If you live in California, there’s a good chance that you’re a customer of Pacific Gas and Electric (PG&E). PG&E is a San Francisco-based company that provides natural gas and electricity to nearly 16 million people in the northern and central regions of California, making it one of the United States’ largest utilities.

Here are the most important aspects of your PG&E bill to help you understand how much electricity you’re using and how your bill can change if you install solar panels.

How PG&E Calculates Your Monthly Utility Bill

There are two factors that impact how much you’ll pay for your PG&E bill: how much energy you use and your rate plan/schedule.

Electricity Usage

The amount of electricity you use each month is measured by kilowatt-hours (kWh). This number can fluctuate significantly from month to month based on your consumption throughout the year. In warmer climates and throughout California, it is not uncommon to use more electricity during summer months when you’re running your air conditioning unit to keep the house cool, therefore requiring more kWh.  Whereas your energy needs will often be much lower during the winter.

It’s important to understand your monthly electricity usage and charges. If you evaluate your bill and see that your electricity charges have increased because of a boost in consumption (which you can control), you have the opportunity to change behaviors to save money.

Because of PG&E’s baseline allowance, it’s important to understand your monthly usage. The baseline allowance is the amount of electricity (in kWh) you can consume before you have to pay a more expensive rate.

Low-usage customers receive a baseline allowance, which varies by area and season. Energy-efficient usage will help keep you in Tier 1 so you can pay the lowest rate possible.

Rate Plan

The next thing you’ll want to understand is your rate plan. Many PG&E customers don’t realize that they can actually change their rate plan. The first step is to identify which rate plan you’re on. Many utility companies offer their customers a default rate, which remains in place unless the customer changes it.

For its electricity customers, PG&E offers two types of plans that vary in pricing and structure—a tiered-rate plan and a time-of-use plan.

If you have a tiered-rate plan (e.g., E1), you’re charged a fixed rate for each kWh of electricity until your baseline allowance is reached. As a result, the more electricity you use, the higher your tier and the more you’re charged for each kWh.

In contrast, PG&E’s time-of-use (TOU) plans charge customers different rates depending on the day, time and season. This type of rate structure is a “time-varying rate” because it charges customers a different price for electricity depending on the time of day that it’s being used. You can benefit from lower rates by taking advantage of off-peak power: the periods when demand for electricity is low (like mornings and late at night). However, you’ll pay more during “peak hours” when the overall demand for electricity is high (evening hours). 

Finally, if you own an electric vehicle, PG&E offers several rate plans for EV owners. These plans encourage EV owners to charge overnight when overall electricity demand tends to be low. You can save a lot of money by charging your car during off-peak hours compared to during the day or after work when rates are highest.

For more information on PG&E’s current utility rate plans, visit their website.

Types of Electricity Bill Charges

The many confusing terms and line items on your electricity bill can make it difficult to identify the all-in rate that you pay for power. However, the majority of these line items can be grouped into three categories: supply, distribution/transmission and miscellaneous. These rates cover the cost of producing, transmitting and distributing electricity to your home or business as well as any other charges and fees related to maintaining the grid.

Supply

Because supply charges are based on the amount of electricity you use, they’re easiest to think of as payments for the power you consume. That’s why they’re labeled “Generation Charges” on your PG&E bill.

Utilities often charge different prices for the electricity they supply, depending on which power plant it originates from and the cost of the fuel source (i.e. coal or natural gas).

As of 2019, a significant portion (28.5%) of the electricity delivered by PG&E comes from renewable energy resources. However, there’s also a considerable amount generated from hydroelectricity (27.2%) and nuclear power plants (44.3%).

Moreover, California homeowners may notice that while their power comes from PG&E, their bill is made up of charges for electricity supply by another company. This is because part of California’s electricity market is deregulated, which means that other entities—outside utility companies—can procure and sell electricity. 

Distribution and Transmission

Delivery and transmission charges are fees that PG&E charges to deliver electricity to your home. Utility companies use these charges to build and maintain poles and electrical wires that deliver electricity from power plants directly to your home. Think of the delivery charge as a way to pay for shipping and handling when you buy an item online.

The distribution and transmission charges on your PG&E bill are located on the third page under “electric delivery charges.”

Miscellaneous Charges

In addition to paying based on supply and demand, utility companies also have many miscellaneous charges. Some of these charges are mandated by the state and help fund statewide initiatives.

For example, California’s energy efficiency goals and renewable energy mandates require a portion of your bill to support clean-energy programs. Examples of these charges are: 

• Nuclear Decommissioning – which goes towards making nuclear power plants safe to shut down
• Electric Public Purpose – which funds energy efficiency and low-income programs
• Customer fee – A fixed bill charge that remains the same regardless of how much you consume

You can learn more about the different charges on your bill, and what they mean, by looking at this helpful glossary from PG&E’s website.

What Will My PG&E Bill Look Like After Going Solar?

After you install solar panels on your rooftop, you’ll still continue to receive monthly bills from PG&E for gas charges and additional miscellaneous fees. You’ll need to pay the minimum delivery charges each month in order to remain connected to the power grid.

Additionally, your monthly bill will include a summary of your net metering charges. Net-metering is a solar incentive that allows you to claim credits for excess electricity sent back into the grid. Net metering allows solar power customers to sell any extra electricity they generate back to their utility provider. You can use these credits to offset what you pull from the grid at night or on cloudy days when your solar panel system isn’t generating enough electricity.

California requires new solar customers to sign up for a time-of-use (TOU) plan to take advantage of the state’s net metering 2.0 (NEM 2.0) program. Under this plan, the value of your solar credits depends on when you send it to the grid (during peak or off-peak hours).

In your net metering charges summary, you will see two columns of data: one representing peak usage and the other off-peak usage. Any negative numbers here reflect the amount of credits that will  be applied to future utility bills. Positive numbers indicate that you drew more electricity from the grid than your solar panel system produced, so PG&E will bill you for that difference.

However, even if your monthly utility bill shows a net positive usage, you don’t have to pay it just yet since PG&E customers receive an annual True-Up statement. This is a bill you’ll receive once a year that summarizes how much electricity your solar panel system exported and drew from the grid over the 12 month period.

If you generate more electricity than you use during this period and have a negative True-Up bill balance, you’ll see a line item for Net Surplus Compensation (NSC). If you have excess credits at the end of your True-Up period, PG&E will pay you a wholesale rate for them. This is known as the net surplus compensation rate. You can either use this credit toward your next True-Up period or request a check for the balance. It is important to emphasize that the rate at which PG&E pays you back for these excess credits is very low. There is often a misconception that you are going to “make money” for generating excess energy, when the more reasonable expectation is to focus on your savings potential. 

Conclusion

If you’re ready to save money, help the environment and power your home with clean energy, contact us today for a free customized solar quote.