Rates 101: Understanding Energy Charges

Donna Fong
Rates 101: Understanding Energy Charges

By understanding the key features of their electric rates, business owners are better equipped to manage use against those features and therefore eliminate unnecessary costs on their monthly bills. Rates are just one way business owners can take greater control of their operational costs.


Below are common questions you may have about understanding energy rates:


1) Q: What makes up the electric charges on my energy statement?

A: Your total electric charges consist of a Customer Charge, Energy Charges and an Energy Commission Tax. Energy Charges are calculated by the amount of electricity, measured in kilowatt-hours (kWh), used per time period, multiplied by the per-kWh rate for those respective time periods. Some time-of-use rate plans also include a Demand Charge. This Demand Charge is calculated by using the 15-minute interval during each billing month when your business uses its maximum amount of electricity. As a benefit to this type of rate plan, regular electricity charges are about 30% lower than for a comparable rate plan without a Demand Charge.


2) Q: How can an online rate analysis help business owners select the lowest rate for their business?

A: An online rate analysis allows you to compare your current rate plan against other available rate plans, so you can lower your annual bill. Log in to your Pacific Gas and Electric Company (PG&E) online account for a personalized rate analysis that estimates your costs based on your historical energy use.


3) Q: What is Peak Day Pricing?

A: Peak Day Pricing is a PG&E program that gives businesses a discount on regular summer electricity rates in exchange for higher prices on nine to 15 Event Days per year—typically the hottest days of the summer.* By using less electricity on Peak Day Pricing Event Days when the power grid is under the most strain, you help keep California’s energy supply reliable for everyone—plus your business could save money.


4) Q: How can a Peak Day Pricing plan help manage costs?

A: With Peak Day Pricing, your regular rate is discounted from May 1 through October 31.* On Event Days, a surcharge is added to your regular time-of-use rate during the peak period of 2 to 6 p.m. By reducing or shifting your energy usage on Event Days, you may be able to save on your energy bills. You’ll be notified the day before an Event Day, so be sure to add or update your Peak Day Pricing notification preferences so you don’t miss any Event Day alerts.


5) Q: What if I’m not able to save energy on Peak Day Pricing Event Days?

A: If you’re not able to save energy on Peak Day Pricing Event Days, your bill may be higher. However, PG&E provides automatic Bill Protection for your first year on Peak Day Pricing, so you can try the program risk-free. If you end up spending more on your first year of Peak Day Pricing, PG&E will refund you the difference. And you can decide to opt out at any time.


6) Q: What tools are available to help manage costs and monitor energy use?

A: With your PG&E online account, you can view your energy usage history to identify the times and activities that impact your bill, so you can make energy- and cost-saving decisions for your business. You can also get a personalized rate analysis that compares your current rate plan against estimated costs for other eligible rate plans, so you can save on your annual energy bill. With the Business Energy Checkup, you can compare your energy costs with similar-sized businesses and create a customized energy savings plan to identify energy-efficient upgrades and recommendations for your business.


If you’d like your energy bill to be consistent from month to month, or need help budgeting energy costs, try the Budget Billing. It levels out your monthly payments so that if your energy usage changes significantly from season to season, you won’t see big spikes on your bills.


7) Q: Why do time-of-use rates vary?

A: Time-of-use rate plans better align the price of energy with the cost of energy at the time it is produced. Lower rates in the winter and during partial-peak and off-peak hours offer an incentive for customers to shift energy use away from more expensive summer and peak hours, which can help you save money and reduce strain on the electric grid.


8) Q: What is the difference between time-of-use summer and winter seasons?

A: During the summer season, which is from May through October, there are three rate periods: off-peak, partial-peak and peak. During the winter season, there are two rate periods: off-peak and partial-peak. Peak period rates are highest on weekdays, from noon to 6 p.m., May through October, when there is more strain on the grid. At all other hours, rates will be lower.


9) Q: What is a Demand Charge?

A: Some time-of-use rate plans include a monthly Demand Charge. This Demand Charge is calculated by using the 15-minute interval during each billing month when your business uses its maximum amount of electricity. As a benefit to this type of rate plan, regular electricity usage charges are about 30% lower than for a comparable rate plan without a Demand Charge.


10) Q: Why do some energy rate plans include a Demand Charge while others do not?

A: Eligibility for a rate plan that includes a Demand Charge depends on a customer’s peak monthly demand patterns. You can find out which electric rate plans are available to you by logging into your PG&E online account.


11) Q: How can consumers reduce or eliminate a Demand Charge?

A: One way to lower your monthly Demand Charge is to stagger the times at which you use equipment, rather than using all your equipment at the same time, minimizing spikes in your electricity use. Depending on your business type, it may be possible to spread your electricity use throughout the day to lower your Demand Charge.


12) Q: Can businesses switch to a different rate plan and, if so, how?

A: There may be additional rate plans for which your business is eligible. Log in to your PG&E online account to compare your rate plan options. Once you’ve decided to switch rate plans, or for more information, call our Business Customer Service Center at 1-800-468-4743.