Once your solar power system is up and running, your utility bill will certainly change. For one, you’ll see you total costs dropping. That’s the easy good part. But it is more complex than that and understanding your bill is important to maximizing your solar system’s benefits.
Baseline Usage and Peak Hours
If you already have a solar power system, then you have already spent some time getting to know your power bill BEFORE the solar system was installed. You should have a basic understanding of baseline usage and non-baseline usage charges and fees we all see on our electric bills. For those of you who have not take the arduous journey into your power bill, baseline usage is the amount of electricity (in kWh) that the utility company expects your household to use in a month. Non-baseline usage is billed at a higher rate and typically the higher you go beyond baseline usage the higher the electricity costs. Because baseline usage rates are lower than non-baseline rates, you can bet your utility is underestimating your expected power usage.
It is also important to note peak hour and off-peak hour rates. The difference between these two can be staggering. Peak hours are during the day and are higher in the summer when electricity is in peak demand and, coincidentally, when your solar power system is working at peak output.
Rates and other fees and charges will vary depending on your location and utility, as well your electric bill after an install. With the solar system installed, be aware that you may actually receive two bills if your gas and electricity is handled by the same company (such as PG&E on the West Coast).
A Second Bill?
The second bill is often called the Net Energy Metering (NEM) bill or will have a similar name. This bill will have your electricity production and consumption laid out next to each other on the page, thanks to the bidirectional meter installed with the solar system. Both categories will be tallied and your total bill will either be in the positive (money you owe) or negative (money or credit the utility owes you).
Before any of this, you will have to sign an interconnection agreement with the utility. In this agreement you will usually have two choices about how your electricity rates. One, you can set fixed rates. That is electricity will cost the same at all hours, for you and the utility when it is purchasing power from you. The second choice would be a time-of-use (TOU) rate plan. This plan is closer to how the utility typically charges consumers; rates are higher during peak hours and less otherwise. A time-of-use scenario is often better for solar homeowners because the house is often empty during peak daylight hours, so the solar system is pumping high-dollar electricity into the grid.
As you can see, a TOU program is very beneficial to homeowners who mainly draw power at night, and for sometimes one-quarter the cost for which they are selling it to the utility during the day. Because of this many utilities have altered time-of-use schedules or rate plans in order to level the playing field.
Again, all of this can vary based on your location and utility. The best way to get to the bottom of your electric bill’s idiosyncrasies is to discuss it in detail with a local solar installer prior to purchasing or installing your system.