UCAN has reviewed the new DR-SES tariff which went into effect on May 1, 2008 and compared it to the existing Net Metering tariff. We have had difficulty finding much merit in the DR-SES relative NEM except, perhaps, for those self-generating customers who have no electric consumption during the peak periods of the summer. And even that isn't quite so clear.

SDG&E's new DR-SES rate appears to do away with the baseline billing resulting in any positive usage being billed at the stated TOU rate of $.07662 fixed rate plus a changeable commodity rate (see below) The customer also pays an additional $3.81 a month. From what we can tell, a customer would have to build up a significant credit during the summer on-peak rate to offset the loss of the baseline allowance. Moreover, the TOU rates for winter would be a significant problem for an all electric homes given the reduced daylight hours and cloudy winter days. The best case for the new tariff would be for customers who work during the day out of their house and do not use a lot of electricity during winter months (e.g. heat their homes and water using gas or solar power. Even then, it isn't so clear that there are notable benefits for such customers.

Late breaking item:  In July 2008, SDG&E filed an advice letter asking the CPUC to approve a revision to its DR-SES rate that would allow a customer to try the DR-SES rate for 90 days and, if they aren't satisfied, that customer can revert back to a Net Metering rate.    If the CPUC approves,  then customers who might possibly benefit from DR-SES might want to try out this option......but we expect there won't be too many customers who will fit into that particular niche.

The upshot is that the winter rates are pretty close to the average rate charged to all customers at the lower tiers (avg. $.15 p/kwhr). The summer peak rate is about 70% higher but only during the 11am-6pm time period. Any customer opting to use the DR-SES rate would not want to use ANY electricity during that summer peak period.

The monetary benefits of DR-SES are hard to discern. At this point, UCAN does not recommend this alternative rate unless a customer produces at least 500 kwhrs per month from their PV system, consumes well over 1000 kwhrs each month and uses almost electricity during the summer peak periods. Even then, it is unlikely that a customer would see a significant monetary benefit (or payment) from SDG&E at the annual true-up that would offset the risk of possibly owing SDG&E money.

After the rate went into effect, we asked SDG&E whether it had computed any exemplars of customer consumption patterns where a customer might come out better than using a DR-SES rate rather than under a NEM (net metering) rate. The answer: SDG&E hadn't done it. But they were nice enough to pull something together for us. Here's what SDG&E wrote:

Table 1 presents estimated annual electric bills under Schedules DR and DR-SES for residential customers in two climate regions (Inland and Coastal) and at three levels of average monthly usage (500 kWh, 1,000 kWh, and 2,000 kWh). The usage estimates are prior to PV installation and reduction in net usage. This analysis assumes a solar system with an AC rating of 2kW. Annual bill amounts shown are for the estimated net usage after PV installation.

Notes:

1. Calculations based on rates effective June 1, 2008.

2. Schedule DR-SES bill calculation uses average customer load profile, by climate zone, based on SDG&E load research sample. The annual average load shape used to represent Coastal customers has 11% of consumption in the on-peak period, 31% in the semi-peak, and 58% in the off-peak. The annual average load shape used to represent Inland customers has 12% of consumption in the on-peak period, 31% in the semi-peak, and 57% in the off-peak.[1]

3. Actual load shape and bill amount under Schedule DR-SES will vary by customer.

As shown in Table 1 above, residential solar customers at 500 kWh of average monthly consumption who install a 2kW PV system benefit greatly from the AB1X capped rates under Schedule DR. By remaining on Schedule DR the customer's net consumption will be within Baseline allowances and therefore billed under highly subsidized rates still capped based on 2001 levels. If the low-usage customer were to instead opt for Schedule DR-SES the customer would be subject to an annual bill increase of approximately $135 as compared to Schedule DR.

At higher levels of consumption, under Schedule DR, net consumption enters into the higher-priced upper tiers where the rates are increased to recover subsidies related to AB1X capped rates. As usage levels increase, the benefits associated with TOU rates for solar production increase as well.

At the 1,000 kWh average monthly consumption level, net consumption under Schedule DR enters into Tiers 3 and 4 for both Inland and Coastal customers, and can result in savings under Schedule DR-SES. For example, as shown on Table 1, an Inland zone customer using 1,000 kWh that opts for Schedule DR-SES would benefit from an annual bill decrease of approximately $56, or 4% as compared to Schedule DR.

At the 2,000 kWh average monthly consumption level, net consumption would be predominantly priced at the highest-priced usage tier under Schedule DR. Switching to Schedule DR-SES will result in significant bill decreases for both Inland and Coastal customers. For example, as shown on Table 1, if an Inland zone customer using 2,000 kWh opts for Schedule DR-SES the customer would benefit from an annual bill decrease of approximately $1,181, or 29% as compared to Schedule DR.

OUR CONCLUSION: This is pretty complex stuff. UCAN's advice is that if you are using a LOT of kwhrs and you inexplicably installed a relatively undersized 2kW system, you might be interested in looking at the DR-SES rate. But it is the rare residential customer who has installed a such a small PV system when their consumption is so high (primarly, it'd be someone who just wanted to get out of the top tier rates). Given this analysis, it is hard to think of many SDG&E customers who'd want to take advantage of this rate.

[1] The Time-Of-Use periods under Schedule DR-SES are:

· Summer (May through October):

o On-Peak: 11 a.m. - 6 p.m. Monday through Friday, excluding Holidays.

o Semi-Peak: 6 a.m. - 11 a.m. and 6 p.m. - 10 p.m. Monday through Friday, excluding Holidays.

o Off-Peak: 10 p.m. - 6 a.m. Monday through Friday and all hours weekends and Holidays.

· Winter (November through April):

o Semi-Peak: 6 a.m. - 6 p.m. Monday through Friday, excluding Holidays.

o Off-Peak: 10 p.m. - 6 a.m. Monday through Friday and all hours weekends and Holidays.