take if you know what to look for. Changing out your old light bulbs to LEDs is an obvious and easy fix for example. But one of the biggest and often under the radar culprits that I’m here to tell you all about are pool pumps.
Pool pumps can have such a big effect on your electric bill that we always discuss it when doing a solar site evaluation at any home fortunate enough to have a pool. Of course we don’t recommend eliminating your pump altogether as they are necessary to keep your water filtered and clean. So what is the solution? There are all sorts of newer “efficient” pool pumps out there and likely your pool guy/girl will happily install if you say you’d like an upgrade. However, what you really need if you want to make a dent in your electrical load is something called a “variable speed” pool pump.
A variable speed pool pump is exactly what it sounds like… Rather than pumping water with a consistently high speed you really only need max power at the outset to get the water moving. Once its moving the variable speed pump then downgrades the output power to keep the water moving since less energy is required to keep something moving than to get something going from a standstill. This reduced speed equals reduced energy loads!
We have heard clients who installed variable speed pumps have seen reductions on their bill on the order of over $500 per year!
The downside for these pumps is often the price is much higher than regular pumps. But I come bearing good news! Many utilities offer rebates and incentives for Energy Star qualified pool pumps. In our home turf of Pasadena, California we are fortunate to have a very proactive utility, Pasadena Water and Power, striving to help residents lower their footprint. They normally offer a rebate of $400-$450 off the sticker price for a variable speed pump. However, I was just notified that PWP is running a promotion on all of their energy efficient appliance rebates through October 31st, 2016:
“PWP is offering a $900 (bought outside Pasadena) to $950 (bought locally) rebate to all PWP residential electric customers who replace their old pool pump with a new energy efficient variable speed or variable flow pool pump and motor. Replacing older inefficient pool pumps with new efficient models will not only help you reduce energy use but save you money. With the summer heat and the possibility of rolling blackouts, PWP wants to make sure you do your part to conserve energy."
We couldn’t agree more! Check PWP’s rebates listing for a list of other rebates to take advantage of. The listed prices on the website include the current promotion.
If you’re not in PWP’s service area, never fear! You can check if your utility has rebates on the Energy Star website.
After you’ve addressed all the drafty windows, switched out your lightbulbs and upgraded all your appliances, then it is time to give Run on Sun a call (626-793-6025) and we’ll help you offset the rest of your energy needs!
UPDATE - 5/28/16 - Despite our best efforts, AB 2339 was HELD in the Appropriations Committee, effectively killing the bill this session. Thank you to everyone who took the time to call and voice their support for the bill. Special thanks to Frank Andorka who created a podcast in support of the bill, all the way from Cleveland! We lost this battle, but the fight continues.
UPDATE - 5/26/16 - We passed the Assembly Utilities Committee on a 10-2 vote, but right now we are stuck in the Assembly Appropriations Committee, chaired by San Diego Democrat Lorena Gonzalez. The decision of whether to allow AB 2339 to advance to the Assembly Floor rests in the hands of two people: Chair Gonzalez and Speaker Rendon. Please take a moment to give them a call and urge them to support the bill. Here are their numbers:
Back in February we wrote about the new Net Metering 2.0 rules that the California Public Utilities Commission (CPUC) approved over the objections of the Investor-Owned Utilities (IOUs), SCE, PG&E, and SDG&E.
We noted at the time that the CPUC rulemaking did not directly affect the Municipal Utilities (munis, like Pasadena Water and Power). Boy was that right as muni after muni is looking to shut down Net Metering altogether! Here’s our take, and more importantly, an action item that you can take to preserve Net Metering with the munis.
The munis are generally free, within the limits of state law, to set their own policies as confirmed by the local city council. So here in Pasadena, PWP sets its policy but has to have that policy ratified by the city council’s vote. When it comes to Net Metering, state law requires that the munis, like the IOUs, offer Net Metering agreements until the amount of solar deployed exceeds “5% of the electric utility’s aggregate customer peak demand.” (CA Public Utilities Code § 2827) Now if that quote seems like less than a model of clarity, you are quite right. Before the CPUC, the IOUs argued that it meant that you look at a utility’s highest peak demand as of a certain point in time, and that would be the cap. Such an interpretation, however, reads the words “aggregate customer” out of the statute. The CPUC agreed, and the proper interpretation requires the utility to sum the aggregate demand from each customer and that becomes the cap.
The results are dramatic - the proper interpretation effectively doubles the total amount of solar allowed under the cap. That decision by the CPUC back in 2012 redefined Net Metering, but only for the IOUs. At the time there was little concern regarding the munis since none was close to reaching their cap.
Fast forward to today and five munis have already reached their caps, as calculated under the old, pre-CPUC ruling, methodology. That leaves them free to replace Net Metering with whatever they choose, and at least one, Turlock, has adopted new rules that have resulted in an 85% decline in the solar market there! (In contrast, LADWP has already agreed to the new methodology thanks to leadership from Mayor Garcetti.)
