A guiding principle in the business world is to simplify your pricing to win sales. The challenge for the consumer comes when one has no choice but to pay for a service, such as in the case of public utilities. As understanding your energy bill starts to feel more like cracking the American tax code, your rates are steadily rising. The additions to Southern California Edison (SCE) pricing options—which the company says were “designed so you can find the right fit to your household’s lifestyle”—may leave you feeling crippled by confusion. The result has been that more SoCal homeowners are adopting solar alternatives, enjoying rates that are not only lower, but consistent, predictable, easily understood, and protected from annual increases. For those still using conventional energy with SCE, here we provide a simple(r) breakdown of its billing options.
Tiered Rate Plan
The tiered system appears to be simplest, with its Tier 1 option for energy usage “up to Baseline allocation” priced at $0.16 per kilowatt hour (kWh), Tier 2 for usage ranging 101% to 400% of Baseline priced at $0.25/kwh, and—brace yourself—a “High Usage” tier for users consuming more than 400% of Baseline priced at $0.31/kWh.
Three options. Simple, right? But what is “Baseline” and who determines it? These allocations are determined by the California Public Utilities Commission (CPUC) and are based on “the number of days in the billing period, the season, the climate, and whether your primary source of heat is electric,” according to SCE.
If that seems like a lot of factors, it is. After all, it’s not quite fair to charge a desert-area customer the same for power as a beach-city resident who beats the summer heat by cracking a window. To meet the challenge, Edison breaks communities into baseline regions, applying different allocations to the various areas.
The move to just two tiers is a recent one, having been reduced from four tiers over the past couple years. While this does serve to simplify pricing, the price jump from Tier 1 to Tier 2 (nearly double) may have some homeowners clamoring for complication!
"Time of Use" Rate Plan
If you haven’t heard of the Time of Use plan (TOU), get acquainted—the CPUC is requiring Edison to automatically change customers to this plan beginning in 2018, though it is possible to change back.
What is TOU? In the simplest terms, this plan charges varying rates for energy used at different times of the day, with the rationale being that customers can “control” their energy bill by moving power consumption to off-peak hours. (Perfect for those who prefer to use their AC when it isn’t hot.)
While the explanation is simple, the application of the plan is anything but. The TOU plan actually provides four options—D-A, D-B, D-T and EV-1—which range from two to four different prices per day, each applied to different hours, carrying separate “Daily Basic Charges,” and each having alternative rates for weekday versus weekend, and summer versus winter.
Net Energy Metering 1.0
Net Energy Metering (NEM) 1.0, we hardly knew thee… This plan, designed for and available to solar energy users, was phased out as of July 1, 2017, as SCE transitioned new solar customers to the NEM 2.0 program.
But for historical purposes, Net Energy Metering refers to the energy a solar system produces and feeds onto the electric grid, minus the power consumed by the household—the “net” energy. Homes that generated more energy than consumed were owed a surplus credit by SCE, but alas, some key differences in NEM 2.0 have made this a less common occurrence.
Net Energy Metering 2.0
In some ways, NEM 1.0 and 2.0 are very similar: Both have a grandfathering period of 20 years and, as most consumers are interested in, a retail rate credit for energy export. The challenge is it’s harder to get that credit because of a key difference. Whereas NEM 1.0 “netted out” its series of Nonbypassable Charges (NBCs)—a collection of small fees—based on gross consumption during the billing period, NEM 2.0 chops the usage into “metered intervals” that limit the amount of energy you can feed the grid at given times and largely minimize the possibility of reaching a net surplus of energy to receive credits.
There are other differences as well. The Interconnection fee—assessed for connecting a solar system with the grid—which was waived in NEM 1.0 is charged at $75 for systems smaller than one megawatt, and $800 for systems greater than one megawatt (which were unavailable under NEM 1.0). The new NEM plan also requires all customers to be on a Time of Use structure if available in their community.
Edison's Tips to Minimize Your Bill
As Edison continues to expand and complicate its billing structure options in heavily solar-reliant Southern California, it’s clear that rates are increasing and relief is dependent upon using less energy. To that end, SCE recommends energy-saving tips such as closing the drapes during the daytime, plugging electronics into a surge protector and switching it off when not in use, using fans rather than the air conditioner, and simply not using your appliances.
Our favorite SCE saving tip, however, is “Consider installing solar panels to produce some or all of your home’s electricity.” SoCal residents who install enough solar panels to offset their household energy usage will not only pay less for energy, but their monthly bills will be consistent, predictable, and locked in for 20 years or more.
At SunPower by Precis, our team of award-winning Riverside solar panel installation experts has been helping homeowners and businesses make the switch to clean, renewable energy since 1988. To find out more about how going solar can benefit you, dial (951) 800-7926 or contact us online today.