Adam Evans, founder and CEO of Sunpro Solar, has conducted hundreds of rate analyses over the years for both his existing solar panel customers and those considering investing in a solar system.
“In every case,” he says, “the numbers show that solar panels deliver significant savings.”
Evans uses the rate analysis tool found on Southern California Edison (SCE)’s website to determine solar panel cost savings. 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.
That’s why he and his team at Sunpro Solar are helping people—whether they are solar customers or not—navigate SCE’s new Time-of-Use (TOU) rate system.
The What, Why and When of TOU
Currently, most residential SCE customers are on a tiered rate plan that determines the rate customers are charged per kilowatt hour based on the total amount of energy consumed each month.
However, the TOU rate system is based on when energy is used, not how much. All three of California’s major investor-owned utilities—SCE, Pacific Gas & Electric (PG&E) and San Diego Gas & Electric (SDG&E)—have been directed by the by the California Public Utilities Commission (CPUC) to transition their customers into this new plan by the end of 2020.
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 – 9:00pm. There is a detailed outline of each rate plan on SCE’s website.
In March, SCE transitioned the first four hundred thousand SCE customers, 10% of its customer base, to the TOU rate system.
“But when a customer is transitioned into the TOU rate system, SCE automatically choose the rate plan, instead of giving the customer the choice,” says Evans. “This is important because some customers may see an increase in utility bills if they let SCE chose their plan for them.”
Ron Gales, SCE senior advisor, corporate communications, confirms that SCE automatically selects a plan for their customers, but only after they are informed by mail of the coming change. In the notification, customers are encouraged 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 are 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 points out that on the TOU-D-4-9pm plan, the highest daily rates for the summer are the hours between 4:00 – 9:00pm, at .41¢ per kilowatt hour (kWh). The least expensive time to use energy is between the hours of 8:00am and 4:00pm, at .22¢ per kWh, which 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. That means households where people are out of the home during the day and use more energy in the evening when they return will end up paying a lot more, Evans explains.
Real Costs, Analyzed
A lot of times, Evans says, customers don’t even realize that the change has taken place. After the first phase of the transition in March, several of his solar customers called to ask why their bills were going up, many unaware that the transition had happened until they open their bill.
“It’s up to the customer to then go in, look at the plans and then 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 had put him in either the TOU-D-4-9pm plan or the TOU-D-5-8pm plan, he would have had an increase of 1,187%.” That data is from SCE’s own rate analysis tool found on its website, not something Evans created out of thin air.
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 use than solar panel customers, the numbers bear out a little differently. But the data still points to a potential increase of 6% – 30% if they are in the D-4-9pm and TOU-D-5-8pm plan, Evans says.
“If you don’t want to get solar and let SCE switch you to the new rate, it may be possible to save some money—if you change your lifestyle around to avoid using energy during peak times when the cost is so much higher,” he explains. “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, the new TOU rate plan underscores the reason that solar panels are such a good financial investment.
Research shows that 75% solar energy production can offset the entire billed usage. When panels produce more electricity than is used, the customer receives a credit on their bill that rolls over each month helping offset any price charges throughout the year.
“When your solar is working at peak between 2:00 – 8:00pm, you get as much as 48 cents credit back from the utility 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 metering (also known as net energy metering or NEM). NEM allows solar system owners to store energy credit in the electric grid and use it later throughout the year like a virtual battery. If the solar panels were installed more than one year ago, the system is part of NEM 1.0 and customers are only charged $1 minimum service fee.
Solar panels installed in the last year and currently are part of NEM 2.0, which charges a minimum service fee of about $10. As the solar cap levels get closer, new, more expensive NEM’s will come for new solar users. Past users are locked into their 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. “If people want a recommendation as to which of the new rate plans is right for them, they’re welcome to call me or email us, whether they’re a customer or not.” Evans says. “We’re happy to walk them through the process.”
Adam Evans is the founder and CEO of Sunpro Solar, Southern California’s premier solar panel installation company. The Sunpro team is passionate about the Solar Revolution and offers the newest in solar module technology. Every solar system Sunpro Solar installs is custom designed in-house by Sunpro Solar engineers. Sunpro is not a subcontractor and does not subcontract. Whether your project is residential or commercial, Sunpro Solar handles all of the permitting and construction. Find out more at www.sunpro-solar.com.