California’s Public Utilities Commission (the CPUC) has rejected the requests of its three main investor owned utilities PG&E, SCE, and SDG&E to institute residential demand charges, grid access fees, installed capacity fees, standby fees, or similar fixed charges on Net Energy Metering (NEM) customers. Importantly, the CPUC has retained “Demand Charging” for non-residential customers. In establishing its successor Net Energy Metering (NEM) program, the CPUC followed California’s legislative mandate to ensure that customer-sited renewable generation continues to grow sustainably. The successor NEM program mandates that customer-sited generation will utilize “time-of-use” billing rates. Why “Time-Of-Use” and Non-Residential “Demand Charging” matters to SolarCity, Tesla, and SolarEdge Electric bills are maddeningly complex. At any given moment, the energy use in a building can be driven by weather, occupant behavior, and equipment issues. By design, electric utilities layer a web of charges that vary by time of day, day of week, and season. Determining the true cost of your electricity use can be daunting. Time-Of-Use (TOU) rate structures Under time-of-use rate plans prices are higher when electric demand is higher. This means when you use energy is just as important as how much you use. Non-Residential Demand Charging At a base level, utilities bill commercial and industrial customers for electrical power consumption, and demand. To use an analogy, think about consumption as the number on your car’s odometer, telling you how far you’ve driven, Think of demand as the instantaneous reading on your speedometer. Consumption is your overall electricity use, and demand is your peak intensity, or “maximum speed”. Consider a large commercial facility with lighting, HVAC loads, process equipment and associated motors all being turned on at the same time as the business first opens. The momentary demand as lights come on, AC units start up, and motors, compressors, and pumps begin to spin can result in a tremendous spike in the load (in demand terms “maximum speed or peak demand”). The utility supplying this load, must have the generation, transmission, and distribution equipment online to service this peak demand, if only for a short duration. This is the basis of utility “demand charges”. Demand charges represent substantive revenues for all electric utilities. In contrast, they are the soft underbelly of electric utility business models, and present strong opportunities for disruptive solar companies and customer self-generation. SolarCity, Tesla, and SolarEdge have created an smart energy management system. It gives residential customer the ability to generate power, store and intelligently control their consumption. Commercial and industrial customers will have the ability to intelligently manage consumption as well as energy flow, reducing their consumed power and mitigating load spikes. Often non-residential demand charges represent 30 to 40 percent of business’ electric bill. Since California is SolarCity’s home state, the company is well positioned with the right products to advantage of this tremendous opportunity.