I got my first Pacific Gas and Electric bill since getting the solar panels put in, and I think I finally understand how the Net Energy Metering (NEM) works—their explanations of it on their web sites and in the NEM contract itself are terrible, though the idea itself is simple.
There are three things to keep track of:
- daily minimum connection charge of 14.784¢
- net energy in kWh
- net energy cost in $
The daily connection charge is simple—it is the amount I would pay if I used no electricity. I don’t start paying more than this minimum for electricity until the charges for my net use exceed the minimum charge. What this charge amounts to is $54 a year ($58.59 a year with local utility taxes) for connecting to the grid. I find this to be a reasonable charge, since I’m using the grid as if it were an enormous storage device: pumping energy into it in the summer when the solar panels are at their peak, and taking energy out in the winter, when I use more electricity for lighting and running the fans of the furnace.
The net energy usage is also simple: what is the difference in the meter reading? Have I put more energy into the grid than I’ve taken out?
The net energy cost takes into account all the subtleties of retail pricing of electricity in California, including time-of-day differences and usage tiers. It looks like when I’m providing electricity, I get credit for it at Tier 1 rates (the cheapest rate: 32.306¢/kWh peak, 20.779¢/kWh part-peak, 13.101¢/kWh off-peak). When I’m using electricity, I get charged based on total usage, but I doubt that we’ll ever get out of the Tier 1 prices, as our total usage before solar only got a little ways into Tier 2 (101–130% of Tier 1 limits) and, very rarely, into Tier 3 (131–200% of Tier 1).
The basic calculation is done in $ at retail rates, so when I provide power during peak hours, I’m credited with 32.306¢/kWh, but when I use it (as now) in the middle of the night, I’m only charged 13.101¢/kWh. (But I only get off-peak rates for electricity generated on weekends, because that is what I would have been charged then.) For the 14 days on the bill, I had a net total of -20.505kWh (an average usage of -1.4646 kWh/day), but the total energy charge (including negative taxes) was $-12.44, which looks like 60.668¢/kWh. The -40.1106 kWh @ 32.306¢ and -13.845 kWh @ 20.779¢ is balanced by 33.4506kWh @ 13.101¢. I expect to have moderately large negative balances in the summer that gradually get eaten away in the winter, when generation will be much less and usage much higher. (Also, there are no peak hours in winter, so I don’t get as big a credit for the mid-day power generation.)
Time of day billing is far more valuable with a solar panel than it was before—previously it was high usage at low cost and low usage at high cost, but now it is high usage at low cost and negative usage at high cost.
Once a year, they have a “True-Up”, where either I pay whatever the net $ balance is, or they pay me for whatever the net kWh balance is @3.873¢/kWh, wiping out any $ credits that have accumulated. Note that, because of the time of my generation and usage, the $ credits are worth far more than (15×–16×) the kWh credits. If this were a True-Up time, the $-12.44 and 21kWh I currently have in credits would turn into about $-0.88.
Based on my earlier estimates, I expect my net electric energy usage in kWh for a year to be near 0, and so I’ll have positive $ credits each year that will evaporate on True-Up days (well, the credits will probably pay the $58.59 a year minimum charge for connection, giving me a $0 bill for the year).
What confused me about all PG&E’s description of the NEM agreement is that they never explicitly said that they keep track of two balances: energy cost at retail rates and energy usage in kWh. I had to ask customer service for an explanation, and it took them two tries before they finally told me that I would be credited for energy generated at the retail rate I would have been charged for using it. I’m sure that scheme was required by the California Public Utility Commission, as I can’t see any utility voluntarily paying retail rates for electricity, even during peak periods. If they could get away with it, they’d pay only the 3.873¢/kWh wholesale rate for energy they accept, but charge full retail rate for any electricity going the other way.