Tag: "domestic rate structure"

06/05/14

  07:50:00 am, by Jim Jenal - Founder & CEO   , 620 words  
Categories: Solar Economics, SCE, Commercial Solar, Residential Solar

Just in time for Summer - SCE Jacks its Rates

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.

SCE’s Tariff Library

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:

Part of SCE's Domestic rate

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.

Cruel, cruel 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!

Silver Lining

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!

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06/02/14

  09:26:00 am, by Jim Jenal - Founder & CEO   , 654 words  
Categories: SCE, Residential Solar, Ranting

SCE Explains Your Bill - Not!

We have looked at a lot of electric bills.

Pretty much every potential client that we speak to sends us a year’s worth of their electric bills as the first step in the process of getting a proposal for adding solar to their home or business.  We use that data to model what your actual savings will be, based on the rate structure that the utility applies to you as their customer.  Some of those rate structures are really complicated (like this time-of-use rate for EV charging), but for most residential clients, the rate should be relatively straight forward.  After all, you are only paying for total usage (not demand charges) and most folks aren’t yet on a time-of-use rate.  How complicated can it be?

But we had a bit of an epiphany the other day as we tried to explain an SCE bill to a couple at their kitchen table.  Perhaps you’ve noticed this little chart if you are an SCE customer:

SCE's idea of helping you understand your bill!

Presumably this is SCE’s attempt in helping you to understand your bill.  So what is going on here?  SCE residential customers are under a tiered rate structure.  The lowest tier, the so-called baseline rate, is relatively cheap at roughly thirteen cents per kilowatt hour for the first few hundred kilowatt hours needed.  Of course, no one uses just their baseline allocation and so the second tier is a tiny slice that is 30% of the baseline.  If you stay in those first two tiers, congratulations, you are getting some pretty cheap energy.

Tier 3 is where things start to get pricey, with the cost per kilowatt hour doubling from what you paid for baseline.  Tier 3’s allocation is 70% of baseline, which mean that if you use more than twice your baseline allocation, you are out of Tier 3 and into the dreaded Tier 4 where you will pay more than 31¢/kWh. 

Ok, so far so good. But notice the odd thing that is going on in that graph.  The widths of Tiers 1-3 are actually proportionate to reality.  The width of the bar for Tier 1 is equal width to the sum of the bars for Tiers 2 & 3— which is exactly how the rate structure works.  But what is going on with that bar for Tier 4?  At a quick glance, you might think that you are using about the same amount of energy in Tier 4 as you did in Tier 1 (or Tiers 2 & 3).  But look at the number: whereas Tier 1 was 399 kWh, the usage in Tier 4 is more than four times that amount at 1,799 kWhs!  This client is living in Tier 4!

This is not only not helpful to “understanding your bill,” this is downright deceptive.

So what should this actually look like if drawn to scale?  How about this:

SCE's actual tier structure

Now the true impact of this client’s high energy usage starts to become clearer.  Their usage is dominated by Tier 4 but you never would have seen that relying on the chart provided by SCE.

Of course for most clients, they are more interested in what they are paying, and it is here that the real impact of SCE’s tiered rate structure comes home.  Check out this chart:

SCE's actual cost structure

Wow - this client is spending 10x as much on Tier 4 as they are on Tier 1!  That is some painful energy costs right there!

To be sure, if you review your bill carefully, you could find this same information, but the bill obscures the facts by parsing out the numbers in a manner that only makes sense to the lawyers who crafted the rate structure (and those of us who have made it our business to decipher them).

We have a suggestion to our friends at SCE—if you really want to help your customers understand their bills, start by ditching the misleading charts and replace them with a clear representation that makes the facts readily understandable.

In the meantime we will continue to do our part, one kitchen table at a time.

05/12/14

  10:13:00 am, by Jim Jenal - Founder & CEO   , 918 words  
Categories: Solar Economics, SCE, Electric Cars that Run on Sun, Residential Solar

SCE's EV vs Domestic Rates - Driver Beware! - UPDATED

UPDATE - As its very own Christmas present to EV drivers, on December 24, 2014, SCE announced that as of January 1, 2015 the TOU-D-TEV rate structure would be closed to new participants, and that all existing SCE residential customers on this rate schedule will be migrated to another residential rate following their next meter read date after February 1, 2015.  No explanation for the change was provided.  We will write more about this in the coming days.  (H/T Joseph Gray.)


