SDGE Rate Increase 2019 Explained (Time Of Use Case Study)

SDGE Rate Increase 2019 Explained
(Time Of Use Case Study)

SDGE Energy Rates Continue to Increase Year Over Year, Alongside Billing Structure Changes

It Can Be Difficult to Understand How Your SDGE Bill Is Calculated At the End Of the Month

Today We Are Going to Compare the SDGE Rate Increase 2019 Over Previous Years

As Well As Explain the New TOU Billing Structure In A Simple / Easy to Follow Format

To Help You Better Understand Your SDGE Bill and Control Your Energy Costs

SDG&E Rate Increase Case Study

Before (2009) & After (2019)

A Steady Increase

As you can see from the animation video, prices have been rising steadily from 2009 to 2016. There is a sharp SDGE rate increase at years 2017-2019. From 2009 to 2018 SDGE customers were billed on a tiered billing structure. 2019 marks a new beginning for all SDGE customers, due to the Time of Use implementation.

For the first segment of the case study animation, the rates were calculated by taking the averages of all the pricing tiers for both summer and winter at the end of the year.

From 2009 – 2015 SDGE operated on four pricing tiers for each summer and winter. These four billing tiers were: Baseline Energy (Tier 1), 101% to 130% of Baseline (Tier 2), 131% to 200% of Baseline (Tier 3) and Above 200% of Baseline (Tier 4).

From 2015 – 2019 SDGE flattened from four pricing tiers to two, then added back a third. They achieved this by combining tiers to create a two tier system, then added in a high usage charge for consumption above 400% of baseline. The three billing tiers left on the DR billing structure are: 130% of Baseline (Tier 1), 130% to 400% of Baseline (Tier 2), Above 400% of Baseline (High Usage Charge).

Key Findings

• Summer prices started at $0.23 and ended at $0.40 resulting in a 74% average price increase
• Winter prices started at $.22 and ended at $0.37 resulting in a 68% average price increase
• The most expensive rate you can pay for electricity increased by 87%
  • In 2009, it was $0.33 per kWh
  • In 2019, it was $0.52 per kWh
  • After TOU implementation in 2019, it will be $0.62 per kWh

2019 SDG&E Time of Use

WHEN You Use Electricity Matters

To clearly understand the financial implications of upcoming TOU changes, we have created an example illustrating the end cost to the customer in a typical summer scenario.

The prices used in the example were pulled from SDG&E electricity price sheet for Schedule TOU-DR1 effective 3/1/2019.

A brief overview of how Time of Use works is based on charging you a different price WHEN you use your electricity. Depending on when you use your electricity can mean the difference between a $100 or a $300+ electricity bill.

There are three pricing tiers in TOU-DR1:

• On-Peak – From 4 p.m. – 9 p.m. at $0.62 per kWh
• Off-Peak – From 6 a.m. – 4 p.m. and 9 a.m. – 12 a.m. at $0.40 per kWh
• Super Off-Peak – From 12 p.m. – 6 a.m. at $0.35 kWh

TOU In Action

Our example customer:

• Used a total of 950 kWh for the month
• Has an 130% base line of 394 kWh

At the end of the month, we added together the customers kWh usage by what pricing tier it was consumed within. The total come out to $476.30 of billable electricity. SDG&E offers a baseline credit up to 130% of their usage to their account. Their 130% baseline was set as 394 kWh which resulted in a $74.86 credit. We then subtracted $74.86 from their total usage $476.30 to get their final bill at $401.44

After running this case study, we found that a customer that is working a traditional work schedule (9 a.m. – 5 p.m.) is at a high risk of paying an expensive electricity bill. If you use the majority of your electricity when you get home (4 p.m. – 9 p.m.) being on the TOU plan will make your bill more expensive than it was previously on a tiered billing structure.

SDG&E Time of Use Plan In Detail

Starting March 2019, everyone in San Diego will be transitioning to the TOU (time of use) schedule.

