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.
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.