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…

Meet TOU-D-TEV

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:

SCE's TOU-D-TEV rate structure

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.

So Why Switch?

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:

Average user on SCE's TOU-D-TEV rate

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?

 Large user on SCE's TOU-D-TEV rate structure

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.

Solar to the Rescue

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.

04/08/13

  06:09:00 am, by Jim Jenal - Founder & CEO   , 731 words  
Categories: Solar Economics, Solar News, SCE, Residential Solar

Inside SCE's Rate Increase - Part 2

Our first post on the new SCE rate structures revealed that there were big changes coming to Residential customers.  In this post we will look a little closer at how those changes will affect your bill.

As we explained before, SCE’s new Domestic rate structure changes baseline allocations and completely eliminates the dreaded Tier 5.  Instead, the price of energy at Tiers 3 and 4 went up sharply (6.3% and 7.2% respectively) while summertime allocations generally declined.  (We didn’t discuss it in our previous post because it doesn’t affect that many SCE customers, but allocations for “all-electric” homes dropped dramatically, as much as 35% or more!  If you are in an all-electric home, you better be generating your own electricity!)

But the changes in the rate structure are complex - after all, non-summer allocations often increased and without Tier 5 it figured that some customers - those who use a great deal of energy - would actually benefit from the change.  We decided to find out.

Methodology

To assess the impact of the new rate structure, we modified our old SCE Domestic rate model (which we have used to estimate future savings from installing solar) to reflect the rate structure changes: new baseline allocations and the elimination of Tier 5 in return for modifications to the lower Tier rates.  Now we had two models - one based on the “2012 Historical Rates” and the other based on the new rates effective April 1, 2013.

Since the allocations vary by region, we chose Region 9 (which covers the cities surrounding Run on Sun such as South Pasadena and San Marino) as the home for our representative SCE customer.  We then ran our models based on a daily usage ranging from 10 kWh (way less usage than any single-family home in either of those cities) all the way up to 70 kWh (greater usage than all but the largest properties).  To account for summertime loads, we increased the daily usage by 50% for the months of June through September (a generally conservative estimate, especially as daily usage increases).

Winners and Losers

Here are our results (click for larger):

SCE rate comparison: 2012 vs 2013

Despite the presence of four (or five for 2012) different rates, the actual graph is almost entirely flat, except for usage at the very bottom end of the scale.  Fairly early on, we see the 2013 rates bend up above the values from 2012 with the greatest increases between 18 and 36 kWh daily usage (more on that in a moment).

As predicted, however, the rate increase is actually a rate reduction - if you happen to own a mansion or are running a whole bunch of Grow Lights.  Indeed, for folks way out there on the right edge of this curve, they will see their annual energy costs decline by more than 1%!  How nice for them.

But how did the rest of us do?  Let’s zero in a bit on where the middle class lives and see what their rates look like - check this out:

Middle-class SCE rates

For this graph we have restricted our usage values to the range of 18-36 kWh and narrowed the scale of our cost axis to start at $1,000 instead of $0.  The resulting “magnification” shows who is shouldering the bulk of this rate increase.  Customers in this band will see rate increases this year of anywhere from 2.88% to 4.85% (at 28 kWh), and keep in mind this is just one year of a multi-year rate increase plan.

Who are these lucky folks?  Well, in terms of potential solar clients, their system needs would range from 3.6 kW (just above our minimum system size) to 7.2 kW - in other words, the “sweet spot” of our potential residential clients.

So what is our takeaway from this analysis?  Well, as is seemingly commonplace these days, if you are  in the middle you are getting squeezed.  Folks on the low end mostly get a pass while folks on the high end are actually getting a break!  But if you are in the middle, it is your pocket that is getting picked.

Installing solar is your best hedge against the clever targeting by the team, no, make that the legion of lawyers and economists employed by the utilities to design these rate structures.  We cannot stop their scheming, but we can certainly assist you in fighting back!  Give us a call today, or better yet, fill out our online form and let’s put this new rate model to use in saving you some money!

