My Electric Bill - Solar and NEM 2

Understanding my NEM bill was harder than I expected. Part 2

This is the second post in a series. Part I describes how PG&E and PCE interact in our electric bill; this part goes into more details and adds solar exports under NEM 2.0.

Recall our setup:

Our Household in a Nutshell

Our household is in a territory served by Pacific Gas and Electricity (PG&E) and Peninsula Clean Energy (PCE). We joined PCE in 2016 (that’s the Vintage year). We charge our Electric Vehicles at home using the EV2-A tariff. We have solar Panels installed under NEM 2.0 tariff. We do not have any battery storage.

Distributed Solar

Solar and batteries change the energy generation and transmission model from a centralized model to a decentralized model. The industry and the regulators are still adjusting to this and the current rules reflect a transitional period.

PG&E and PCE handle solar exports differently. PG&E follows the CPUC NEM 2.0 rules. PCE is not constrained by NEM 2.0 and uses a more generous model.

PG&E and PCE consider exports and imports monthly and annually. The annual tally is resolved once a year in a “true-up” event. PCE and PG&E use different rules for the monthly computations, for the true-up, and, to make things more fun, the two true-ups happen at different dates.

Tracking all of this gets a big complicated. I am including some details, like the rates, to provide some perspective on the relative costs of different charges. The content makes the post “busier” but I think the extra perspective is useful. All rates are valid at the time I am writing this post.

The chances that I got everything right are about 0. Please add corrections via comments to this post and I’ll incorporate them.

Added - I added a summary of the rules at the end of the post.
Correction - The NSC final computation does NOT apply to CCA (PCE) customers.

PCE Rules

The PCE rules are the simplest. The authoritative description of the rules is here.

PCE Balances

The only balance needed to track PCE is the PCE NEM balance, in $$s.

PCE Monthly

• PCE uses your net electrical consumption (positive or negative) for each category in the PCE EV2-A tariff and the corresponding rate to compute its value. The current rates are:

  • peak - $0.20392/kWh

  • partial peak - $0.16145/kWh

  • off peak - $0.12237/kWh

• Any net exports is credited at 100% of the corresponding import PCE rates.

• If the total monthly kWh show an export, you are credited an additional “generation bonus” of $0.01/kWh.

• The addition of all the values is your monthly PCE bill.

• If your monthly PCE bill is positive (you owe), the value will show up in your PG&E monthly bill. If it is negative (PCE owes you), the monetary value ($$) will be added to the running PCE NEM balance.

PCE True-Up

PCE has one annual true-up, in April.

• At true-up time, if your balance is non-zero, the full PCE NEM balance belongs to you. Credits over $500 will be mailed to you; credits under $500 will be “rolled over” to next year.

• If your balance is “rolled over”, it will show up as a credit in your PG&E account.

This is nice and simple. The only unusual things are: (1) the true-up date of PCE is not aligned with that of PG&E, and (2) the credit shows in the PG&E account, which is because PG&E is the retailer and PCE does not have a direct financial relationship with us.

PG&E Rules

PG&E is more complicated. The model is similar to PCE, a monthly balance and annual true-up, but there are multiple twists.

The authoritative description is the EV2A tariff (6 pages), as adjusted by the NEM 2.0 tariff (48 pages), Schedule E-FFS (3 pages) and Schedule CCA Cost Responsibility Surcharge (6 pages) and the NSC Master Table. Our vintage year for PCIA and FFS is 2016. The master page for all PG&E tariffs is here.

PG&E Balances

Tracking the PG&E balance correctly involves the following:

• A monetary credit value. The credit can be come from the true-up of PCE, the bi-annual California Climate Credit, or other sources,

• The PG&E NEM balance, both in $$ and kWh,

• Cumulative monetary value of state-mandated NBC, and

• Cumulative monetary value of minimum delivery payments.

PG&E Charges

The PG&E section of the bill of a household in our situation shows the following line items:

• Bundled (total) electricity costs, shown as net electrical consumption (positive or negative) for each category in our EV2-A tariff, multiplied by the corresponding rate. The current EV2-A rates are

  • peak - $0.62174/kWh

  • partial peak - $0.51125/kWh

  • off peak - $0.30924/kWh

• Non-Bypassable Charges (NBC) Net Usage Adjustment. This line groups several separate charges. The cost is computed using import values and is it is explained further below.

• State-Mandated NBC. This line also groups several separate charges. The value is also computed using imports and it is explained further below.

• A generation credit - the PCE generation charge.

• A Franchise Fee Surcharge (FFS). Using net consumption at a rate of $0.00105/kWh.

• A Power Charge Indifference Adjustment (PCIA). Using net consumption at a rate of $0.01129/kWh.

Separate there is a:

• Minimum Delivery Payment. Per day at a rate of $0.39167/day. This is explained further below.

The Franchise Fee Surcharge is collected so PG&E can pay our cities to use their streets. The Power Charge Indifference Adjustment “is intended to ensure that customers who switch to the CCA pay for energy that PG&E procured on their behalf, prior to their switch”.

Non-Bypassable Charges (NBC)

NBCs are charges based on import consumption and they are due even if an account has a zero, or positive, net balance. There are two types of NBCs, the Net Usage Adjustment ones, and the state-mandated NBC.

