Understanding the impact of SCE's new TOU rates

Southern California Edison's (SCE) new time-of-use (TOU) rate plans went into effect in March 2019, affecting the utility's entire coverage area. Whether you have solar panels on your roof, are considering solar, or don't have any plans to generate your own electricity, the time-of-use (TOU) rates will have an impact on your monthly electricity costs.

Currently, SCE customers have the option of switching over to TOU or remaining on their standard, existing rate schedule. However, TOU rates will eventually be the default for all residential customers of SCE. When it comes to choosing your TOU plan, the most favorable option depends on how much electricity you use and when you use it.

Today, most residential SCE customers are on a tiered rate plan. This means your per kilowatt hour (kWh) electricity rate is determined by how much electricity you use in a given month. When you use more electricity than the baseline allocation, you move up tier levels and have to pay a higher rate per kWh for that excess electricity. TOU rate plans are different: your per-kWh rate changes based on your total monthly electricity use and the time of day you use it.

There are specific times during the day when electricity is more expensive to generate - these are known as "peak" hours. When you draw electricity from the grid during peak hours, SCE charges you more for it. Alternatively, you can experience lower electricity rates if you consume energy during the specified "off-peak" hours.

Historically, SCE had six different TOU plans for their residential customers, allowing for flexibility in choosing your rate structure. This changed in 2019 when SCE implemented their new TOU rate plans, limiting the number of available TOU plans down to two primary offerings, plus one exclusively available to homeowners who have an electric vehicle. While some of the older TOU plans included peak hours that began as early as noon, the updated offers shift all peak hours past 4 PM. This means new solar customers will be generating most of their solar electricity in off-peak hours for a lower rate than what the alternative TOU rate plans allowed.

The new TOU rate plans went into effect starting on March 1, 2019. If you're a residential SCE customer without solar panels, you can opt into a TOU plan or remain on the standard, tiered electricity schedule. Alternatively, if you already have solar and were enrolled in an existing TOU plan, you're grandfathered into that legacy plan for the time being. However, starting in October 2020, TOU rate plans will be the default for all residential customers of SCE, regardless of whether or not you have a solar panel system on your property. At this time, any existing solar customers in grandfathered TOU plans will need to opt into one of the current offerings.

Utilities don't use TOU rates to make more money off of their customers. Rather, TOU rates more accurately reflect how electricity prices vary throughout the day than fixed, per-kWh rates depict. During peak hours, electricity demand is high and thus more expensive for utilities to generate and deliver. Alternatively, during off-peak hours, electricity demand is lower in your utility zone and, therefore, more affordable for SCE and, consequently, you as the end customer. TOU rates help encourage people to shift their electricity use away from costly peak hours.

There are a few steps you can take to reduce your bills when you're on a TOU rate plan. SCE's new rate schedules are still tiered and have peak hours from either 4-9 p.m. or 5-8 p.m. You can choose energy-efficient appliances and lighting to reduce your total monthly electricity use and remain in the least expensive "tier." You can also save money by moving some of your electricity use to off-peak hours. Many electrical appliances such as dishwashers, washing machines, or dryers have scheduling functionality or "delayed start" features so that you can set them to run during off-peak hours ahead of time.

There are two primary TOU plans that SCE customers can choose from. The primary difference between each plan is where the peak hours fall: the TOU-D-4-9 PM plan has peak hours from 4 to 9 p.m., while the TOU-D-5-8 PM plan has peak hours from 5 to 8 p.m. Both of these plans have higher peak rates during the summer (June through September) than in the winter (October through May). You can find the most current prices for both plans on the SCE website. SCE also offers a rate plan comparison tool that will give you personalized evaluations of one TOU rate plan versus another based on your actual electric usage history.

TOU-D-4-9 PM summer and winter pricing

TOU-D-5-8 PM summer and winter pricing

TOU-D-PRIME for SCE customers with electric vehicles

If you have an electric vehicle, you can opt into the TOU-D-PRIME rates that offer a lower rate overnight. These TOU rates have a higher daily fixed charge compared to the other two options but lower off-peak charges that will reduce the cost of charging your electric car during nighttime hours.

Prior to the implementation of TOU rates, many solar installers in SCE territory would install a solar panel system that could offset enough of your electricity usage to remain in the lowest tier of electricity rates. However, the new rate schedules may change how you approach your solar savings.

When your solar panels produce excess electricity during the day, it's sent back to the grid in exchange for net metering credits. Under SCE's new TOU rate plans, most viable sun hours are during off-peak periods, meaning you'll receive lower compensation for the kWh than if they were generated during peak hours. Your solar panels may not produce enough electricity to cover your usage during peak hours, resulting in a higher electricity bill.

TOU rates are one of the primary reasons many homeowners choose to install a battery with their solar panels. With a solar battery, you can store your excess solar electricity production at home instead of sending it back to the grid. Then, during peak hours when your solar panels aren't producing electricity, you can draw from the battery instead of having to pay a higher rate to your utility.

California also has an incentive for storage, known as the Self-Generation Incentive Program (SGIP), that helps lower the costs of energy storage in the state. This program provides rebates to homeowners who install a battery with their solar panel system. However, if you aren't ready to install a battery, your solar company can install a solar PV system for you now that will be ready for a battery addition at a later date.

Installing solar panels on your property is the best way to protect yourself from variable electricity prices, regardless of whether you're on a TOU rate plan or not. You can compare multiple quotes from local, prescreened installers by joining the EnergySage Solar Marketplace. Upon registering, you'll have the opportunity to upload your SCE electric bill so that installers can quote and design a solar panel system best suited for your needs.