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What Is A Tiered Rate Electricity Plan?

Mar 20, 2020

If you’re like most homeowners, you’ve probably found yourself scratching your head over the phrase “tiered rate electricity plan.” What in the world does a tiered rate electricity plan entail? Our team at Energy Saving Pros in Northern California wants to fill you in on all of the details of this type of plan, as well as the benefits of choosing solar! 

What is a Tiered Rate Electricity Plan?

Tiered rates are a common approach that electric utilities use to bill customers. California is one of the few states that has “inverted tier rates.” These are also called baseline rates. These rates help discourage excessive energy consumption, and reward homeowners for minimizing electricity usage. Pricing is organized in tiers, based on how much electricity you use in your home. 

In other words, the utility company varies energy prices for different classes (tiers) of customers. If you use a large amount of electricity, you will be charged more for it. If you only use a minimal amount of electricity in your home, you may qualify for the lower tier 1 rate. If you increase the amount of electricity you’re using, your rates will increase into tier 2, then tier 3, and so on as you use more electricity. You can find out which tier you have fallen into on any given month by looking at your electricity bill. How much are you being charged above the baseline rate? This will give you an idea of your tiered rates.

How Can a Tiered Rate Plan Benefit Solar Customers?

We all know going solar saves money. By going solar, you will begin generating your own power for your home, thereby reducing your electric bill significantly. Along with this obvious benefit, the utility company will reward you for going solar by eliminating tiers 4 & 5 (the most costly tiers) from your energy bill. 

In order to reap the tiered rate benefits of solar, make sure to create a solar energy system for your home that consistently keeps you in tiers 1 & 2. Becoming familiar with the rate structures that are available to you as a current or potential solar customer will provide the foundation of an accurate assessment of the financial value solar can provide.

Contact Us Today!

For more information on tiered rate electricity plans, and how going solar can benefit you, call Energy Saving Pros at (916) 259-2501 or get your free solar quote online!

Image by Jukka Niittymaa from Pixabay


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