What Is TOU

TOU (Time Of Use) is a energy pricing plan where energy rates are based on the time in which energy is being consumed. Similar to booking a flight or hotel, prices fluctuate based on the date you are booking. Prices for travel are higher around holidays because the demand is much higher.

The large majority of the population are away at work or school during the day, therefore the amount of energy being used in homes during the day is a lot lower. When people get home they turn on the A/C, charge their electronic devices, wash / dry laundry, watch TV, play video games, etc. In the evening, energy load is at its highest and demand peaks. Following the supply and demand principle, as demand increases and supply decreases the price will go up.

SDGE offers two different time of use pricing plans (TOU-DR1 and TOU-DR2)

TOU-DR1

As you can see from the graph there are three different pricing categories.

• On-Peak – From 4 p.m. – 9 p.m. pricing will be the highest, this is when demand on the grid peaks when a big portion of the population gets home.
• Off-Peak – From 6 a.m. – 4 p.m. and 9 a.m. – 12 a.m. pricing will be in the middle. This is usually when a lot of people are at work or school.
• Super Off-Peak – From 12 p.m. – 6 a.m. pricing will be the lowest, when most of the population is sleeping.

Off-Peak and Super Off-Peak hours vary by weekdays, weekends and holidays.

For most customers, this change can increase prices DRAMATICALLY! You pay almost double the price for using the same amount of electricity during On-Peak (4 p.m. – 9 p.m.) compared to Super Off-Peak (12 a.m. – 6 a.m.).

TOU-DR2

TOU-DR2 is comprised of two pricing levels:

• On-Peak – 4 p.m. – 9 p.m.
• Off-Peak – 12 a.m. – 4 p.m. and 9 p.m. – 12 a.m.

The advantages of the TOU-DR2 is that it maintains the same pricing schedule seven days a week and is easier to understand.

Why TOU Is Being Implemented?

TOU is being implemented to control consumer behavior of energy consumption, to ease strain energy load at high demand times. The utility company’s claim they can save you money by shifting your energy patterns to different days / times, but in practicality it is not convenient for people once they get home from work to refrain from using AC. Last summer there were record breaking high electric bills, due to sweltering hot days and A/C usage to live in comfort.

A big incentive in 2019 is the California Solar Tax Credit, more and more people are going solar to take advantage of the 30% tax credit. With more people getting solar installed, TOU is being implemented to lower the productiveness of solar panels. By making electricity produced worth less when the sun is up and more expensive when the sun is down, the energy offset on a solar customers bill will be less than it was previously.

What the Future Beholds

Looking into the future, SDGE is planning to continue their trend of increasing electricity rates, not exactly great news for residential SDG&E customers.

According to a SDGE rate hike request report by ABC 10 News San Diego, they state that the biggest increase is about 11%, which would cost the average San Diego customer an additional $13.99 per month. In 2020, rates are expected to increase by 6.9%, 5.1% in 2021, and 4.9% in 2022. The total would equal to a 28% increase over four years!

Why Do Rates Keep Going Up?

According to SDGE, they continually need to increase rates to improve their business operations such as:

• administrative expenses
• infrastructure
• maintenance
• safety measures
• modernization of facilities

SDGE also states that it needs to enhance safety and reliability, and to manage risks that could impact their employees, customers, and/or system. They are also required to meet regulatory and compliance standards driven by system safety and reliability and environmental compliance.

The Solution – Use Your Power When You Want

An energy storage system will protect you from expensive electricity rates during peak hours.

When the majority of people get home from work and turn on their devices from 4 pm – 9 pm during peak hours, they will be paying $0.60+ per kWh. You can avoid paying On-Peak rates for energy at this time of day by adding home energy storage to your solar energy system. You’ll be able to store self-produced solar power during the day, and save it to use in the afternoon/evening when utility rates are most expensive.

AND you’ll get emergency solar battery back-up power for when the grid fails!