Solar Southwest Florida

As expected, Cape Coral passed the Public Service Tax measure on April 29, 2013. The tax impacts every utility electric customer in the City. The more you use electricity, the more tax you pay.

As I noted in my earlier post, solar energy producers can avoid tax on every kilowatt-hour they reduce or produce with solar energy.

The City of Cape Coral released an online calculator that has a few deficiencies. Most importantly to me is that the calculator ignores solar producing customers using LCEC’s netmetering program (both commercial and residential). If you are a small commercial (non-demand charge) or residential customer with solar electric panels and you have a netmetered account, you pay different rates than standard utility customers. As a result, your tax calculation is different. The City’s calculator only shows large commercial (demand charge) rates, and not small commercial rates.

The good news is that there isn’t much tax difference for netmetered customers, who often pay lower rates than those who don’t produce solar energy. In fact, many residential netmetered customers fall below the 500 kWh tax threshold, so they will pay no tax except tax on the customer charge, or $1.35. Netmetered customers with an energy surplus in any month will also pay just $1.35!

I felt obligated to produce a better calculator that could be used by most commercial and residential netmetered customers who are producing solar energy. This calculator should match Cape Coral’s calculator for residential customers without solar electricity.

If the calculator does not appear below, you may access it directly at: http://szumlanski.com/PST/

Assumptions and Disclaimers: This calculator is based on the 7% Public Service Tax as approved on April 29, 2013 and utility rates are accurate as of May 1, 2013 to the best of my knowledge. SolarSouthwestFlorida and it’s author are not responsible for and errors or omissions in this calculator.  Please use with caution. Results are for approximate reference only. Rounding errors may exist. The City of Cape Coral’s office calculator can be accessed by clicking here.

The price of residential electricity has historically trended upwards despite routine promises of future innovation resulting in lower energy prices. Based on the linear trend, electricity in 25 years will cost about 50% more than it does today. At a 3% annual increase, typical of expected inflation rates, electricity would more than double in the next 25 years. In other words, a $150 electricity bill today will be over $300 in 25 years!

Florida Historical Residential Electricity Prices

What if I told you that you could prepay for 25 years of electricity at well under the current price of about 11.5 cents per kilowatt-hour? Wouldn’t that be a smart financial move and a great hedge against rising future energy costs? Whether you expect to be on a fixed income, want to improve your future quality of life, or are looking for a solid return on your investment, I have a solution for you.

Solar electric (photovoltaic) systems have come down in price so substantially over the last 3 years that, with available incentives, the levelized cost of electricity produced by the system over the 25 year warranty period can be well below the current cost of electricity. If you have the money to install a solar electric system and a suitable roof, it is completely reasonable (and profitable) to install solar electricity on your Florida home today!

Utility electric rates in Southwest Florida vary quite a bit depending on how much electricity you consume. I created a spreadsheet to calculate what your utility electric rate would be with different utilities depending on the amount of energy consumed.

What you will find is that the effective rate for LCEC is higher for typical residential customers because of the higher fixed customer charge. Another interesting fact is that LCEC netmetered customers with solar electric generation pay more that regular LCEC customers until they consume at least 1,342 kilowatt hours (net). Again, this is because of a higher customer charge.

The rates are current as of April 16, 2012 and include all charges, fees, and taxes.

Note: The Franchise Fee will vary by municipality. I have used 3% to provide a reasonable approximation and comparison. For example, the Lee County fee is 3% and the Cape Coral fee is 3.173%.

SWFL Utility Rate Comparison

Southwest Florida Utility Electric Rate Spreadsheet (Requires Excel 2007 or greater)

It’s a common question. “How many solar panels do I need to power my ### square foot house?”

The answer is not so simple. In fact, I can’t even give you a rule of thumb. Some industries can tell people a reasonable range for sizing equipment, and often building codes dictate sizing of appliances. For example, an A/C company might tell you that on average you need one ton of air conditioning for every 600 square feet of living area for a Southwest Florida home. A plumber might tell you that you need a minimum 50 gallon water heater for a 3 bedroom, 2 bath home. There is no such approximation with solar energy.

