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There’s been a lot in the news lately about how Georgia Power is raising electricity rates over the next few years, and residential customers are increasingly wondering what they can do to lower their monthly electric bills to offset these rate hikes.
Of course, using less electricity helps. There are all sorts of energy efficiency upgrades that can make a difference on your bills, like switching to LED lightbulbs, adding insulation, and buying a more efficient air conditioning unit or dishwasher. Installing solar panels on your roof can lower your electric bill significantly, but it can take years for the savings to pay off the cost of the system. All these things are good ways to lower your bill, but they require an upfront investment. There is one potential improvement that costs nothing more than a phone call: changing your electricity rate plan.
As a policy advisor for Southface, I focus on state regulatory proceedings, utility operations, and local government policy—but as a homeowner and Georgia Power customer, I focus on how to keep my family’s electricity bills as low as possible without sacrificing comfort. I started this series to combine those experiences, using my own bill and those shared by friends and volunteers as case studies, to explain the many factors that go into choosing your electricity rate. Over a series of seven posts, I reveal the rub: While changing your rate may be easy to do, understanding whether a change is right for you is no small task.
I have found that choosing a rate option from most utility providers is a lot like choosing a healthcare plan in the US today. Your final out-of-pocket cost depends on how you use the product. If you only go for an annual physical, you might opt for an insurance policy with lower fixed costs (i.e., lower premiums) and higher volumetric charges (i.e., co-pays, a higher percentage of co-insurance, and a higher deductible). You pay more for care when you use it, but limiting your use overall might make it a more cost-effective option. Electricity rate plans have similar features, including different levels of fixed and variable costs and time-sensitive pricing. There is no clear “best option” for all customers.
In my next post, I’ll explain how to recognize your energy use patterns, but first, let’s breakdown the charges on electricity bills.
Residential electricity rate plans can be grouped into four common types. While different utilities may offer similar rate structures, they charge different rates for each item on the bill.
1) Flat/Fixed Rate Plans have the most basic pricing structure that typically includes just two components. (e.g., Cobb EMC’s Fixed Rate). This kind of plan does little to reflect a customer’s pattern of electricity use.
a.) Customer/Basic Service Charge – This fixed charge is billed per month (e.g., $15/month) or per day (e.g., 45¢ day) just for being connected to the utility’s system. This fee is intended to cover the cost of installing and maintaining your meter and meter drop as well as issuing you a monthly bill.
b.) Flat Rate Energy Charge – This is a volumetric charge with a single, set price for every kWh of electricity you use. Whether you use more or less energy in a month directly corresponds with how much you pay.
2) Tiered Rate Plans are common for residential electricity customers. Like a flat rate plan, there is both a customer charge and an energy charge, but the energy charge calculation is more complex.
a.) Georgia Power’s Standard Residential rate plan features a block energy price in summer that increases when you hit a higher threshold of usage. From June through September, the first 650 kWh you use are 6.2¢ per kWh; the next 350 kWh are 10.3¢ per kWh; and over 1000 kWh, you pay 10.6¢ per kWh.1
b.) Since demand for electricity is higher during hot summer months—and costs Georgia Power more to produce in those periods of peak demand—this pricing is meant to encourage you to conserve electricity in summer months. Note that each utility sets their tiers and prices differently.
3) Demand Rates are common for commercial customers and are becoming more common for residential customers. Demand rates include a monthly demand charge alongside the customer and energy charges. This charge is based on the customer’s peak demand (i.e., highest amount of electricity used in a 15-, 30-, or 60-minute interval) during the billing period or longer.
a.) Georgia Power’s Smart Usage rate plan includes a demand charge that is calculated based on the customer’s highest single hour of use during each month.
b.)Utilities must supersize their generation, transmission, and distribution systems to handle periods of peak demand, and like tiered pricing, demand rates are meant to encourage customers to manage and shift energy usage to off-peak times, helping utilities to reduce peak period costs.
c.) It can be very hard to lower your demand charge because you must control your electricity use every single hour with no slip-ups. If your demand charge includes a “rachet,” your annual peak demand can be what determines the amount of your monthly demand charge, making it even harder to lower. Cobb EMC’s Smart Choice rate is an example of a residential demand rate with a rachet. But if your peak demand is consistently set on summer afternoons, for example, upgrading to a more efficient AC unit could effectively lower it.
