When Net Metering is Not Truly Net Metering

In our October 2005 PG&E E-7 Time of Use net metering bill, I noticed a discrepancy between the Unbilled Charge that PG&E calculated and the amount I calculated using their numbers for Peak Usage and Off peak Usage. I didn't make too much note of it at the time because it was a relatively small amount, my computer died shortly after, and the next four months of bills matched my calculations well. But then in March 2006 it happened again and I noticed that the discrepancy only happened when we had negative peak KWH usage.

It turns out that PG&E changed they way they calculate peak and off-peak baseline quantities. It'll cost us money by pushing more of our energy into higher rate tiers in the months during which we generate more energy than we use during peak hours. This runs counter to the concept of net metering.

I called PG&E to complain. Mike, the first guy I talked with, agreed with me that it seemed wrong. He then called in his manager, Barbara Butterfield, who emailed me the Peak and Off Peak Baseline Calculations (below) and claimed the CPUC approved these calculations.

> Date: Mon, 27 Mar 2006 10:20:03 PST
> To: "Valenzuela, Michael" ,
> From: "Butterfield, Barbara"
> Subject: Peak and Off Peak Baseline Calculations
> Team --
> I received a phone call from a customer who wanted to know how the
> Peak and Off Peak baseline quantities were calculated on the E-7
> rate. Tim gave me a detailed lesson. The result is a very simple
> formula that may be valuable to the rest of the team.
> Step 1: X = Peak Usage + Off Peak Usage (disregard any negatives)
> (for example if the net Peak Usage is -29, the number used for this
> calculation would be 29)
> Step 2: Y% = Peak Usage /X (percent of total usage Peak usage comprises)
> Step 3: Z% = Off Peak Usage / X percent of total usage Off Peak usage comprises)
> Step 4: Baseline Quantity x Y% = Peak Baseline Quantity
> Step 5: Baseline Quantity x Z% = Off Peak Baseline Quantity
> Barb

If the CPUC truly did approve of these calculations, I am surprised and extrememly disappointed. It goes counter to the idea of net metering. For the same net KWH/day, I get charged at higher tier rates if I provide excess power to the grid from my PV array during peak hours.

For instance, say that my baseline quantity is 12 KWH/day. For simplicity lets say the bill is for just one day. Say that my net usage is 16KWH/day. Using PG&E's formula in the email from Barbara Butterfield:

Scenario 1

Peak usage = 0 KWH
Off-peak usage = 16KWH
Net usage = 16KWH

X = 0+16 = 16
Y = 0/16 = 0
Z = 16/16=1
Peak Baseline Quantity = 12 x 0 = 0
Off Peak Baseline Quantity = 12 x 1 = 12
Effective Total Baseline Quantity = 0 + 12 = 12

Tier 1 peak usage = 0
Tier 2 peak usage = 0
Tier 3 peak usage = 0
Tier 1 off-peak usage = 12
Tier 2 off-peak usage = 3.6
Tier 3 off-peak usage = 0.4

Scenario 2

Peak usage = -16 KWH (power sent to the grid)
Off-peak usage = 32KWH
Net usage = 16KWH (Same as for Scenario 1)

X = 16+32 = 48
Y = -16/48 = -0.3333
Z = 32/48= 0.6667
Peak Baseline Quantity = 12 x (- 0.3333) = -4
Off Peak Baseline Quantity = 12 x 0.6667 = 8
Effective Total Baseline Quantity -4 +8 = 4 (1/3 of what it should be!)

Tier 1 peak usage = -4.0
Tier 2 peak usage = -1.2
Tier 3 peak usage = -2.8
Tier 4 peak usage = -4.0
Tier 5 peak usage = -4.0
Tier 1 off-peak usage = 8.0
Tier 2 off-peak usage = 2.4
Tier 3 off-peak usage = 5.6
Tier 4 off-peak usage = 8.0
Tier 5 off-peak usage = 8.0

So if I provide energy to the grid during peak hours, I could find myself being charged at Tier 4 and 5 rates at up to 50 cents/KWH. If it were truly net metering then I'd only be just barely into Tier 3.

Notice that in the email "X", "Y" and "Z" have no descriptive names. In steps 2 and 3, it implies that "X" is "Total Usage", but it really isn't. It's an underhanded obfuscation trick to make it seem that during peak hours my selling of power is actually usage of power.

I'm expecting this to cost us an additional $200 this year in surcharges. Surcharges are 2.5 times as high as they were a 15 months ago. If surcharges keep increasing at this rate, then in 2 years I'll have to start wondering if it would cost me less to send my excess peak power into a resistor wasting energy rather than send it into the grid. Surely this is not the intent of the net metering program. The beauty of solar is that it generates the most energy during peak demand hours and thus reduces the need for utilities to build more power plants.

These new calculations will discourage people from installing photovoltaics because not only do they reduce the savings from photovoltaics, but the calculations become so convoluted that people can't predict how much money they will save on their electric bills. Consumers will find it harder to justify the investment in solar.

I would like to see peak and off peak baseline calculated the way it used to be calculated. Negatives in Step 1 should be treated as the negative numbers that they are, and not treated as positive numbers.

Baseline Energy Charges detailed comparison of calculation methods:

  • October 2005
  • March 2006

    California's Net Metering Law

    Carolyn Luce