The past 15 years has seen close to a 500% increase in electric rates in San Diego, a trend that is likely to continue.
San Diego Gas & Electric (SDG&E) electric rates feature a tiered structure where the more energy is consumed by a customer, the higher the cost. Over the past 15 years from 2001 through 2015 the number of rate tiers has fluctuated from as few as 2 to as many as 5. The first tier represents a baseline allowance, with each successive tier set at a multiplier of the baseline. In 2001 SDG&E had two rate tiers ranging from a base of just over 6 cents per kWh, to a top tier of under 9 cents. By November of 2015, that base rate more than tripled, increasing to 19 cents. In that same period of time, the top rate inflated nearly 500%, from less than 8.4 cents in January 2001, to just under 42 cents in November 2015. The accompanying chart illustrates these Domestic Residential (DR) rate changes. (Source: http://www.sdge.com/rates-regulations/historical-tariffs)
Effective September 1, 2015 the utility also went from 4 tiers to just 3 tiers. This is more bad news to the consumer, as this change in the rate structure has the effect of bringing utility customers to the highest rate tier quicker, at a lower consumption level.
Notice that rates do fluctuate up and down, but the unmistakable trend is dramatically upward. SDG&E typically raises rates several times each year. The chart also illustrates that whenever there has been a slight reduction in the rate, soon thereafter there has been a marked increase, more than offsetting the fleeting benefit of any reduction. Notice that a reduction in the base rate in 2006 was accompanied by a marked increase in the top tier rate. This resulted in a significant increase for most customers using much more than the baseline allowance.
The takeaway here is that it seems obvious that we can look forward to continually increasing electric utility rates. Can you afford to see your cost for electricity even only double over the coming 15 years? If history repeats itself, and we know it does, you may see costs even more than double in that time.
The only sensible solution, to avoid paying higher electric rates in the future, is for consumers to lock in their rate and Now Go Solar! Delaying the decision to go solar may be extremely costly.
If you are not already fed up with ever increasing electric rates, the likelihood is that you will soon come to that conclusion. The obvious question, however, relates to affordability.
Can you afford to install a solar energy generation facility on your roof?
The answer to the affordability question is almost certainly a resounding, “YES, you can afford to Now Go Solar!”
If you can afford to pay for the electricity you consume today, and if your consumption is high enough that you are close to, or already in, the upper rate tiers, then you can surely afford to pay less. If you cannot afford to pay for your current consumption, because you are being charged those higher rates, then you most assuredly need to go solar — and quickly. Under those circumstances, you cannot afford not to Now Go Solar.
Of course, there are exceptions to this blanket statement. If you consume so little power that you never break out of the baseline allowance, then you may be fine without investing in solar now. Low income consumers may also qualify for discounts under the California Alternate Rates for Energy (CARE) or Family Electric Rate Assistance (FERA) programs. Eligibility is based on household size and yearly income, or by participation in certain public assistance programs, and is also governed by consumption levels. Households otherwise qualified for these discount programs are subject to disqualification if their appetite for electricity exceeds a certain threshold.
Even if your current appetite for electricity is low enough that you are not pained by your electric bill now, that may not be so in the future. Two factors may come into play here.
- First, do you expect electric rates to continue to rise in the future? If we have seen a 300% to 500% increase over 14 years, what will the next 14 years bring us? Can you afford even another doubling of your electric rate?
- Second, will your appetite for electricity increase in the future? As San Diego summers seem to be getting hotter, are you likely to install or use more air conditioning? Will your changing family size lead to increased electric consumption?
Even if going solar does not seem important today, it may become so in the future. If you decide to wait, will you come to regret that decision?
There are other compelling reasons to consider investing in solar today. There are two looming changes that may make the decision to delay a costly one.
The first of these is that the current Net Energy Metering tariff may soon disappear, or become far less beneficial than it is today. Net Energy Metering (NEM) is the arrangement where the utility is required to give customer-generators credit for any excess energy they produce and send to the grid. The current NEM tariff requires the utility to give its customer-generators one kilowatt hour (kWh) of credit for every kWh received from the customer. This program is likely to end during the first quarter of 2016.
The other coming legislative change is that the Solar Tax Credit is slated to come to an end at the close of 2016.
What about financing your solar project?
If you fear that financing an investment in solar may be difficult, we may have a pleasant surprise for you.
Because solar makes so much economic sense, often saving more than it costs, there are now solar financing plans available even to people with less than stellar credit scores.