4) Time of Use (TOU) Rates are more granular than tiered plans and reflect when you use electricity both seasonally and across the hours of each day. TOU rates are another flavor of an energy charge, so typical plans also include a basic customer charge and, in some cases, a demand charge too.
a.) The utility’s cost to generate and distribute electricity varies depending on the specific hour and day throughout the year, and the goal of TOU rates is to make that matter to you and influence your usage accordingly. You see this type of pricing with some rideshare programs. You’re charged a higher rate (per mile with rideshare and per kWh with electricity) during on-peak hours and less during off-peak.
b.)TOU rates typically group hours into different buckets. It could just be two buckets—on-peak hours and off-peak hours—like Georgia Power’s Smart Usage and Nights & Weekends residential rate plans. The third Georgia Power TOU rate plan, Plug-In EV, prices electricity based on three buckets: on-peak, off-peak, and super off-peak. See the figure below.
Georgia Power Plug-In Vehicle Rate Plan Infographic
As an example, the next figure shows how my electricity use on a late-June day aligns with the Plug-In EV time of use “buckets.” Across the whole day, I used 48 kWh: 15 during peak hours, 22 during off-peak hours, and 11 during the super off-peak hours.
24-Hour Electricity Use from Late June 2022 Aligned with Plug-In EV Rate Buckets
Riders: Many, if not most, electric utilities also assess riders, which are discrete charges intended to recover specific costs incurred by the utility. For example, there is often a separate fuel rider (sometimes called a “fuel charge”) to recover costs for the fuel the utility uses to generate electricity, such as coal, natural gas, or uranium.
Real Time Pricing: Real time rates could arguably be fifth on the list of types of electricity rates above, pricing electricity for each hour of the year based on the utility’s projected cost to produce electricity in that specific hour. These rate structures are very rare for residential customers. Though real time rates can be lower on average when fuel riders are correctly set, customers must fully understand the risks inherent in market fluctuations. Perhaps the most widely known utility company to use real time pricing in the US, Griddy, took a fatal hit in the wake of the Texas cold snap and ensuing energy crisis of 2021.
As you may have realized, when TOU rates and demand charges are involved, accurately comparing your rate options based only on your total monthly electricity use won’t get you very far. It’s like trying to drive to a friend’s beach house using a globe for navigation. You need more detail. In the case of electricity rates, that means hourly data.
Georgia Power began offering its residential customers online access to their hourly electricity use data through Georgia Power’s My Energy Use online tool in late 2021 and made the data formatting more customer-friendly in April 2022. You can download up to 33 days’ worth (792 hours) of hourly use data at a time all the way back to December 2022. As the program continues, this availability may cap off at 18 or 24 months of trailing data. Several electric membership cooperatives (EMCs) in Georgia, including Cobb EMC and Sawnee EMC, also provide customers with access to hourly data.
In the next post, I’ll share what I’ve learned by examining my family’s hourly electricity use data from February 2021 through January 2023 so that you can better interpret your own residential usage. You may find a way to lower your utility bills or kindle an interest in energy advocacy, but either way I hope it will be worth the read.
Electric Bills Decoded is Southface Institute’s series exploring how Georgia Power residential customers can use data to help determine whether changing their electricity rate plan can lower their utility bills and offset recent rate hikes. Follow along to understand different types of rates and charges; identify electricity usage patterns; use your data strategically; consider the impact of going solar; explore several case studies; and learn about battery storage as a cost-saving tool. We’re decoding it all!