If you live in California, there's a good chance that you're a customer of Pacific Gas and Electric (PG&E). This company, based in San Francisco, provides natural gas and electricity to about 16 million people throughout northern California, making it one of the largest utilities in the United States.
Many electricity customers throughout the country receive their electric bill every month and pay it without really diving into the details of what they're actually paying for...and we're here to help break it down. In this article, we'll review the most important parts of a PG&E electricity bill and how that changes once you install solar panels.
Your PG&E bill includes charges for supply, transmission/distribution, and miscellaneous charges
PG&E offers a variety of rate plans, including tiered, time-of-use (TOU), and EV plans
Compare quotes on the EnergySage Marketplace to see how much you can save on your PG&E bills with solar
There are two important factors in determining how much you'll owe on your electricity bill: your electricity usage and your rate plan/schedule.
How much electricity you use in a given month is calculated in kilowatt-hours (kWh). This number may change significantly from season to season based on your consumption habits – many people use more electricity during summer months when they run their air conditioning units and will see lower electricity bills during colder months. It's important to keep track of how your monthly electricity usage changes over time rather than just looking at the overall cost of your bill. Seeing that your electricity bill is increasing because of an uptick in consumption (which you can control) rather than changes to utility rates gives you the opportunity to change your behaviors and save money.
Understanding your electricity consumption is also important because of PG&E's baseline allowance: the number of kWh of electricity you can consume before you begin to pay a more expensive rate for electricity each month. Baseline allowances vary by area and season, but generally, it's a good idea to be as energy-efficient as possible to maximize your chances of remaining in Tier 1 (therefore paying the lowest rate possible).
Next up, rate plans: you may or may not know which rate plan you're on (or even that you have the opportunity to change it). Many utility companies have default rate options for their customers that remain in place unless you proactively make changes.
PG&E offers plans that not only vary in pricing but in structure: two of the most common types are a tiered-rate plan and a time-of-use plan.
If you're on a tiered-rate plan (e.g., E1), you're charged a fixed rate for each kWh of electricity you use until you pass your baseline allowance; the more electricity you use, the higher the tier, and the more you're charged for each kWh of electricity.
PG&E's time-of-use (TOU) plans, on the other hand, charge a different rate for electricity depending on the day, time, and season. This type of rate structure is called a "time-varying rate" since the cost of electricity varies based on the time that you use it. You can benefit from lower rates during times when demand for electricity is lower (morning and late at night) but pay more during "peak hours" when demand for electricity is high (evening hours).
Lastly, if you own an electric vehicle, PG&E offers a variety of EV rate plans. These plans encourage EV owners to charge their vehicles overnight when the overall demand for electricity is low. You can save a lot of money by charging your car during these off-peak hours, as opposed to during the day or immediately after work when rates are at their highest.
Electricity bills tend to have a lot of confusing terms and line items, making it difficult to identify the all-in rate you're paying for electricity. However, most of these line items can be categorized into three separate buckets: supply, distribution / transmission, and miscellaneous. These rates cover the electricity you use, getting the electricity to your home or business, and any other charges and fees related to the maintenance of the grid.
It's easiest to think of supply charges as paying for the actual electricity you use. You can see all of your supply charges on the section of your PG&E bill labeled "Generation charges."
Utilities across the country charge different amounts for electricity supply depending on the power plant it comes from and the cost of the fuel (i.e., coal or natural gas). As of 2019, a lot of electricity delivered by PG&E comes from renewable energy resources (28.5 percent), however, they also deliver a fair amount of energy generated from hydroelectric (27.2 percent) and nuclear power plants (44.3 percent).
Importantly, you may notice that PG&E delivers electricity to your home, but you're paying someone else for supply: California has a partially deregulated electricity market, meaning other entities, outside of utility companies, have the opportunity to procure and sell electricity. Community choice aggregation (CCA) programs, which are becoming increasingly popular in California, allow local governments to aggregate electricity purchases for their constituents. Many towns do this as a way to deliver cheaper, cleaner electricity to the area. If you see a different company or organization mentioned in the supply section of your bill, this may be your town's CCA provider.
Distribution and transmission
Distribution and transmission charges, sometimes referred to as delivery charges, are fees from PG&E to send you the electricity. The utility company uses these charges to build and maintain poles and electrical wires that deliver electricity from power plants to your property. You can think of the delivery charge as effectively the same as paying for shipping and handling on any product you buy online.
On your PG&E bill, you will see your distribution and transmission charges on the third page under "electric delivery charges."
In addition to paying supply and demand, utility companies often have a number of miscellaneous charges. Some of these are charges mandated by the state to help fund statewide initiatives. For example, if you live in a state with energy efficiency goals or a renewable energy mandate, a fraction of your bill charges may go to supporting clean energy programs. Some examples of this for PG&E customers are the Nuclear Decommissioning charges (which go towards making nuclear power plants safe to shut down) and Electric Public Purpose charges (which go towards funding energy efficiency and low-income programs). Additionally, most utilities, including PG&E, also charge a customer fee: this is a fixed bill charge that remains the same regardless of how much electricity you use in a given month.
PG&E has a helpful glossary on their website, where you can learn more about these individual charges and what they mean.
After you install solar panels, you will continue to receive your monthly electricity bills from PG&E. Each month you need to pay your minimum delivery charges (which are fees required to stay connected to the grid).
In addition, the monthly bill includes a summary of your net metering charges. Net metering is a solar incentive that allows you to claim credits for any excess solar electricity you send to the grid. You can use these credits to counterbalance what you pull from the grid at times when your solar panel system isn't generating enough electricity to meet your needs (like at night).
As a new solar customer in California, you will be required to go on 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 the time of day you send it to the grid and whether that was during peak hours (when electricity is most expensive) or off-peak hours (when electricity is the most affordable).
In your net metering charges summary, you will see a column for both net peak and net off-peak usage. If you see negative numbers here, those represent credits you can carry forward. Positive numbers indicate that you drew more electricity from the grid than your solar panel system produced, so you'll have to pay PG&E for that electricity.
However, even if your monthly bill includes a net positive usage, you don't have to pay it yet – all PG&E customers receive an annual True-Up statement. This is a bill you'll receive once a year that summarizes the total money you owe to PG&E, accounting for how much electricity your solar panel system exported to the grid and how much you drew from the grid over the course of 12 months.
If you send more electricity to the grid than you consume during this period and have a negative balance on your True-Up bill, you will see a line item for Net Surplus Compensation (NSC). Effectively, PG&E takes any excess credits that you didn't use over the True-Up period and pays them out at a lower wholesale rate (known as the net surplus compensation rate). You can either use this monetary credit during your next True-Up period or request to receive the balance as a check.
Many PG&E customers already save on their electricity bill thanks to solar–and you could be next! On the EnergySage Marketplace, you can receive up to seven quotes to compare. These quotes provide custom savings estimates based on your electricity usage, the rate you pay, and the solar potential of your property. If you'd like to start out with a rough estimate of solar costs and savings, try our Solar Calculator.