By Tim Henderson
In April of 2018, Pacific Gas and Electric Co., also known as PG&E, implemented a new rate structure – the latest of many in recent years.
Designed to promote more efficient energy usage and simplify rate plans for customers, the PGE rate increase affected the residential rates of about 150,000 customers across PG&E’s service areas. It is the first phase of a statewide effort that will cost millions of dollars.
Here’s what you need to know about the PGE rate increase, and how it’s affecting Californians now.
PG&E is testing a new usage system, and North State residents will likely see the effects in the coming months. Known by some as the “Time of use (TOU) experiment,” this effort is meant to promote renewable energy, shift usage demands to times when renewable energy is prevalent, and make the state a greener place.
PG&E currently has about 16 million customers. In April, 150,000 those households were placed on a trial TOU rate plan instead of their original tiered plans. Under this new plan, pricing changes based on how much energy these households use, and when they use it. Rates are lower during the 19 hours a day that make up “off periods,” and higher during peak periods, or times when energy is in most demand.
Here’s an example of how tiered plans work, as compared to TOU plans:
If a household has a baseline allowance of 100 kWh, they’ll pay $0.20 per kWh for the baseline, up to 100% of the total allowance. That rate increases, however, to $0.28 per kWh if the household goes over the allowance, and steps up to a considerable $0.40 per kWh if the allowance is exceeded by more than 400%.
Out of the 150,000 customers participating in the time of use trial, about 11,000 customers are from the North State. TOU trial customers can opt out, if they choose. The small sample population is designed to PG&E can work out the bugs, but everyone in California will be switched to the TOU plan by next year.
At the end of 2015, the average monthly bill for PGE customers was about $137.66. By the end of 2016, that number had increased to about $151.80, or 10.3%. By 2017, the numbers had risen to an average of $165.10 monthly.
These rate changes depend on the rate plan and the household’s energy use, of course.
The new system will combine “amount used” and “when you use it” pricing. The plan defines peak times as between 4pm and 9pm, and makes electricity more expensive ($0.26 per kWh) during that time, even if it’s below your baseline.
If you exceed the baseline during that peak time, your rate will increase to $0.34 per kWh. Off-peak hours, meanwhile, will remain at the current rate, and will actually be one-cent if you exceed the baseline, dropping it from $0.28 to $0.27 per kWh.
Many people looking for an alternative to rising PGE rates are beginning to consider installing solar power systems. Not only does this approach allow you to take advantage of net metering and all the benefits that go along with it, like credits on your utility bills, but it may help you avoid future rate increases, as well.
Before the rise of TOU rates, lots of solar installers operating in PG&E territory would install systems that were designed to offset some electricity use and help households stay in the lowest tier of energy costs. Today, many solar installers are taking that one step further by recommending systems with built-in solar battery storage.
With a solar battery, you can store your household’s excess solar electricity rather than sending it back to the grid. During peak hours, your household can draw on this stored power instead of using high-cost electricity.
For the first 12 months of the PGE program, the company will offer bill protection. This protection is designed to allow customers to try the new time-of-use plan risk-free while checking for an electricity cost rate increase.
During this time, customers have the option to earn a credit if they pay more on the time-of-use plan than they did on their former plan.
Starting July 1 – all residential PG&E customers will automatically be enrolled in Monterey Bay Community Power’s (MBCP) MB Choice Plan (unless they opt out). In the future, some commercial rates may be affected.
If past trends are any indication, TOU rates will continue to climb. While there are things homeowners on the California Central Coast and nationwide can do to decrease their usage and reduce their electric bills, installing solar panels and solar battery systems is a great way to eliminate your electric bill and enjoy savings for years to come.
While TOU plans will continue to shift and change, solar is a reliable and forward-thinking way to power your home, both now and in the future.
If you’re considering going solar in 2018, contact Sandbar Solar for a free solar quote or to learn more about our residential solar installation services.
Tim has worked in the solar industry since 2008. He has a Master's Degree in Energy Resources Engineering from Stanford University. His years of experience include working on solar energy projects for both homes and commercial properties. Tim enjoys sharing his knowledge of this evolving industry and making a difference in his community.
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