California energy officials on Tuesday outlined changes expected for the state’s solar power industry in the coming years as utilities shift from tiered pricing to time-of-use electricity pricing structures.
For decades, utility customers, including those with rooftop solar systems, have been paying tiered pricing based on how much power they use, regardless of what time of day they use it.
That’s now changing across California, as San Diego Gas & Electric, Southern California Edison and Pacific Gas and Electric start to charge customers based instead on when they use the power, with consumers paying more during daytime on-peak hours and less for power used during evening off-peak hours.
Many utility customers already are on time-of-use pricing, but by 2019, all California ratepayers, including solar power customers, will be required to be on the new pricing structure.
“Time-of-use rates going forward may look very different than the time of use you are used to,” warned Sean Gallagher, Vice President of State Affairs for the Solar Energy Industries Association (SEIA), a leading solar power industry advocacy group.
Shifting Time-of-Use Pricing
While a final decision isn’t expected until February 2017, current proposals from the utilities call for shifting on-peak energy periods to later in the day and evening hours.
San Diego Gas & Electric and Southern California Edison are expected to ask for state regulators to approve moving on-peak energy times from the current noon to 6 pm to 4 to 9 pm, officials said.
Such a significant shift in the peak energy pricing could have a substantial impact on the ability of solar power customers to earn enough utility credits for electricity their systems generate during the day to off-set the times they need to buy utility power off the grid when the sun isn’t shining, officials said.
“Potentially, if the utilities’ proposals were accepted, these would be very dramatic changes,” said Brandon Smithwood, SEIA’s California State Affairs Manager. “We think the utilities applications are very extreme and off the mark in terms of being cost based.”
Instead, SEIA is working to convince the California Public Utilities Commission, which regulates state electricity utilities, to enact a more reasonable time-of-use rate structure, with on-peak hours from 2 to 7 pm, Smithwood said.
When the actual costs of generating and transmitting electricity to California consumers are factored in, the CPUC should only allow the utilities to charge on-peak pricing for the earlier daytime and evening hours, Smithwood said.
“The impact of using these costs is that it’s likely to keep the on-peak periods earlier,” he said.
Energy Consumers Need Time-of-Use Options
Paul Phillips, a program supervisor for the California Public Utilities Commission, said tens of thousands of California ratepayers are already on pilot programs to test different time-of-use billing structures and help state regulators determine which methods are fair and most affordable for ratepayers.
“We want consumers to have a lot of choice around their time of use options,” Phillips said.
Smithwood said with more Californians going solar every day and more of the state’s electricity coming from renewable sources of energy, his group is hopeful that the commission will settle on a time-of-use pricing structure that is fair to both solar customers and the utilities.
“Solar and time of use are joined at the hip now and we’re very optimistic that we can end up with favorable economics for rooftop solar,” Smithwood said.
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