HOW MUCH POWER SHOULD YOU OFFSET?

When you are purchasing a solar system, you have the option to offset part or all your power. Here in Fresno and the Central Valley, summer bills can get out of control with air conditioning use and kids being out of school so it pays to think this through before finalizing the purchase.

Many solar companies here in Fresno and the in Central Valley will usually recommend offsetting all your usage except for the "lower two tiers" of your bill. They are referring to the baseline and the next tier after the baseline, which have been locked by the California Public Utility Commission (CPUC) to low pricing to help lower income individuals from high bills.

Recently, PGE was able to coerce the CPUC into removing the pricing lock for the lower 2 tiers, meaning that PGE can raise rates even though this will affect low income individuals and raise utility bills for every one. These two tiers will run from $80 to $100 per month before moving on to higher rates, depending where you live.

Going back to how much power should you offset, when you purchase a solar system you are getting rebates and tax credits as a one time payment to help you offset the cost of solar. If you leave a part of your bill, even though they are called "cheap energy", you are still tied to the utility company paying something every month. You have made a significant investment to go solar/green and yet you still have a bill due every month, for the rest of the life of the system.

Let's think about this: the State of California the Federal Government and in some cases, your city/county is paying for such a huge part of your solar system, go ahead and offset 100% of your bill. It is true that your IRR will drop because you are using solar to offset cheap energy.
Your internal rate of return (IRR) might not look as good, but you will not end with a $1,400 - $1,800 bill at the end of the year when your True-Up Period is due. You can use that extra 1,500 per year and put it to your kids college fund, your Ferrari fund, whatever makes you happy.

Remember that every dollar you send to the utility company is an after tax dollar. Realize that even the cheap energy builds up and becomes quite a bill at the end of the year.

On another note, once you start using a lot of your energy on a Non-Peak Time of Use (TOU) you can start paying HUGE rates if your system is not designed to offset all of your bill. TOU penalizes you for using power during PEAK times AND when your power consumption is high on Non-Peak and Part-Peak. I will go over this on the TOU page.

Rates at the first two tiers on Non-Peak and Part-Peak are cheap, but as soon as you pass the first two tiers in consumption (at around 500 kWh/month in Winter, 800 kWh/month in Summer) you will be paying OUTRAGEOUS rates per kWh.

Remember, this is a one time purchase, heavily subsidized. Yes, your IRR will not look as good, but that is only a figure on paper. In the end, taking into consideration other factors, it pays to offset as much as you can up front than to have to pay a lot at the end of your True-Up Period