So Cal Edison hits home solar with a rate change

So Cal Edison (SCE) has announced changes to their Time-of-Use rate plans that will significantly cut how much money SCE home solar owners will be paid for the power their systems produce. SCE’s sneaky rate plan packs a nasty one-two punch: It both cuts rates paid for solar during the day and increases rates charged by SCE at night. That will have the dual effect of cutting earnings from solar and increasing the customer’s overall rate for electricity.

Freedom Forever’s CEO Brett Bouchy speaks about the impact of the Southern California Edison’s rate change on homeowners with solar power

So Cal Edison TOU rate changes, effective March 1st, 2019

Under current TOU plans, So Cal Edison charges peak electric rates from 2 PM to 8 PM. That means that SCE pays home solar owners at peak rates after 2 PM. Depending on the TOU plan selected, those rates vary from $0.36 to $0.47 per kWh.

TOU as of March 1st: SCE will move the times that they charge peak rates to a time much later in the evening. Peak rates will be charged between 4 PM and 9 PM. Thus solar power system owners will be charged peak rates later in the afternoon as their systems stop producing power. During the day, when solar power systems are producing power, SCE will pay the off-peak rate of $0.13 per kWh. This will cause solar power system owners to see a cut in the amount they are paid for their electricity of either $0.26 or $0.34 per kWh, depending on which TOU plan the system owner was on.

Southern California Edison’s reason for the TOU rate change

According to So Cal Edison: “As California continues to adopt cleaner resources to generate energy, the cost to deliver power throughout the day is changing. Energy is now less costly during midday and more costly in the late afternoon and evening. That’s why TOU peak periods are shifting to these times of the day.”

Southern California Edison’s reason for moving peak rates doesn’t make sense

SCE’s new TOU plan shifts the start of peak demand from noon to 4 PM. It shifts super off-peak rates to begin at 8 AM and end at 4 PM. Coincidentally, those hours cover nearly all of a home solar power system’s production. This raises the question: Is electricity that cheap for SCE to produce, or did it decide that the price it was paying homeowners for electricity produced was too high?

The US Energy Information Administration shows electrical demand on the grid in California by the hour. According to the EIA’s graph, demand ramps up rapidly from noon to 4 PM. Demand actually levels off between 4 and 5 PM and declines after that. Based on the EIA’s graph, SCE is experiencing peak demand during hours when home solar power systems are producing maximum power. Under SCE’s new TOU rates, actual peak demand will be declining throughout SCE’s new peak demand hours!

What SCE ratepayers can do to reduce the impact of the new TOU rates

As of March 1st, 2019, SCE ratepayers should try to minimize their use of electrical appliances between 4 PM and 9 PM. Concurrently, SCE ratepayers should seek to push as much of their electrical demand to the hours of 8 AM to 4 PM. Some tasks that ratepayers can try to shift to those hours are laundry and cooking. One potential unintended effect of these new super off-peak hours is that they may encourage heavier air conditioning use in the early afternoon until peak rates start at 4 PM.

Thinking about going solar? Lock in the benefits now

Southern California Edison ratepayers aren’t alone. San Diego Gas and Electric customers already face high 4 PM to 9 PM peak rates, and off-peak rates during the time their solar power systems are producing power. The good news is, people with existing solar power systems often get grandfathered in at their current, more solar-friendly rates. That’s why it makes sense to go solar now. By the end of this year, the Federal Tax Credit for solar will begin to sunset, in December. And of course, at that time of year, utility companies will begin to announce their rate increases for the coming year. By going solar now, you have your best opportunity to maximize your return on investment for solar.