Fortunately there is a fix in the works. AB 2339 (Irwin - D-44) will require that the munis calculate their caps in effectively the same way as the IOUs. The bill is presently in the Assembly Committee on Utilities and Commerce, chaired by Mike Gatto (D-43) - a former student and colleague of mine, and a champion of clean energy.
We need the strongest bill possible coming out of the committee, and you can help make that happen. How? Our friends at CALSEIA have compiled a target list of key assembly members who need to here from their constituents on this bill. From the CALSEIA newsflash:
- Jim Patterson (R-Fresno/Clovis) 916-319-2023
- Susan Eggman (D-Stockton/Mountain House/Thornton/Tracy) 916-319-2013
- Mike Gatto (D-Burbank/Glendale/La Canada/La Crescenta) 916-319-2043
- Bill Quirk (D-Hayward/Ashland/Castro Valley/Cherryland/Fairview/ Fremont/ Pleasanton/San Lorenzo/Sunol/Union City) 916- 319-2020
- Miguel Santiago (D-Huntington Park/Vernon) 916- 319-2053
- Eduardo Garcia (D-Imperial/Blythe/Brawley/Calexico/Cathedral City/Coachella/Desert H.Springs/El Centro/Indio) 916- 319-2056
- Christina Garcia (D-LA/Bell Gardens/Bellflower/Cerritos/Commerce/ Downey/Montebello/Pico Rivera) 916- 319-2058
- David Hadley (R-Torrance/Gardena/Lomita/Manhattan Beach/Palos Verdes Estates/Redondo Beach/West Carson) 916- 319-2066
- Phil Ting (D-San Francisco) (916) 319-2019
- Rocky Chavez (R-Oceanside/Calsbad/Encinitas/Vista) (916) 319-2076
If you live in one of those districts, or if you run a business in one, or have customers there, please contact that member.
More generally, there is a website where anyone can go to express their support for expanding the benefits of Net Metering to muni customers throughout the State. Just click on the button to make this happen:
Sadly, the list of entities opposing this bill includes Pasadena Water and Power - looks like we need some political leadership here in our own backyard to get PWP on board.
We will update this post as the bill progresses through the legislature - watch this space!
Recently a potential client was asking us about an oddity in their Pasadena Water and Power (PWP) electric bill. PWP has a tiered rate structure, but the most visible component of that tiering, the Distribution charge, steps up above 350 kWh of usage in any one month, but it steps down above 750! Which lead us to the question, are PWP’s electric rates regressive?
PWP’s Residential rate structure, like many utility tariffs, is a model of complexity. On your bill there are a number of obvious charges, and a few that are not so obvious. The obvious ones are on the right-hand-side of the bill and include a Customer charge, a Distribution charge, a Transmission charge, and an Energy charge. (The not-so-obvious charges include those related to public benefit programs and paying to put power lines underground.)
All of these obvious charges are tied to the customer’s usage, but only one, the Distribution charge, is tiered. At or below 350 kWh of usage per month, the customer pays just 1.5¢/kWh. Between 351 and 750 kWh of usage the Distribution charge increases dramatically all the way up to 11.65¢/kWh, nearly an eight-fold increase! Ok, the whole point of a tiered rate structure is to discourage higher use by making you pay more as your usage increases. But PWP’s rate then does something truly odd - above 750 kWh/month the rate comes down, dropping from 11.65¢/kWh to just 8.5¢/kWh! What sort of an incentive is that?
That rate design is certainly counter-intuitive, to say the least, but is it regressive? In other words, is there a point at which a large residential user ends up paying less per kWh than does someone who uses less? To find out, we modeled daily usage from 10 kWh/day all the way up to 60 kWh/day. As a reference, a typical Run on Sun client in PWP’s service area averages around 25 kWh/day. Since the Transmission and Energy charges are adjusted higher in the summer months, we broke out the overall rates seasonally as well.
Here are our results (click for larger):
The blue line is the winter rate and the orange is summer. If you use a tiny amount of energy you will pay between sixteen and seventeen cents per kWh, with rates rising sharply until you get to 25 kWh/day. Beyond that, the rate of growth flattens out markedly, but it never dips down. (That is true even if you carry the analysis all the way out to 200 kWh/day!)
Contrast this with the SCE Domestic rate - that is a truly aggressively progressive rate structure with energy charges of 14.5¢/kWh for those using within the smallest (baseline) tier of energy, going all the way up to 30.8¢/kWh for energy used in the fourth tier, which kicks in for monthly usage above approximately 900 kWh.
So no, PWP’s Residential rate is not regressive, but by flattening out the rate for usage above 25 kWh/day, it sends at best a mixed signal if the utility is trying to encourage its customers to reduce their usage.
How does this relate to solar? Well, if your usage is above 20 kWh/day you are spending at least 20¢/kWh whereas the cost of a solar power system will be less than half of that! So yes, in PWP territory - and particularly while they still have rebates in place - installing solar will still pay you big dividends.
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