California’s largest utilities are soon shifting all residential customers to time-of-use (TOU) rates, with full implementation by December 2018. This change promises to be horribly confusing for most residential customers.
PG&E's current weekday and weekend time-of-use rates1
A few graphs from the U.S. Department of Energy’s Open Energy Information website show the challenge. The graphs attempt to make clear that the price of electricity changes in four ways over a year:
1) by hour
2) by weekday/weekend
3) by season
4) by amount of electricity used within the rate block
The graphs above depict PG&E's current TOU offering in San Francisco/Silicon Valley residents (TOU Rate Option 1, Baseline Area T).
Let’s unpack the graphs. Rate block “2” (in blue) is the highest priced electricity, and this rate is charged June through September, 3-8 pm. Looking vertically at the 3-8 pm columns (eg the same hours of daily use), one can see that rate block “4” (in red) is the price of electricity between 3 and 8 pm in all other months.
Table A is also part of the TOU rate schedule, providing price details. It shows that each rate block actually has two prices. The lower price applies until the Max Usage number is met, then the higher price applies. So for rate block “2”, 28.4 cents will apply until 7 kWh is used between 3pm and 8pm. For usage that day above 7 kWh, the price jumps to 40.5 cents. While there are four rate blocks, there are actually eight different electricity prices throughout the year.
It is not clear how a consumer will know when they have moved from a lower to a higher rate. For example, on a hot summer day an air conditioning unit can use 2 – 3 kWh per hour, so within the 3 pm to 8 pm rate block, it is easy to imagine a residence moving from the lower price in rate block “2” to the higher price. But without real-time data from the smart meter, which is not a utility service at this time, the resident will not know that this has happened.
While the final TOU rates have not been set, we here at WattzOn are confident that:
- TOU is going to be terribly confusing to residents. How will a ratepayer understand their bill and manage costs?
- Bill “shock” will occur when rates jump to 40 cents per kWh in the evening hours, when families are home. Expect a painful adjustment and lots of customer calls.
- It is uncertain whether solar and/or storage can help. The leading solar trade association (SEIA) did the numbers. They argue that a 33 cents per kWh difference in rate blocks is needed to justify an investment in storage.2 The largest difference in rate blocks shown above is 25 cents per kWh, making storage unprofitable for consumers. Is another utility/solar fight at hand?
There will be more to say about TOU in the coming months, but the vivid graphs from DOE make the first challenge clear: TOU will be confusing.