The energy used by a home, and more specifically a homeowner, can vary tremendously (note: homes don’t use energy – people do). My 3,000 square foot home uses about 2,000 kilowatt-hours (kWh) of electricity each month. I’ve been at a customer’s 2,500 square foot home that uses 3,500 kWh of energy! That would be a range of 0.67 – 1.4 kWh per square foot per month – hardly a useful range to use as a rule of thumb.

Energy use is complicated. People have very different habits, standards of living, and luxuries.

I was at a customer’s home where they had two refrigerators in the garage. That is the worst place to put a refrigerator in Florida (because of the ambient temperature). But two?! They were wondering why their electric bill was so high despite the installation of solar products. I think I have an idea…

Pool homes consume more energy generally. Old air conditioners and poor insulation cause poor efficiency for cooling. Some people run incandescent lights in their yard 12 hours a day. And many times, habits are the cause.

Even the utility company averages have little value. LCEC and FPL report about 1,100 kWh per residential account. However, that includes small condos, separately metered buildings, manufactured homes, and seasonal residents. It’s not a good metric to use – just about every customer we visit consumes more than the “average.”

What we need to know is how much energy you use. Fortunately, that’s easy to find out. Both utilities in Southwest Florida have online account history that shows you energy use by month. Fafco Solar’s solar advisers can help you figure out how much energy you are using and how many solar panels you need to power your house!

Don’t panic! It’s not here yet!

Time-of-use metering allows a utility company to charge you different rates based on the time of day. This billing approach is popular in places like California and the Northeast US where there are large peaks in electricity demand. Utilities deliver power by producing a “baseline” amount of power that corresponds with the lowest amount of total expected power demand for their customers at the lowest possible cost. It costs more to meet power needs that are above this baseline amount of power because production costs are higher to meet the peaks. Total demand changes based on the time of day and the time of year.

One way to think about it is how you drive your car. If you are cruising along at a constant speed, your fuel consumption is steady, predictable, and relatively low. When you accelerate and put the pedal to the metal, it costs a lot in terms of fuel consumption, and it’s a very inefficient way to consume fuel to get where you want to go. The same concept applies to utility companies’ power production. A utility’s dream is to be on cruise control, delivering a constant amount of power throughout the day and night.

LCEC's Southwest Florida Annual Load Demand Curve. January 2009 was particularly cold, causing a huge demand for electric heating.

Current electricity rates for PG&E customers in California with time-of-use metering can vary from 9 cents per kilowatt hour to over 47 cents per kilowatt hour! Depending on how much energy you use each day and when you use it, you could pay over 4 times the rate we pay in Southwest Florida!

Florida does have a relatively steady annual power demand because the population swells in the cool season. Even though less air conditioning is required per capita in the cool season, the sheer number of people here helps to level out the total amount of energy consumed each month. See the LCEC Annual Load Demand Curve to the right to illustrate this phenomenon. Nonetheless, demand throughout the day does vary significantly year-round.

The scary thing about time-of-use metering in Florida is that rates would be highest during the day in the summer when air conditioning is typically used. Electricity bills could skyrocket in Southwest Florida for annual residents and businesses unless habits are drastically changed. Commercial customers would be hit hard, as offices and shops consume the vast majority of their energy during peak hours. Retirees who are home during the day would also be hit with higher air conditioning costs. Lower income seniors may need to forego the luxury and comfort of temperature controlled surroundings.

The good news is that utility rates for off-peak times may actually be reduced dramatically. The other way for electric utilities to lower total cost of production is to actually raise the baseline. That means they want you to consume electricity during the off-peak times. One potential boon for this approach is electric cars. Imagine millions of electric cars charging up in garages overnight across Southwest Florida, flattening out the power demand curve!

