Understanding Rate Plans

The cost of energy varies widely by state and rate plan, which is important when considering solar panels and the value of solar energy. Energy rate plan structures, the time of day when energy is consumed from the grid vs. solar, and the plan’s net metering rate all impact how quickly a customer recoups their initial investment and is producing clean, free, renewable energy. Customers should also consider the impact of any Federal, state or local incentives.  

Some of the most common rate plan structures include:

Fixed Rate Plan

Pay the same fixed rate per unit of energy, no matter how much energy is consumed or at what time of day. Your bill will vary based on the total amount of energy you use. Using less energy from the grid will result in a lower bill.  

Tiered Rate Plan 

This plan has multiple tiers based on the amount of energy used. As customers move through these tiers and use more energy, they will be charged higher rates. Using less energy from the grid and offsetting with solar significantly reduces cost with these plans by keeping customers in the lower, less expensive tiers.    

Time-of-Use Plan

Rates vary based on the time of day, day of the week, or season that energy is used (or any combination of those factors).  Some Time-of-Use plans also include discounts for customers who reduce their energy usage to within a baseline allowance.

Customers can save money by limiting their energy consumption from the grid to times that are outside of peak pricing hours, or by staying within their baseline allowance (i.e. the lowest tier pricing for electricity).

Electric Vehicle Base Plans  

These plans will vary based on the number of energy meters a customer has in their home. If a customer has one meter for both electric vehicle and home energy use, the rate charged will depend on the time of day energy is used. In this case, customers pay less by charging their vehicle and using energy during off-peak hours.

If a customer has two meters, one for their electric vehicle and one for home energy use, then rates for vehicle charging will depend on time of the day and day of the week. Customers pay less by charging their vehicle during off-peak hours.