Time of Use Explained
As part of NEM 2.0 (net metering 2) and other structural rate changes, electricity will be no longer priced and sold in tiers. Instead, electricity will be priced based on when, in other words – the ‘time’ – you buy it. Hot summer days will be significantly more expensive than milder winter ones because kilowatt hours purchased during the winter will be cheaper than those bought in the heat of summer when the electrical grid is stressed by peak consumption.
Blasting the AC at 6pm on a hot Thursday in August will cost a lot more than running it at the same time on Saturday because weekends will be cheaper than weekdays. As you might expect, nights will be cheaper than days for six months out of the year and holidays will be cheaper than non-holidays. This is how time-of-use or TOU works. It’s no longer just about how much electricity you consume, but how much AND when. The when is the mitigating factor here.
How will time of use be rolled out to SCE customers?
This snippet taken from SCE’s website sums it up: NOTICE: The California Public Utilities Commission requires us to begin switching customers to Time-Of-Use (TOU) Plans in 2018. This change will be a multi-year effort. You will receive multiple communications in advance of being switched.
Every homeowner in Southern California Edison territory with high electric bills will be dramatically impacted by these tariff structure changes in 2018 (happening now!). Homeowners seeking to reduce their exposure to the tariff changes will need to begin looking seriously at energy efficiency measures, load shifting, and onsite generation. In plain English, this probably looks like LED lightbulbs, a Nest thermostat, smart battery storage, and solar panels.
Why is the State of California requiring TOU?
Time-Of-Use rate plans are part of a statewide initiative designed to stabilize the grid and keep it reliable when energy resources are in high demand. Such rate plans encourage homeowners to cut their electricity use during expensive ‘high demand’ times (like summer evenings). If it’s important to you to continue enjoying your air conditioning on sweltering summer days without breaking the bank, now is the time to look at installing solar panels or adding smart battery storage to your home. Your goal in a time-of-use world is to shift your heavy power consumption to ‘off peak’ times and/or have power on hand (solar/battery) to use in the place of grid supplied power when that power becomes expensive.
Tips for Saving the Most Money Once You’re on TOU
If possible, plan your electricity usage during the lowest cost times of the day on weekdays, as well as trying to shift energy intensive chores (like laundry) to the weekends. For example, if you run your pool pump at night or first thing in the morning you can avoid paying peak rates to keep your pool sparkling clean.
If you haven’t done so already, perform all necessary energy efficiency upgrades to your home that you can afford to do – lightbulbs are a great place to start followed by a smart thermostat. Energy efficiency measures almost always have the fastest payback, but will be even more impactful and give you greater control in a post Time-of-Use world.
Consider installing solar panels. Today’s solar technology is highly efficient and produces the most electricity during peak rate times – especially if your home is blessed with west and southwest facing roof planes that will allow you to produce more electricity during expensive summer evenings.
Consider smart battery storage. Smart batteries charge up at night when electricity is cheap and can be programmed to discharge during expensive times allowing you to buy low and sell high. Combined with solar panels, storage makes tremendous sense in a TOU world.
At Flex Advisers, our experts will help you prepare for and navigate the confusing new world of TOU so that you can maintain your quality of life without worrying about every kilowatt hour.