Tiered Rates vs. Time of Use Rates | What to Know

Tiered Rates vs. Time of Use Rates

Silicon Valley Clean Energy (SVCE) recently announced that they would automatically transition residential customers currently on a tiered rate plan with PG&E to Time of Use (TOU) rates by June of 2021. SVCE is allowing residential customers the option to remain on the tiered plan if actively requested. This change comes as an effort to support California’s commitment to clean energy. 

So what does this mean?

Long-time tiered rate customers are at risk of a wildly different energy bill based on current consumption behavior.

Tiered rates incentivize lower overall consumption during each billing period by providing a lower rate for customers that stay under their published energy allowance. These rates are referred to as Baseline Usage” with higher rates if you go over. This approach does not monitor when energy is consumed. In a tiered plan, customers don’t need to strategize daily energy use or activities based on the time of day. 

Time of Use Rate Electricity Bill

Time of Use (TOU) rates incentivize energy consumption during certain hours when demand is typically less, and renewable energy resources (solar and wind) are more active. These periods are referred to as “off-peak” and carry lower energy prices. SVCE has defined Peak hours as 4-9 pm when electricity demand is higher.

Electric Power time of Use Rates

Residential customers that consciously move their high-energy activities to off-peak periods will be able to take advantage of the lower rates.

Alternatively, customers who knowingly or, more likely, unknowingly continue their normal high energy activities (think air conditioning) during peak hours will receive higher than average energy bills.

The goal is for consumers to make small shifts in energy usage that can allow them to save money while reducing overall demand.

Which plan is right for you?

TOU rates plans don’t have to spell disaster. In-fact the published savings for a well-managed TOU billing period are well worth the effort. Moreover, switching to a TOU rate provides consumers with a feel-good benefit of contributing to sustainability and a healthier environment. It takes advantage of the renewable resources mentioned above.

APT utilizes our power monitoring and tenant billing solutions to help customers make educated decisions on energy consumption. APT provides forecasted billings based on various rate options. Additionally, we ensure customers find the right rate plan to fit their situation. 

If you need help navigating the waters of rate plan selection, we are here to help. 

Ken Shaffer, Senior Project Manager APT