Is time-of-use metering coming to Southwest Florida? Based on the status quo, we will probably not see time-of-use metering as a requirement in the near future. However, it is almost inevitable that some changes will be made to electricity rates in the mid- to long-run. It is totally impractical for utility companies to maintain a low baseline power production and meet peak demand with more expensive production options.

How does this relate to solar energy? Well, solar energy systems produce the most energy when the sun is out (surprise!) and this time generally corresponds to the peak power demand times for utility companies in Florida. If your solar energy system is reducing your usage during peak times, your bill will be reduced dramatically. You would be cutting down your usage of the most expensive power required for your home. Furthermore, any electricity that you sell back to the utility (power produced in excess of power concurrently used), would be sold back to the utility at premium rates!

Time-of-use metering is generally hated by the average consumer, but it is a more fair way to charge for electricity because it is tied to the cost to produce the power at the time it is consumed. If (when) time-of-use metering does come to Southwest Florida, one way to be prepared is to use a solar electric system to eliminate the most expensive power you will need.

Lee County Electric Cooperative (LCEC) places a paper insert in utility bill envelopes for netmetered customers (those with solar photovoltaic systems). This insert is a bit confusing, and it is no wonder that customers come to me asking if their solar electric system is meeting expectations. Months ago I made recommendations to LCEC on how to reword the information presented to make it more accurate and understandable, and they have made some improvements.

So how do you read the LCEC netmetering bill insert? Here is picture of a recent statement from a customer’s utility service. Let’s break down each line.

Example of a LCEC Netmetering Insert

1. Kilowatt hours consumed (from LCEC): This is the total amount of energy that your home used from the utility company. It is NOT the total amount of energy your home used. Your home also used some energy produced by the solar electric system.
2. Kilowatt hours returned to LCEC (the grid): This is the excess energy that your solar electric system “sold back” to the grid when it was producing more power than your home was using.
3. Kilowatt hours net from/to the grid: This is how much energy for which you will be billed. It is the difference between the energy you used from LCEC and how much you “sold back” to LCEC.
4. You have reduced your LCEC billable consumption by: This is always the same as #2 above. I don’t understand the need for this item, and it is the most confusing item on the statement. The asterisk should actually be next to this item. Without the asterisk, it would be easy to mistakenly assume that this solar electric system only produced 281 kilowatt hours during the billing period. The bottom line is that LCEC has no idea how much energy your solar electric system produces. The utility meter can only measure energy drawn from the grid and returned to the grid. It cannot measure power produced by your solar electric system that is consumed by your home concurrently. This is where the use of a solar energy monitoring system is helpful.
5. Reserves (accumulated) kWh to date: If the amount in #3 above is negative, it means that your solar electric system produced more energy than your home consumed in the billing period. This line is a running total of the “banked” kilowatt hours that you have in your account. If there are accumulated reserves at the end of the year, LCEC will cut you a check for the net amount of energy “sold back” to the utility.

It is unfortunate that this has to be so confusing, but it is a limitation of the bi-directional netmetering approach that local utilities have adopted. FPL uses the same type of bi-directional meter. Some utilities actually require a second meter that just measures energy produced by your solar electric system. This is called a revenue meter. You are billed the difference between your regular usage meter and the revenue meter. In this approach, the utility can tell you how much solar energy you produced, because you effectively sell all of your solar energy back to the grid. It also allows for varying energy prices. For example, you may be able to sell solar energy back to the grid for a higher price than the consumption rate. It also allows for a variety of time-of-use billing practices.

While the revenue meter approach is better for a number of reasons, the bidirectional meter is cheaper and easier to implement for the utility and the homeowner. The revenue meter would typically be easier for the solar contractor to install because integrating with some existing electrical distribution systems is troublesome. A revenue meter also allows you to compare you independent solar monitoring system to the revenue meter to ensure you are being credited properly for your solar production.

The LCEC bidirectional meter should accurately measure your net electricity usage. It allows you to sell your excess solar electricity back to the utility company at the same rate for which you purchase electricity. It may be a bit confusing, but ultimately it gets the job done!