What are non-bypassable charges

July 13, 2020 | 3min read

Non-bypassable charges are fees that you pay on every kilowatt-hour of electricity that you consume from the grid. These charges can be used to fund things like energy assistance programs for low-income households and energy efficiency programs. These charges apply even if you buy your grid-supplied power from an outside power company. These charges are considered non-bypassable because they can’t be paid for by your net energy metering credits. You do not pay non-bypassable charge fees on electricity produced by your solar system and consumed “behind the meter.” 

Types of non-bypassable charges

Public purpose programs help low-income households afford gas and electricity. They are also used to make energy efficiency improvements to any household. These programs are state-mandated. Another non-bypassable charge is for nuclear decommissioning. These charges are used to pay for shutting down and cleaning up the San Onofre Nuclear Generating Station (SONGS) and the Diablo Canyon Nuclear Generating Station. 

The deregulation of the California electricity market led to a host of new energy providers entering the California market. This deregulation led to the states’ utilities being stranded with assets such as long-term contracts for the purchase of electricity that they could no longer use. To enable utilities to recover the cost of those stranded assets, the Competition Transition Charge (CTC) was approved by the California Public Utilities Commission (CPUC).

Deregulation in California in the 90’s caused electricity prices to spike. This made electricity unaffordable for the Department of Water Resources (DWR). The state allowed the DWR to sell bonds to cover the cost of that electricity. The DWR bond charge is the non-bypassable charge that pays for those bonds.

Charges that can be paid for by net metering credits

Other charges on your bill can be paid for from bill credit you receive for energy supplied by your solar system to the grid. These include the cost of electricity you consume along with the cost of getting that electricity to you. There are also taxes and fees including the State Surcharge Tax, which pays for conservation efforts and the development of energy resources in the state. The State Regulatory fee is charged to utilities and used to pay for CPUC operations. The Franchise fee is charged to utilities by cities for the utility to have the right to have transmission and distribution equipment on public land.

The future of non-bypassable charges

Some of the non-bypassable charges we pay today will have an end-date. The nuclear decommissioning charge should end once San Onofre and Diablo Canyon are cleaned up and their spent fuel safely stored. The CTC should end once utilities have recovered the value of their assets that were made noncompetitive by electricity deregulation. The same goes for the DWR charge, it should end once the DWR has recouped the cost of the bonds it sold to pay for electricity. The Public Purpose Program charge will be ongoing.

The important takeaway from all this is that you don’t pay non-bypassable charges for the electricity you use from your solar system. Use as much of your own electricity that you can to save on non-bypassable charges.

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