For some, opening their utility bill can be terrifying. If the bill is too high you may find yourself in a financial bind that you didn’t anticipate. High utility bills can be a nightmare but the good news is there are ways to reduce or even end high utility bills. Going solar is a smart move, but it shouldn’t be your only move. One of the most important (and free) things you can do is educate yourself on how your utility bills you for power. You may find that they offer a better rate plan that can save you money.
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How utilities bill for power
Some utilities charge a flat rate for power. But many utilities charge either by tiers or by Time-of-Use(ToU). It’s important to know how you are charged because both tiered billing and ToU billing can make your bill get much higher. If that’s the case for you then finding out if your utility company offers better alternative rate plans is well worth the effort.
Tiered billing is the practice of increasing the rate you pay as you consume more electricity. Your base rate is the lowest rate you pay. If you use more than your base rate allows, then you pay a higher rate for the amount of electricity you use beyond the base rate. Tiered plans can have multiple tiers. Each tier will bill at a higher rate than the previous tier.
Time-of-Use (ToU) billing rates are based on when you use electricity. If you are served by ToU billing, it’s best to reduce your power usage during peak rate hours. In California, peak rate hours for all three of the state’s major utilities are from 4 PM to 9 PM. You can save money when billed using ToU rates if you can shift your power usage to off-peak hours.
Which is cheaper, flat, tiered rates or ToU rates?
The answer is complicated. If you don’t use a lot of power, then a flat rate is probably going to save you money. If a flat rate isn’t available and you don’t use much power, a tiered rate may be your best bet. For that to be the case, your power usage should rarely if ever exceed the first tier. Your utility may have multiple tiered-rate plans. If that is the case for your utility, then you should compare rate plans to find the best one for you.
If you do use a lot of power, then a ToU rate may be your best bet. For ToU rates to be cheapest, you should be able to shift as much of your power usage to off-peak rate hours. Some utilities have multiple ToU rate plans. If your utility has multiple ToU plans, then compare them to find the best one for you.
Got an EV? You may get a lower rate
In states such as California, you may qualify for special lower ToU rates for owning an eligible EV or plug-in hybrid. These reduced ToU rates are designed to encourage EV adoption. Also in California, if you have an eligible EV or plug-in hybrid, you may be eligible to collect the Electric Vehicle Carbon Credit (EVCC). If approved, you get the EVCC through your utility company in the form of a bill credit. To apply for it, search for “Electric Vehicle Carbon Credit” and look for information in the search results from your utility company. The value of the credit depends on how much the state gets for selling carbon credits on the state cap and trade marketplace.
Author’s note: I receive the EVCC through SDG&E. It was $850 this year.
Smart home systems can save you a lot of money
Watching your electrical usage is a smart way to keep your electric bill low, but it takes a lot of work. The easy way to keep your energy usage in control is to let a smart home system do it for you. Smart home systems take advantage of ToU billing to move as much of your electric usage as possible to off-peak billing hours. They also cut down on unneeded electrical usage. Smart home systems can even make life easier while they save you money.
One example is if you live in a hot place like Arizona. A smart home system can anticipate when you come home from work and switch on the AC for you so you come home to a comfortable house. If you are a customer of the Salt River Project (SRP) and you want to go solar, you may even receive a bill credit for installing a smart home system if you have an SRP preferred installer install your solar.
Freedom Forever is an SRP preferred installer. We can help you get the most out of going solar in Arizona.
Energy-efficient appliances can keep your bill down
Another way to keep those electric bills at bay is to install energy-efficient appliances. In some states, you can even get rebates on the cost of those appliances. The cost of energy-saving appliances often pays for themselves in the form of reduced utility bills over time. They also are designed to work with smart home systems. By installing both, you can save even more on your electric bill.
Don’t forget to look into gas-saving appliances as well! If your home uses natural gas or propane, energy-efficient appliances may cut your gas bill down to size too. You can even get water heaters that use solar power to heat your water during the day.
Going solar can take a huge bite out of your electric bill. If you combine going solar with a smart home system and energy-efficient appliances, you’ll likely save even more. In states like California and Arizona, you can apply to qualify for additional credits for including home batteries with your solar system. Those batteries provide power to your house during peak-rate hours, so they may save you even more on your next electric bill. Freedom Forever can help you make smart choices when going solar, thus enabling you to maximize your savings goodbye to those high utility bills.