Wiser Capital Blog

July 29, 2014 | No comments yet

Decoding Your Electric Bill, or Ditching It Altogether

Confused. Daunted. Skeptical. Anyone who has ever paid an electric bill has likely felt one or more of these emotions about their local utility. Although readability has improved in recent years, utility bills certainly do not seem to be designed with the customer in mind. What’s the difference between a kW and a kWh? Why am I charged differently depending on the season? What are fixed, variable, peak, partial-peak, and off-peak electricity rates and tariffs?

Those in the energy industry can take such terminology as given. But for the average energy customer, it is often easier to plead ignorance and pay the bill than to overcome a seemingly steep energy learning curve. This type of disconnect between customer and service provider leads to mistrust, too: according to a survey from UK-based Populus, 51% of consumers do not trust their energy supplier, and 37% are concerned that their energy bills are not accurate.

The strained relationship between utility and energy consumer is largely due to the fact that public utilities are deemed natural monopolies, an economic phenomenon in which high capital costs and vast economies of scale discourage competition in a market. Power plants and transmission networks are extremely costly to build, and their average costs decline as the provider’s capacity grows. The end result is usually a single energy provider for a region and, with no alternative for consumers, little incentive for transparency or standout customer service.

This issue highlights the need for an educated and empowered public, since everyone consumes electricity. Residential homeowners and commercial building owners alike would benefit from greater awareness of how their energy rates are determined, and what options they have to take control of their energy costs.

A great way to take control of some, if not all, of your electricity costs is to harvest energy right where you live or work, with a solar photovoltaic (PV) system. In recent years equipment costs have dropped dramatically meaning solar makes sense for more people and businesses nationwide. There is also a 30% federal tax credit and various state incentives to further entice adoption of clean, renewable energy.

Unfortunately, solar still has relatively high upfront costs when compared to a monthly utility bill and many people cannot monetize the state and federal incentives. Luckily anyone in that camp can take advantage of third party ownership. Third party ownership can be through a Power Purchase Agreement (PPA) or lease. In either case the third party pays for the system and takes the tax benefits, the host of the system pays the third party instead of their utility for a portion of their energy (more to come on the difference between a lease and PPA in a future blog).

The benefit of a financed system is that you know exactly where your energy is coming from: the sun. You also know exactly how much you’ll be paying: 20-25 year contracts let you lock in a fixed rate over the term, reducing future cost uncertainty. Some contracts even include all O&M on the system, meaning you never need to worry about performance or warranty issues.

We at Wiser Capital focus on mid-scale commercial PPAs. Our web-based platform uses advanced analytics to ensure a successful project that saves you money throughout, starting in year one.

By helping medium-sized commercial properties go solar, and doing so transparently, Wiser Capital is helping build trust and flexibility in an otherwise rigid and unfriendly industry. The bottom line for energy consumers is a cheaper, cleaner, and more stable energy portfolio: truly a win-win scenario.

If you want to take control of your energy costs, head to our website and find out if solar is right for you.

Jason Huffine interned at Wiser Capital in the spring of 2014 and is a recent graduate of UC Santa Barbara’s Bren School of Environmental Science & Management, where he earned a Master’s degree with specializations in Energy & Climate and Corporate Environmental Management. He received a BA in Communication Studies from UCLA in 2009 and has several years of editorial experience in print, web, and television media.

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