What SCE’s TOU Rate Change Means for You

Adam Evans, founder of SunPro Solar has done hundreds of rate analyses over the years. For both existing solar panel customers and those determining whether solar is the right choice for them. Evans uses the rate analysis tool found on Southern California Edison (SCE)’s website to determine solar panel cost savings and to show what SCE’s TOU rate change means for his customers. For Evans, it’s not about selling solar panels; it’s about giving people the information they need to make decisions that are right for their households.

“In every case,” he says, “the numbers show that solar panels deliver significant savings.”

This is how Sunpro Solar is helping people, solar customers or not, to navigate SCE’s new Time-of-Use rate system.

Understanding SCE’s TOU Rate Change

Currently, most residential SCE customers are on a tiered rate plan. The amount of electricity you consume each month determines the rate you’re charged per kilowatt-hour based.

However, the TOU rate system is based on when and not how much energy is used. California’s major investor-owned utilities—SCE, Pacific Gas & Electric (PG&E) and San Diego Gas & Electric (SDG&E)—have been directed by the California Public Utilities Commission to transition their customers into this new plan by 2021.

There are five rate plans within the system, each built around blocks of time with different rates. For example, the TOU-4-9pmrate plan has higher rates for peak usage hours of 4:00 – 9:00 pm. There is a detailed outline of each rate plan on SCE’s website.

In March, SCE transitioned the first 10% of its customer base, to the TOU rate system.

“When customers are switched to the TOU rate system, SCE automatically chooses the rate plan, instead of giving the customer the choice,” says Evans.

“Some customers may see an increase in their bills if they allow SCE’s TOU rate change plan to be made for them.”

Ron Gales, SCE senior advisor, corporate communications, confirms that SCE automatically selects a plan for their customers. However, this happens only after you’re informed of the upcoming changes by mail. The letter will encourage you to visit the website to review other options. SCE also allows customers to return to the standard tiered rate plan if they feel it’s a better option. If SCE doesn’t hear from them within a specified time, they have placed either the TOU-D-4-9pm or TOU-5-8pm.

“That’s the problem,” says Evans. “TOU-D-4-9pm and TOU-D-5-8pm rate plans punish low energy users with no discounted Tier 1, especially in the afternoon.”

Evans says the TOU-D-4-9pm plan, the highest rates for the summer is between 4 – 9 pm, at .41¢ per kilowatt-hour (kWh). The least expensive time is between the hours of 8 am and 4 pm, at .22¢ per kWh. This is higher than the previous Tier 1 rate was at .18¢ per kWh. On the TOU-D-5-8pm plan, the peak energy pricing is even steeper at 49¢ kWh. So households with people out during the day and use more energy in the evening, will end up paying more.

Real Solar Costs, Analyzed

A lot of times, Evans says, customers don’t even realize that the change has taken place.

“It’s up to the customer to look at the plans and change into the rate plan that gives them the best rate,” Evans says.

“If they don’t, they may see their energy bills go up substantially, with as much as 227% or higher tiers.”

If that percentage seems excessive, Evans has the data to prove it. When he began to receive calls from solar customers asking about their bills, he started doing research.

“After analyzing one customer’s real energy needs, I switched him to the TOU-D-T rate plan,” he says. “If SCE switched him to the TOU-D-4-9pm plan or the TOU-D-5-8pm plan, he would  have had an increase of 1,187%.”

This is based on data from SCE’s own rate analysis tool found on its website.

Another solar customer, Evans says, would have seen an increase of 45% if he had been in the TOU-D-4-9pm. Of course, it all depends on usage and size of the system, Evans adds. Percentages will vary, depending on how and when customers use energy.  

For non-solar SCE customers, who already pay more for their energy, the numbers bear out a little differently. The data still points to a potential increase of 6% – 30% if they are in the D-4-9pm or TOU-D-5-8pm plan. Evans says.“If you don’t want solar and SCE switches you to the new rate, it is possible to save some money. But only if you change your lifestyle, avoiding using energy during peak times when the cost is so much higher,”

“But if a non-solar SCE customer uses energy during peak times, they will be paying substantially more to do so.”

Savings of Solar

If anything, SCE’s TOU rate change underscores the reason that solar panels are such a good financial investment.

Research shows that 75% of solar energy production can offset the entire billed usage. A customer receives a monthly rolling bill credit when their panels produce more electricity than needed. This helps offset any price charges throughout the year.

“When solar is working at the peak hours you get as much as 48 cents credit back from the utility. This works against the $.12 cost of off-peak energy you use,” explains Evans. “So more energy off-peak saves you even more money; thanks to your solar system.”

SCE customers who have solar panels will continue to benefit through net energy metering or NEM. NEM allows solar customers to store energy credit in the electric grid and use it later throughout the year. Think of it as a virtual battery.

If your solar was installed more than a year ago, the system is part of NEM 1.0 and you’re only charged a $1 service fee. Panels installed in the last year are part of NEM 2.0, which charges a service fee of about $10. As the solar cap levels get closer, new, more expensive NEM’s will come for new solar users. If you’re one of these users, you are safely locked into your NEM level for 20 years.

The Right Option for Your Energy Needs

Evans knows that researching the TOU Rate options may be confusing or time-consuming. “Anyone who wants guidance around the new rate plans please contact us, whether they’re a customer or not,” Evans says. “We’re happy to walk them through the process.”

Southern California homeowners looking to save money on their electric bills should call 951-678-7733 to make an appointment with an experienced energy consultant today.