PG&E and TOU (Time of Use)

I discovered a recent potential client bought his electricity from PG&E at TOU (Time of Use) rates. He is home during the day, so of course he's using the most expensive electricity. Unfortunately, a competitor promised him that his solar panels would be generating so much electricity that PG&E would be buying it from him. There was no way to compete with this lie. He bought his system from the other company.

But in the meantime, we found out something fascinating about how PG&E accounts for electricity generated by residents on TOU meters. I'll try to keep it simple:

PG&E is required by law to provide "baseline" electricity at a certain rate, which has held stable at 12¢ per kWh since 2001. This provides energy for people on low income, living at home with medical equipment, and so on. Residents get so many "baseline" kWh (kilowatt-hours) per month, and then the rates start going up. Currently, this rate goes as high as 61¢ per kWh.

One of the key benefits of installing solar is that you get to offset your most expensive electricity first. If your bill is $400 per month, roughly a third of that is 44¢/kWh. Two-thirds is from the 38¢ and 44¢ together. A solar electric system of less than $25,000 changes that monthly bill to $126.

Unless you're on TOU.

PG&E re-sets your baseline use, and applies the energy your system generates to the baseline first. For a TOU customer, this can be as low as 8¢ per kWh. So instead of each kWh your system generates being worth up to 44¢, PG&E devalues it to as low as 8¢.

As soon as we figured this out, we've suggested to all our TOU clients that switching over to straight net-metering will save them money.