What You Need to Know About Residential Utility Rate Plans and EV Charging

EV Life |

Your electric vehicle (EV) will likely become one of the biggest energy users in your home, so finding the right utility rate plan is an important way to manage EV charging costs and make sure you get the most out of your EV. Some utilities offer special EV charging rate plans, but the rates for EV charging could be different from the rates for the rest of your home energy use. In this post, we cover the best practices and possible pitfalls of EV charging and energy costs, with the goal of helping you get started finding the best rate plan for your home energy use.

Understanding Utility Rate Plans

Utilities keep the lights on for us. The power they provide helps enable many aspects of our lives, from watching Netflix to staying cool. The role of utilities is much bigger than we can address in one post, but here we’ll focus on two basic utility functions: power delivery (delivering reliable power when people want it) and power demand (delivering as much power as people need). When looking at these basic functions, we need to understand that the cost of delivering the amount of energy people want varies based on the time of day and how much energy utilities have on hand at any given time. For example, on a hot summer day when you and all your neighbors have your air conditioning units running at once, the utility has a limited energy supply available due to the high demand. This increases the cost to deliver more energy and may in turn increase the rate you pay for energy.

To help maintain reliable service and align the cost of delivering the amount of energy customers demand for use in their homes, utilities may offer you one or more different “rate plans.” These rate plans are energy prices that reflect the cost of delivering power to every residential customer. Some rate plans are designed to encourage you to use energy at off-peak times so the utility can make sure it has enough power to meet customer demand during peak times. Offering different rate plans provides customers with choices and helps utilities communicate to customers the cost of delivering the energy they demand.

Flat, Tiered and Time-of-Use Rate Plans with EV Charging

Depending on your utility, you may be presented a variety of options, but there are three basic types of residential utility rate plans: flat rates, tiered rates and time-of-use rates.

Flat Rates

Flat rates allow you to use as much electricity as you want at any time of the day for one flat rate per kilowatt-hour (kWh) of energy. Since these rates are fixed, you don't have incentive to adjust your energy use at peak times.

How a flat rate affects EV charging: With a flat rate, you’ll just pay the same rate for any additional energy used by your EV. It’s simple to understand, but could get expensive depending on your flat rate and how much you drive.

Time-of-Use Rates

Time-of-use rates charge a certain rate for energy use at peak hours and a lower rate during off-peak hours (defined by the utility). This can save money if you’re able to shift your energy use to off-peak hours. Off-peak hours tend to be late at night, which by default becomes the best time to charge your EV.

How a time-of-use rate affects EV charging: Whole house time-of-use rates are often used to encourage you to shift energy use, including charging, to off-peak overnight hours. If you have a time-of-use rate for your whole house, be conscious of when you’re using energy in the home and when costs are their highest. If you have a dedicated EV time-of-use rate and don’t mind charging at night, that’s also a great way to save on your energy bill.

Tiered Rates

Tiered rate plans set one rate for energy use up to a certain baseline amount, then increase the rate for energy used above that amount to the next tier. These plans can be beneficial for households where the total energy use per month is typically below a certain amount. Note that there might be multiple “tiers” in the plan and rates might continue to increase as you use more energy. If you’re on a tiered plan, you’ll need to pay attention to how much energy you use in total if you don’t want to pay the higher tier rate for energy. Tiered plans can also incorporate time-of-use rates so the total amount of energy and when energy is used are both important cost factors.

How a tiered rate affects EV charging: The energy required for EV charging could bump you up into the next tier and increase your rates, so pay attention to how much energy you are using.

Where available, fixed rate plans are usually more expensive, so if you're willing to adjust your behavior to save money, you should take advantage of the time-of-use or tiered plans and charge at off-peak times. Time-of-use plans are good for people who have the flexibility to shift their energy use, while tiered plans may be better for people who have less control over when they use energy, but do not exceed a certain amount.

Finding the Right Plan for You

The major California utilities (SDG&E, PG&E and SCE) offer pages comparing the EV charging rate options they offer. You can look for similar information from your utility and think about the following questions to determine what rate plan might work for you. Keep in mind that your EV charging rates might be different from the rates for the rest of your home energy use.

How much energy do you use?

Check your last few utility bills to see how much energy you tend to use. EV drivers will generally use more energy than the average comparable household. But many other activities can increase your energy bill, such as using air conditioning, running computer servers in your house or heating a pool or hot tub. If you want to run your air conditioning, heat your pool and charge your EV anytime you like, your bill will be much larger than the bill for someone who minimizes energy use and charges at times using an off-peak rate. If you have a very low electricity bill already, adding EV charging could be a bit of a surprise (it’s estimated to cost about $45 per month on average), but if you have a large bill, you might barely notice.

How flexible are you?

A tiered plan may be the right option if you can’t shift your energy use, like if you’re a stay-at-home parent who needs to run appliances and charge the EV during the day so you can shuttle the kids around after school. If you work outside of the home, you may be more flexible in terms of being able to shift your heavy energy use, like EV charging, to the evening. This could make you better suited for a time-of-use plan where you charge your EV at night.

How closely will you monitor your use?

If you’re on a tiered plan but aren’t willing to check your energy use regularly, you could get hit with higher rates for exceeding your usage threshold. Some tiered plans increase energy rates substantially above a certain threshold.

We hope these tips help you understand utility rate plans a bit more and find the right rate plan for your home energy use and EV charging. If you have questions about the right plan for you, contact your utility.

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