If you are planning to install a solar system for your commercial building after April 1st, please read what you should do to avoid needing a 10% to 30% larger solar system, which will elevate the cost, taking longer for your solar system to pay for itself.
PG&E is limiting access to the best solar rate, the A-6 rate schedule, after March 31, 2017. If you install a solar system and can get your building on an A-6 rate, you will most likely need a smaller solar system than being on any other rate. Hence, a lower cost and a better return on investment. Here’s why:
In its 2012 general rate-case filing, PG&E asked to reduce the cap on commercial customers’ eligible for the A-6 rate from 500 kilowatts down to 75 kilowatts, which would cut out a large number of commercial customers. Solar advocates protested, the issue went into litigation and the result was:
- Effective April 1, 2017, Schedule A-6 is closed to Commercial PG&E customers with a maximum demand of 75 kW or greater for three consecutive months in the most recent 12 months or with a usage of 150,000 kWh per year or greater.
- Eligibility for A-6 will be reviewed annually and migration of ineligible customers will be implemented once a year on bill cycles each November.
- Any customer with a maximum demand of 75 kW or greater or with usage of 150,000 kWh per year or greater, who sends PG&E a certified letter in time to complete a rate change on or before March 31, 2017 shall be allowed to take service on Schedule A-6.
How does the fact that Pg&E is killing THE best solar rate Affect you?
Background: As a medium-sized commercial electricity consumer (maximum demand less than 500kW), PG&E gives you two options:
A) Schedule Rate A-10. Under this rate schedule you pay PG&E for:
- The energy you consume (kWh). Like a gas pump, your electric meter measures how much power you consume and you will pay a price per kWh that depends on the time of the day, day of the week and time of the year. This is known as time of use (TOU).
- The maximum peak consumption (kW), aka demand charges. Also, PG&E charges (penalizes) you for the maximum peak consumption in the month, arguing the utility has all transmission lines, distribution lines and power plants ready to react to serve all business’ electricity needs. And those that have high spikes of consumption pay a premium.
B). Schedule Rate A-6. Under this rate, PG&E does not charge for the maximum peak of consumption (demand); it only charges for energy consumption. But the peak price (Monday – Friday between noon and 6pm) is twice as expensive as the peak price of the A-10 rate.
The table below shows the PG&E summer pricing for energy consumed and maximum peak demand as of today. As you can see, customers who are on A-6 pay 51 cents per kWh, while a customer on an A-10 rate pays 21 cents per kWh in addition to a peak demand charge of $17.84 per kW. For most of the customers we have analyzed bills for, demand typically represents anywhere between 25% to 40% of the electric bill.
IF YOU GO SOLAR, THE RATE YOU CHOOSE CAN MAKE A BIG DIFFERENCE.
If you install a solar system, your solar system will generate power during the day, while the sun is out, and at night, you will draw electricity from the electric grid. Under net metering, if you produce more energy during the day than you consume, the excess is exported to the electric grid, and the electric company must give you credit priced at the retail rate available when the electricity was exported. This benefits you, because your solar system will produce the most electricity during the times when electricity is most valuable — the Peak times.
WHY do SOME COMMERCIAL BUILDING OWNERS WANT TO SWITCH TO AN A-6 RATE AFTER INSTALLING A SOLAR SYSTEM?
- If you switch to an A-6 rate, you are automatically removing demand charges, which can represent 25% to 40% of your bill.
- If you have a solar system that is designed to generate more power than you consume during the week on summer afternoons and you are under an A-10 rate, the exported electricity would be priced at $0.21/kWh, but if you are under an A-6 rate, your electricity exported would be priced at $0.55/kWh. A-6 allows you to take advantage of the “sell high, buy low”. If you’re exporting electricity, you want that electricity to have as high a retail value as possible. In addition to that, A-6 lets you avoid demand charges.
This means that with A-6, you can install a solar system that is 10% to 30% smaller than if you stay with an A-10 rate, and you will not have to pay any demand charges.
WHAT should you do?
Get in before the doors closes. If your demand is greater than 75 kW, try to switch to the A-6 rate before the March 31, 2017 deadline. But don’t delay your solar installation. Be aware that switching to an A-6 will add much higher energy costs to the building until the solar system is turned on — between 30 percent and 50 percent higher, depending on what time of year the transition comes. Also, if you switch onto an A-6 right now, you can’t change rates for a year.