Step 2 is the hard part.

Matt Ginzton writes here.

The Effect of Time-shifting Electrical Usage on NEM Billing

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One more post on the topic of PG&E bills for solar (NEM) customers.

PGE’s NEM billing scheme blends usage across seasons to allow for seasonal variation in generated power, and their E-6 billing scheme separates usage into 5 time-of-use periods to encourage customers to shift usage away from peak periods.

A question that just occurred to me is whether you can game their billing results by time-shifting usage around inside the same true-up period, between TOU zones, months, or even seasons.

It’s pretty easy to move usage between TOU zones of the same day (say between summer on-peak and summer off-peak) by delaying energy-hungry activities like baking pies until night; that’s both tractable for a home customer and exactly the kind of behavior the E-6 TOU billing rates are designed to encourage. Moving usage between TOU zones of different seasons (say between summer on- peak and winter off-peak), or even from one monthly billing cycle to another, would be more difficult (it’s possible in theory but doesn’t really match human activity patterns to delay all your energy-hungry activities for months and then execute them in a big batch months later; alternatively you’d need a really big battery which is exactly what grid tie-in lets you avoid), but I’m still curious if it would be advantageous in some circumstances.

Again drawing on the example of my last year’s experience, the answer turns out to be yes for both forms of time-shifting. Say you’re going to bake a bunch of pies, and need to run the oven at 3KW for a little over 3 hours, consuming 10 KWh of electricity. (The 3 KW figure is realistic for an electric oven; the heating element running continuously is not; ignore that in the service of an example.) If you’re going to consume that 10 KWh, does it matter when you consume it; what’s the effect on your final true-up bill of adding 10 KWh at various different times?

If you can move that 10 KWh from a higher-value TOU period to a lower-value TOU period in the same day, you win; this turns out to be independent of tiering, consumption, or which month or season you’re in, which is a nice property. It won’t change your overall consumption for that day or month, so it won’t change your tiering calculation. If you had a surplus in the higher- value TOU period, you’ll now have a bigger surplus, which at the higher rate is more than enough to buy the same electricity back from PG&E later in the day, even if the solar cells aren’t producing at that time. (Basically, it wasn’t immediately obvious to me what the credit/charge calculations do in this case, because my intuition keeps wanting to tell me it’s better to consume energy when I’m getting it free from my solar panels than when I’m buying it from PG&E. That turns out not to be true; the NEM system means if you buy and sell the same amount of electricity at a given rate, it’s a wash, and the TOU system actually rewards you for selling it at a higher rate and buying it back at a lower rate.) So yes, you can “game” the E-6 billing system by moving usage from peak times to off-peak times, which use of “game” gets scare quotes because it’s actually the behavior they want to encourage.

Meanwhile, if you could move that same 10 KWh across months, the story is a lot more complicated. Due to tiering, you may be paying more than the baseline rate for some of your electricity, and since PG&E applies the tiering calculations entirely inside each month, based on that month’s usage, you can actually get crossover between “high-value” and “low-value” TOU periods. More concretely: as a solar generator, you may be paying more for winter off-peak electricity at 3rd-tier rates than you are for summer part-peak electricity where you never exceed the first tier. This is exactly what happened to me over the last year (note in the E-6 schedule that winter off-peak and part-peak above 130% of baseline cost about what summer on-peak baseline usage does, and winter off-peak and part-peak above 200% of baseline cost more than the summer on-peak baseline). While from the previous example you’d expect the result of time-shifting your usage to depend on the TOU rates (and you would win by shifting from a high-rate TOU to a low-rate TOU, and lose by doing the reverse), in fact it also depends on the tiering calculations, and you can also win by shifting usage out of a month where you had higher-tier usage into a month where you didn’t, and this can even be true if it involves shifting that usage from a low-rate TOU to a higher-rate TOU. So, surprisingly, you could see a net benefit from moving usage from winter to summer; it’s pretty easy to make the numbers work out if moving from winter part-peak to summer part-peak, and in extreme cases, you could even win by moving from winter off-peak to summer on-peak. This is decidedly not the result they want to encourage, so I’d call it gaming the system. (Of course, you’d need a way to actually buffer your usage across months; a better way to lower your winter bills is to simply use less electricity, without compensating in the opposite direction in the summer.)

I’ll note again that this perverse result derives from the fact that PG&E calculates and finalizes the tiering calculations entirely inside each month, instead of smoothing them across the true-up period, so it’s actually possible for a big energy user with an even bigger solar array to generate a net surplus for the year but be paying 4th-tier rates for winter electricity when the array is underperforming.