Coming up later this week: how the new rate structures affect commercial customers.

04/06/13

  02:36:00 pm, by Jim Jenal - Founder & CEO   , 660 words  
Categories: Solar News, SCE, Residential Solar

SCE Rolls Out Major Rate Changes

In November we wrote that SCE’s rates were set to climb on average by more than 17% over the next three years.  Now we are starting to see how those rates are about to change and the differences are indeed dramatic.

In a 500+ page filing with the California Public Utilities Commission (CPUC), SCE documents major changes to both residential and commercial rate structures that will change how, and how much, SCE’s customers will pay in the coming years.

We will be breaking this filing down over time, but for a start, let’s look at changes for residential customers.

Changing the Baseline

Most residential customers of SCE pay according to Rate Schedule D (for ‘Domestic’) that charges based on a tiered structure.  At the bottom of the tier is the so-called baseline allocation - an amount of energy use per day allowed based on where the customer resides.

As SCE explains it on their FAQ page:

Baseline was never intended to cover 100% of average residential use, but rather to provide a significant portion of the reasonable energy needs to be charged at the lowest rate, and to encourage conservation of energy.

The CPUC established that the baseline quantities be allocated at 50% to 60% of average residential consumption for basic services such as lighting, cooking, heating and refrigeration, except for residential gas and all-electric residential customers, the baseline quantity is established at 60% to 70% of the average residential consumption during the winter heating season.

Under SCE’s new Domestic rate structure, baseline allocations will drop from their present 55% down to 53% of the average residential consumption.  Since all other aspects of the rate structure are dependent on the baseline allocations, these seemingly small drops can have a significant impact on how much a residential customer ultimately pays.  However, the baseline allocation reductions are an average over the entire customer base - some customers will see their allocation increase while others will see theirs go down.

Here’s a table showing old allocations versus new ones for customers in the Run on Sun service area:

Changes to SCE baseline allocations by representative cities

Most everyone sees their allocation increase in the winter period - precisely when most of us need it the least.  But if you live in the San Gabriel Valley - where the vast majority of our clients do - you will see a real drop in your daily baseline allocation and folks in the Pasadena area are especially hard hit.  (NB: Customers of Pasadena Water and Power are not affected by this change - only those who get their electrical service from SCE.)

Overall, for SCE’s nine different regions, six will see a reduction in their baseline allocation during the summer season while three will see increases.  For the remainder of the year, one region will see their allocation go down, six will see it go up and three will remain unchanged.

Is Anyone Shedding Tears Over Fewer Tiers?

SCE’s old residential rate structure had five tiers: baseline (or Tier 1), Tier 2 (usage of the next 30% beyond baseline), Tier 3 (usage between 131 and 200% of baseline), Tier 4 (usage between 201 and 300% of baseline) and Tier 5 (all usage beyond 300% of baseline).  At each Tier, the cost increased substantially.  Whereas a kilowatt-hour of energy within your baseline allocation was charged at the (relatively) modest rate of just 12.9¢, that same kilowatt-hour in Tier 5 would cost 32.6¢ - more than two-and-a-half times as much!

Going forward, Tier 5 is eliminated altogether - which sounds like good news until one realizes that the cost of Tiers 3 and 4 are going up, and for customers with reduced baseline allocations in the summer, they will get into those tiers much sooner.

Here’s how the new rates compare:

New rate comparison for SCE residential customers

 

While the two lowest tiers are essentially flat, Tier 3 goes up by 6.3% whereas Tier 4 jumps 7.2%.

But surely with Tier 5 eliminated altogether, some customers must do better under the new rate structure, right?  Ah, that is a question for another day, but wouldn’t a graph showing annual electric bills under the old and new domestic rate structure be something interesting to see?

We thought so to - that’s coming next time.

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Jim Jenal is the Founder & CEO of Run on Sun, Pasadena's premier installer and integrator of top-of-the-line solar power installations.
Run on Sun also offers solar consulting services, working with consumers, utilities, and municipalities to help them make solar power affordable and reliable.

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