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, as most will be facing eight different prices for electricity each year. The charts below illustrate the potential confusion.
Chart 1: SCE’s Weekday Residential Time-of-Use Rate. Source.
Chart 2: SCE’s Weekend Residential Time-of-Use Rate. Source.
To unpack the charts, you’ll need the rate schedule. Each color code on the chart corresponds to a Period in the chart below. Each period has two rate tiers.
Chart 3: SCE’s Rate Tiers for Time-of-Use. Source.
Putting it all together, Rate Block “2” (in blue) is the highest priced electricity, and this rate is charged June through September, 12 – 5 pm. The lowest rate is Block “3”, but as you can see it is not much different than Block “1”. Lots of detail, but not much economic impact.
In each tier or Rate Block, the lower price applies until the Max Usage number is met, then the higher price applies. So for rate block “3”, 35 cents per kWh will apply until 13.7 kWh is used between noon and 5pm in the weekdays, summer months. For usage that day above 13.7 kWh, the price jumps to 39 cents per kWh. 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 over a five hour period (Rate Block 3),, it is easy to imagine a residence moving up to the higher priced electricity. 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.
How will a ratepayer understand their bill and manage costs under Time of Use rates? Eight prices per year, different prices for the same hour of the day depending on the season, different prices weekdays and weekends, and changes in price that are not known until the consumer gets the bill. Yikes!
And to top it off, it is uncertain whether solar and/or storage can help. The leading solar trade association (SEIA) did the numbers. They argue that a a 33 cents per kWh difference in rate blocks is needed to provide a positive rate of return to consumers investing in storage . The largest difference in rate blocks shown above is 5 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.