How to read your LADWP electricity bill

Los Angeles Department of Water and Power (LADWP) is the largest municipal utility company in both California and the United States, providing water and electricity service to more than 4 million customers in the Los Angeles area.

Many electricity customers throughout the country receive their electric bill every month and pay it without really diving into the details of what they're actually paying for…and we're here to help break it down. In this article, we'll review the most important parts of your LADWP electricity bill and how that changes once you install solar panels.

There are two important factors in determining how much you'll owe on your electricity bill: your electricity usage and your rate plan/schedule.

Electricity usage

How much electricity you use in a given month is calculated in kilowatt-hours (kWh). This number may change significantly from season to season based on your consumption habits – many people use more electricity during summer months when they run their air conditioning units and will see lower electricity bills during colder months. It's important to keep track of how your monthly electricity usage changes over time rather than just looking at the overall cost of your bill. Seeing that your electricity bill is increasing because of an uptick in consumption (which you can control) rather than due to a change to utility rates gives you the opportunity to change your electricity usage habits and save money.

Understanding your electricity consumption is especially important because of LADWP's tier allowances. Simply put, LADWP established tiers that specify the number of kWh of electricity you can use before jumping up a tier and paying a more expensive rate. Tier allowances vary by season, but generally, it's a good idea to be as energy-efficient as possible to maximize your chances of remaining in Tier 1–and therefore paying the lowest rate possible.

Importantly, LADWP's tiers also vary depending on where you live: their service territory is divided into Zone 1 and Zone 2, which have different usage allowances–you can find out which zone you're in by searching your zip code on their website.

Rate plan

Next up, rate plans: you may or may not know which rate plan you're on (or even that you have the opportunity to change it). Many utility companies have default rate options for their customers that remain in place unless you proactively request to be on a different rate.

LADWP offers plans that not only vary in pricing but in structure: two of the most common types are a tiered-rate plan and a time-of-use plan.

If you're on a tiered-rate plan (e.g., R-1A), you're charged a fixed rate for each kWh of electricity you use until you pass your tier allowance; the more electricity you use, the higher the tier, and the more you're charged for each kWh of electricity.

LADWAP's time-of-use (TOU) plans (e.g., R-1B), on the other hand, charge a different rate for electricity depending on the day, time, and season. This type of rate structure is called a "time-varying rate" since the cost of electricity varies based upon the time that you use it. You can benefit from lower rates during times when demand for electricity is lower (morning and late at night) but pay more during "peak hours" when demand for electricity is high (evening hours).

For more information on LADWP's current plan offerings, visit their website.

Electricity bills often have a lot of confusing terms and line-items, making it difficult to identify the all-in rate you're paying for electricity. However, LADWP's is relatively simple to break down, with fewer line item charges than many utility companies – you can find all of your electricity charges broken up by tier in the aptly named "Electric Charges" section of your bill. In general, what you pay for electricity can be categorized into three separate buckets: supply, distribution/transmission, and miscellaneous. These rates cover the electricity you use, getting the electricity to your home or business, and any other charges and fees related to the maintenance of the grid.

Supply

It's easiest to think of supply charges as paying for the actual electricity you use. Utilities across the country charge different amounts for electricity supply depending on the power plant it comes from and the cost of the fuel (i.e., coal or natural gas). In 2018, most of the electricity delivered by LADWP came from renewable energy resources (32 percent), however, they also delivered a fair amount of energy generated from natural gas (30 percent) and coal (18 percent).

Distribution and transmission

Distribution and transmission charges, sometimes referred to as delivery charges, are fees from  LADWP to send you the electricity. The utility company uses these charges to build and maintain the poles and electrical wires that deliver electricity from power plants to your property. You can think of the delivery charge as effectively the same as paying for shipping and handling on any product you buy online.

Miscellaneous charges

In addition to paying supply and demand, utility companies often have a number of miscellaneous charges included on their bills. Sometimes, these charges are a fixed amount unrelated to how much electricity you use, while other times, they're presented as a volumetric rate, where you pay more each month based on how much you use.

LADWP lists a number of bill adjustments they may include on the left-hand side of your electricity bill, including an Energy Cost Adjustment (ECA), a Power Access Charge (PAC), an Electricity Subsidy Adjustment (ESA), and more. Depending on the charge, it may be broken out as a separate line item, or it may be rolled into your all-in rate.

After you install solar panels, you will continue to receive your monthly electricity bills from LADWP. Each monthly bill will include a summary of kWh received (i.e., how much solar electricity you send back to LADWP) and kWh delivered (i.e., how much electricity LADWP delivered to you from the grid). This is net metering in action: net metering is a solar incentive that allows you to claim credits for any excess solar electricity you send to the grid. You can use these credits to counterbalance what you pull from the grid at times when your solar panel system isn't generating enough electricity to meet your needs (like at night).

Like other major utility companies in California, LADWP customers with rooftop solar panel systems are placed on a time-of-use (TOU) plan. Your bill will include a time-of-use summary that breaks down the kWh you sent to the grid and the kWh you drew from the grid into three separate buckets: base, low peak, and high peak. If you see negative numbers here, those represent credits you can carry forward. Positive numbers indicate that you drew more electricity from the grid than your solar panel system produced during that time period, so you'll have to pay LADWP for that electricity.

At the bottom of your bill, you'll see a "Net Metering" bank: this shows your net metering credit balance from previous months. You can use these credits on future monthly bills if you use more electricity than your solar panel system produces. Importantly, you cannot use these credits to offset taxes or other charges not related to your electricity usage (i.e., the water portion of your bill).

LA is one of the sunniest cities in the country – join the thousands of LADWP customers already saving on their electricity with solar! On the EnergySage Marketplace, you can receive up to seven quotes from local Los Angeles installers to compare. These quotes provide custom savings estimates based on your electricity usage, the rate you pay, and the solar potential of your property. If you'd like to start out with a rough estimate of solar costs and savings, try our Solar Calculator.