How to read your SDG&E utility bill

San Diego Gas and Electric (SDG&E) is the third largest utility company in the Golden State. Based in San Diego, they provide natural gas and electricity to about 3.6 million people in San Diego and southern Orange County.

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 SDG&E 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 changes to utility rates gives you the opportunity to change your behaviors and save money.

Understanding your electricity consumption is also important because of SDG&E's baseline allowance: the number of kWh of electricity you can consume before you begin to pay a more expensive rate for electricity each month. Baseline allowances vary by area and season, but generally, it's a good idea to be as energy-efficient as possible to maximize your chances of remaining in Tier 1 (therefore paying the lowest rate possible).

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 make changes.

SDG&E 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., DR - Residential), you're charged a fixed rate for each kWh of electricity you use until you pass your baseline allowance; the more electricity you use, the higher the tier, and the more you're charged for each kWh of electricity.

SDG&E's time-of-use (TOU) plans, 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).

Lastly, if you own an electric vehicle, SDG&E offers an EV rate plan known as EV-TOU. This plan encourages EV or plug-in hybrid car owners to charge their vehicles overnight when the overall demand for electricity is low. You can save a lot of money by charging your car during these off-peak hours, as opposed to during the day or immediately after work when rates are at their highest.

For more information on SDG&E's current plan offerings, visit their website.

Electricity bills tend to have a lot of confusing terms and line-items, making it difficult to identify the all-in rate you're paying for electricity. However, most of these line items 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. You can see all of your supply charges on the section of your SDG&E bill labeled "Electricity generation."

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 2019, some of the electricity delivered by SDG&E came from renewable energy resources (31.3 percent), but they also delivered a fair amount of energy generated from natural gas (24.4 percent) or unspecified sources of power (44.2 percent).

Importantly, you may notice that SDG&E delivers electricity to your home, but you're paying someone else for supply: California has a partially deregulated electricity market, meaning other entities, outside of utility companies, have the opportunity to procure and sell electricity. Community choice aggregation (CCA) programs, which are becoming increasingly popular in California, allow local governments to aggregate electricity purchases for their constituents. Many towns do this as a way to deliver cheaper, cleaner electricity to the area. If you see a different company or organization mentioned in the supply section of your bill, this may be your town's CCA provider.

Distribution and transmission

Distribution and transmission charges, sometimes referred to as delivery charges, are fees from  SDG&E to send you electricity. The utility company uses these charges to build and maintain 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.

On your SDG&E bill, you will see your distribution and transmission charges under "Electric delivery."

Miscellaneous charges

In addition to paying supply and demand, utility companies often have a number of miscellaneous charges. Some of these are charges mandated by the state to help fund statewide initiatives. For example, if you live in a state with energy efficiency goals or a renewable energy mandate, a fraction of your bill charges may go to supporting clean energy programs. Some examples of this for SDG&E customers are the nuclear decommissioning charges (which go towards making nuclear power plants safe to shut down) and public purpose program charges (which go towards funding energy efficiency and low-income programs). Additionally, most utilities also charge a customer fee: this is typically a fixed bill charge that is unrelated to the amount of electricity you use in a given month.

After you install solar panels, you will continue to receive your monthly electricity bills from SDG&E. Each month you need to pay your non-bypassable charges (NBCs), which are fees required to stay connected to the grid.

In addition, the monthly bill includes a summary of your Net metering charges and net metering credits. 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).

As a new solar customer in California, you will be required to go on a time-of-use (TOU) plan to take advantage of the state's net metering 2.0 (NEM 2.0) program. Under this plan, the value of your solar credits depends on the time of day you send it to the grid and whether that was during peak hours (when electricity is most expensive) or off-peak hours (when electricity is the most affordable).

In both your delivery and generation charges summary, you will see separated charges for On peak, Off peak, and Super off peak usage. 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, so you'll have to pay SDG&E for that electricity.

However, even if your monthly bill includes a net positive usage, you don't necessarily have to pay it yet – all SDG&E customers who have solar receive an annual True Up statement. This is a bill you'll receive once a year that summarizes the total money you owe to SDG&E, accounting for how much electricity your solar panel system exported to the grid and how much you drew from the grid over the course of 12 months.

If you send more electricity to the grid than you consume during this period and have a negative balance on your annual billing statement,  you will see a line item for Net Surplus Compensation (NSC). Effectively, SDG&E takes any excess credits that you didn't use over during your annual billing period and pays them out at a lower wholesale rate (known at the net surplus compensation rate). You can either use this monetary credit during your next billing period or request to receive the balance as a check.

Many SDG&E customers are already saving on their electricity bill thanks to solar–and you could be next! On the EnergySage Marketplace, you can receive up to seven quotes 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.