Saturday, April 30, 2011

SAVE MONEY! Practical Economics of Electricity Conservation and Production

Most people don't know that their residential electricity charges can be based upon a tiered system, versus a flat rate per kWh (Kilowatt Hour) used.  Here in San Diego, SDG&E has four tiers of price per kWh, and those prices rates for tiers 3 and 4 change for winter and summer.  The two lower tier in summer are 14¢/kWh for tier-1 and 16¢ for tier-2, then jump to 29¢ and 31¢ for the top two tiers.  The pricing for the two bottom tiers are capped by the California Public Utilities Commission (because of California State Assembly Bill AB1X) and so the utility companies try to make their money in the top two tiers - thus the jump in pricing for those tiers.  Note that relative to the others, tier-2 is fairly small, so you can shoot right through that one quite easily.

What does this mean to you?  If you work to save electricity just a little bit through energy conservation, or produce just a little bit of electricity with a small Photovoltaic Solar system, you can shave off a proportionately greater portion of your electricity bill.  Note, the key words here are "just a little bit."  Its a generalization, but the more you do to either conserve or produce electricity, the more you receive diminishing returns on your investments.  Eventually you start doing it for altruistic reasons than for financial reasons.  The goal, really, is to shave off billing in the top two tiers of your electricity bill.

A rough example:  In a month if our electricity bill is $269, and we shave off 20% of our electricity use by then conserving and/or producing electricity, the same bill would be $202 which means we saved 25% on our electricity bill.

Bottom line, you don't really need to make a huge investment in energy conservation or production to make a big difference on your electricity bills, nor would you really want to make that investment because of the poorer return on your investment and "payback" time on that investment.   There are plenty of ways you can inexpensively change your approaches to lighting and that can have a profound effect on your bill, for example, and/or you can put in a small solar PV system to send electricity back into the grid.  If "going green" is to really succeed, the economics have to make sense to people!

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