SDG&E time-of-use rates: What you need to know

Are you a customer of San Diego Gas and Electric (SDG&E)? Whether you currently have solar panels on your roof, are considering solar, or don't have any plans to generate your own electricity, SDG&E's time-of-use (TOU) rates will have an impact on your monthly electricity costs. In the past, all SDG&E customers had the option of switching to TOU rates or remaining on their existing rate schedule. However, this began to change in early 2019 when SDG&E began the process of moving all residential customers (with a few exceptions) to a TOU plan. When it comes to choosing the right rate plan for your property, the best option for your home depends on your electricity use habits.

Historically, most residential SDG&E customers were on a tiered rate plan. This means your electricity rate–expressed in dollars per kilowatt hour ($/kWh)–was determined by how much electricity you used in a given month. When you used more electricity than the baseline allocation, you moved up tier levels and paid a higher rate per kWh for that additional electricity. However, TOU rate plans are different: your per-kWh rate changes based on the time–season, day, and hour– you use electricity.

There are specific times during the day when electricity is more expensive to generate – these are known as "on-peak" hours. When you use electricity from the grid during peak hours, SDG&E charges you more for it. Alternatively, you will experience lower electricity rates if you consume energy during the specified "off-peak" hours.

Utilities don't use TOU rates to make more money off of their customers. Rather, TOU rates are designed to more accurately reflect the actual variation of electricity prices throughout the day. When you pay a flat per-kWh rate regardless of the time of day, you likely don't realize that your electricity costs more to generate and deliver when demand is high. TOU rates incorporate these differences to encourage you to shift your electricity use away from peak hours, as using electricity during peak hours drives up electricity prices for all utility customers.

There are a few things you can do to reduce your bills if you are worried about a rate increase. For one, 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, a process known as "load-shifting." For example, if you don't run your dishwasher, washing machine, or dryer during peak hours, you'll cut the cost of using those appliances in half. Additionally, smart home devices like smart thermostats can help manage your electric heating and/or air conditioning costs throughout the day by understanding the current electricity rate and adjusting your usage to be more cost-effective.

There are a few different TOU plans that SDG&E customers can choose from, and the best one for you depends on your specific electricity use patterns.

Regardless of the plan you choose, each has on-peak pricing from 4 to 9 p.m. The primary differences between the rates are the number of time periods (on-peak, off-peak, and super off-peak), the commitment required, and the inclusion of "Reduce Your Use" event days.

Below are SDG&E's winter TOU rates as of January 2020:

TOU-DR 1

Here are the differentiating factors of the TOU-DR 1 plan:

• Weekday vs. weekend pricing: under this plan, you pay different electricity rates during the week than during the weekend or on holidays.

• Super off-peak pricing: There are three different pricing tiers under this plan: on-peak, off-peak, and super off-peak. If you use electricity early in the morning and mid-day, you'll pay the lowest rate available.

• One year, no-risk pricing: Because SDG&E is rolling out TOU plans to all of their customers, they're offering this no-risk price guarantee on a few plans. With this plan, if you end up spending more on electricity than you would have with a standard, tiered plan, SDG&E will provide a credit for the difference.

• No commitment required: many TOU plans require at least a year of commitment before updating your plan; with TOU-DR 1, you don't have to wait before making an adjustment.

Source: San Diego Gas & Electric

TOU-DR 2

Here are the differentiating factors of the TOU-DR 2 plan:

• Weekday vs. weekend pricing: under this plan, you will pay the same electricity rates during the week as you will during the weekend or holidays.

• No super off-peak pricing: with this plan, there are only two pricing tiers: on-peak and off-peak.

• One year, no-risk pricing: Because SDG&E is rolling out TOU plans to all of their customers, they're offering this no-risk price guarantee on a few plans. With this plan, if you end up spending more on electricity than you would have with a standard, tiered plan, SDG&E will provide a credit for the difference.

• No commitment required: many TOU plans require at least a year of commitment before updating your plan; with TOU-DR 2, you don't have to wait before making an adjustment.

Source: San Diego Gas & Electric

TOU-DR P

Here are the differentiating factors of the TOU-DR P plan:

• Weekday vs. weekend pricing: under this plan, you will pay different electricity rates during the week than you would during the weekend or on holidays.

• Super off-peak pricing: There are three different pricing tiers under this plan: on-peak, off-peak, and super off-peak. If you use electricity early in the morning and mid-day, you'll pay the lowest rate available.

• One year, no-risk pricing is not available: Because SDG&E is rolling out TOU plans to all of their customers, they're offering this no-risk price guarantee on a few plans. With this plan, even if you end up spending more on electricity than you would have with a standard, tiered plan, you won't receive credit from SDG&E for the difference.

• 1-year commitment required: this TOU plan requires at least a year of commitment before any adjustments are allowed.

• Reduce Your Use (RDU) days: Unique to this TOU plan are RDU days: these are days where electricity demand is uncommonly high. If you use electricity between 2 PM and 6 PM during these days, you will pay an additional upcharge for that electricity.

Source: San Diego Gas & Electric

Prior to the implementation of TOU rates, many solar installers in SDG&E's territory would install a solar panel system that could offset some, but not all, of your electricity use to help homeowners stay in the lowest tier of electricity rates. However, the new rate schedules change how you should approach your solar savings. If your solar panels aren't producing enough electricity to cover your electricity use during peak hours, you may still need to pay a significant electricity bill each month.

TOU rates are also one of the primary reasons many homeowners are thinking about installing 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 on-peak hours, you can draw from the battery instead of having to pay a higher rate to your utility.

California's Self-Generation Incentive Program (SGIP) awards generous rebates to homeowners who decide to install a solar battery with their PV system. That being said, if you don't want to invest in a solar battery right off the bat, you don't need to – your solar company can install a solar PV system for you now that will be ready for a battery addition later on.

Regardless of whether or not you install a solar battery, it's important to evaluate all of SDG&E's TOU offerings before making a decision. Most solar panel systems generate the most electricity during super off-peak and standard off-peak hours when the sun is at its brightest and prices are lower. We recommend comparing the electricity rate during these hours to those of other plans to determine which plan will give you the most value for excess solar energy sent to the grid.

Notably, solar customers are not eligible for no-risk pricing under any SDG&E TOU plan: if you're opting into the TOU-DR 1 or TOU-DR 2 plan, it's important to keep this in mind.

If you are concerned about reducing your electricity costs, choosing the proper rate schedule is only the first step. Generating your own emissions-free solar electricity at home is one of the best ways to insulate yourself from rising electricity prices, no matter where you are. To be sure you're getting the best price on your system – and maximizing your 20-year savings – you should always compare multiple offers from different solar companies. Get started by joining the EnergySage Solar Marketplace, where you can review quotes from qualified local installers.