NBC Net Usage Adjustment

Net Usage Adjustment is intended to cover expenses that PG&E incurs to operate their services. These are the main entries I see in Sheet 2 of the EV2-A tariff :

• Reliability Services, charged at a rate of $0.00012/kWh

• New System Generation Charge, using a rate of $0.00759/kWh

• Wildfire Hardening Charge, using a rate of $0.00494/kWh

State-Mandated NBC

The following programs are state-mandated NBC:

• Public Purpose Programs (CARE, ESA, FERA…), using a rate of $0.02649/kWh.

• Nuclear Decomissioning, using a negative rate of -$0.00259/kWh

• DWR (Wildfire) Fund, using a rate of $0.00561/kWh

• Competition Transition Charges, using a rate of $0.00101/kWh

Like other NBC charges, the State-Mandated NBC charges cannot be compensated monthly through exports, but additionally, they cannot be compensated at the annual true-up from the PG&E NEM Balance. State-Mandated NBC can be compensated from the minimum delivery charge, from any credit at the time of the true-up, or from the NSC (see below).

PG&E Monthly

Monthly, PG&E does the following:

• It uses the net usage (import - export) for each category in the PCE EV2-A tariff and the corresponding bundled (total) rate to compute a monetary cost.

  • Aside, the monthly net kWh usage is recorded

• The PCE monthly generation charge is deducted from the bundled rate,

• NBC Net Usage, State-Mandated NBC are computed and added,

• FFS and PCIA are computed and added.

The PG&E NEM monthly balance is the final $$s value . That monthly value is added to the year accumulated PG&E NEM balance. The monthly net kWh balance is also added the net kWh to the corresponding PG&E kWh balance.

PG&E also adds the $$ value of the state-mandated NBC to the corresponding annual cumulative value.

Minimum Delivery Payment

Separate, you (we, the account owner) needs to pay the Minimum Delivery Payment (current rate of $0.39167/day). That shows in your bill and the payment is added to a cumulative tally to be used at the annual true-up.

Electrical Bill

Your monthly electrical bill is the PG&E Minimum Delivery Payment, plus the PCE component. If your account has a credit, PG&E will use that credit to pay for part or all of the bill.

PG&E Annual True-up

The PG&E true-up is on the anniversary of your PTO (Permit to Operate) (added - PG&E allows a one-time change to the true-up). The NEM balances are “resolved” as follows:

• If your PG&E NEM balance is positive (you owe), you should subtract the accumulated minimum delivery payment (which you already peaid) to determine how much you owe.

• If there is still payment due, you can use your credit. Any remaining dues will show up in the bill of your monthly true-up.

• If your PG&E NEM balance is positive (PG&E owes you), you can convert that to $$s using the Net Surplus Compensation Rate (NSC) that will go into your PG&E Credit balance.

• (ADDED!) The PCIA portion of the monthly “NEM Charges” (page 6) shows in the monthly table but does not apply at the annual true-up. The result is that there may be “small” difference between the annual total, as tracked by the table at the top of page 6 and the final number, right bottom of page 3. This is not clarified anywhere and it took me several weeks to get an answer to. Fun, fun, fun!

• At this point you can get PG&E to send you a payment for the total PG&E Credit balance (if any), or leave it as credit for your next cycle.

Net Surplus Compensation Rate (NSC)

The NSC is “the simple rolling average of PG&E's default load aggregation point price from 7 a.m. to 5 p.m., corresponding to the customer's 12-month true-up period.” This rate is used in NEM 2.0 for any excess kWh, and it is also used by the new NEM 3.0/NBT tariff.

The NSC rate depends on the month at which the true-up is done, in our case that is October. The master table has not yet been updated to show that value. As of this writing the September 2024 rate is $0.03781/kWh which is much lower than any import rate through the year.

CORRECTION: The NSC section does NOT apply to CCA (PCE) customers.

Overall Summary

Combining everything together:

• PCE and PG&E have monthly NEM export compensation, and both keep separate annual NEM balances,

• PCE and PG&E have annual true-ups, on different dates and with different rules,

• PCE monthly NEM computation is straight-forward, while PG&E is more complicated and there are import costs that cannot be compensated by exports,

• If you have a net import balance on a given month, you are billed the PCE portion that month,

• Every month you are billed a minimum delivery charge for the PG&E portion,

• If you have an excess of production at PCE true-up time, it will be paid back to you, most often as a credit on your PG&E account,

• There are some annual costs in your PG&E NEM balance that cannot be balanced with your exports,

• If, at true-up, you have excess production in your PG&E NEM balance it will be paid at the very low NSC rate it will be ignored,

• If at the true-up of PG&E you still have a credit, you can keep that for the next cycle, or request it to be mailed to you. Added Actually at any time you can ask PG&E to mail you a check with the credit balance.

Disclaimers

All of the above is the best of my ability and my knowledge. I actually started tracking all this more than a year ago through spreadsheets but it is quite hard to get accurate numbers. I think I am not way off. Sometime in October I’ll confirm my interpretation when we get PG&E’s true-up.

Other Explainers

Here are other explainers of NEM 2.0 payoffs:

• PG&E - NEM Brochure

• San Jose Clean Energy - Residential Rates

• Life Syte Solar - Making Sense of your PG&E Bill After Going Solar

• Aurora Solar - The Ultimate Guide to NEM 2.0

• Redwood Energy - How to read your NEM bill.

A Final Observation on NEM 3.0 / NBT

Time and energy permitting, at some point after October, I am planning to re-rerun numbers with an NBT model. Ideally I can run a simulation with and without storage and I can report on how the financials look like. We will see.