HomeMy WebLinkAboutSCE TOU Fact SheetRESIDENTIAL TIME-OF-USE RATES
Overview
WHAT ARE TIME-OF-USE RATES?
Time-of-Use (TOU) rate plans price energy based on the time of day and season when it is consumed. These price
fluctuations reflect the amount it costs SCE to purchase and distribute energy on the power network. Energy costs
are then passed through to customers while no markup or “profit” is earned by SCE on these energy costs.1
WHY TIME-OF-USE RATES?
TOU Rates aim to align Californians’ energy usage with the state’s green energy production. The following graph
shows a simple rendition of California’s net demand curve and the effect of solar generation on the cost of
electricity. As more solar generated energy is added to the electric grid, energy prices are lowest when the sun is
overhead. As the sun sets, and energy usage remains high, the cost of energy in the late afternoon and evening
increases. To incentivize customers to shift their usage from the evening to the daytime, SCE has proposed to
update the TOU rates for all customers to reflect these changes in the market. SCE’s current TOU rates with an on-
peak period of Noon to 6pm no longer reflect the time where SCE’s costs are highest which is why SCE, along with
California’s other investor owned electric utilities (IOUs), Pacific Gas and Electric and San Diego Gas & Electric, have
proposed to shift the on-peak period to later in the day (e.g. from Noon-6 pm to 4pm - 9pm). This change will help
reduce strain on the electric grid; smooth load and make load easier to manage; reduce energy production ramping
needs; and encourage consumption when the cleanest power is available.
SCE introduced two new residential rates, TOU-D-4-9PM and TOU-D-5-8PM, to more accurately price energy while
providing additional choices for residential customers. Compared to the tiered residential rate, these TOU rates
allow customers greater control over the amount they spend each month on electricity, particularly if the customer
is able to shift usage from higher cost periods to lower cost periods during the day or from weekdays to weekends.
These TOU plans aim to dissuade customers from using energy at peak usage times while encouraging them to take
advantage of California’s renewable resources when they are most available.
1. SCE’s earnings are “decoupled” from its energy sales, meaning that SCE’s profits are not dependent upon the amount of energy customers’ use.
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WHO WILL BE ON TOU RATES AND WHEN?
All of SCE’s streetlights, commercial, and agricultural customers have been on TOU rates for about five years. SCE
proposes to transition non-residential customers to the updated TOU rate periods in Q1 2019.
SCE and California’s other IOUs will begin to transition residential customers to TOU rates in phases between
March 2018 and through 2021. SCE’s new TOU-D-4-9PM and TOU-D-5-8PM rate plans are currently available to
customers for enrollment, and have peak period pricing as shown below. Customers who are migrated to a TOU
rate will be given up to 90-days’ notice prior to their rate plan transition, with follow-up information prior to their rate
transition. These customers will be given individualized rate comparisons showing their lowest cost rate plan, and
will be able to choose the rate plan that is best for them. On-line rate comparison tools are also available. Customers
who are migrated to a default TOU rate will be eligible for up to 1-year of bill protection, meaning that they will be
reimbursed for any amount paid above their previous tiered rate.
SCE began migrating 400,000 (about 10%) of its residential customer population in March 2018, to test education
and outreach strategies, as well as operational systems ahead of the larger migration proposed to begin in late
2020. SCE has proposed to exclude low-income hot climate zone customers enrolled on the California Alternative
Rates for Energy (CARE) or the Family Alternative Rates for Energy (FERA) programs from the initial transition.
THE GOAL OF THE RESIDENTIAL TRANSITION IS FOR CUSTOMERS TO FEEL THEY’RE ON
THE RIGHT RATE.
2. The IOUs proposed their default TOU transition plans in A.17-12-011, et al., which is pending California Public Utilities Commission approval.
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Creative Services G18-055 TOU Fact Sheet_R4 - Edited: LT