How to Read your Electric Bill: Part II

Published December 08, 2015

How to Read your Electric Bill: Part II

DATE PUBLISHED: December 08, 2015

Last week, we posted about how to read your electric bill and explained in detail the different itemized costs incurred every month. This week we'll discuss how consumers can take additional action to significantly reduce or even eliminate electricity costs with solar energy.

As discussed in Part I, electricity consumers in Massachusetts are able to choose the company who generates their electricity, which is then distributed by the utility. When you choose to go solar, you choose to get some, or most, of your electricity from a competitive supplier - your solar array. With your solar array acting as your primary electricity supplier, you only pay the utility for the energy you consume when your array is not generating power, such as at night or on a snowy day.

Having a solar system and being connected to the electrical grid comes with many benefits. One benefit is that any excess energy your array produces, is fed back into the grid.  In this case, when you produce more energy than you consume, you can make use of net metering. The electrons will flow from your solar array through the utility meter, and into the grid – making your utility meter actually run backwards. The utility meter for your solar array measures the balance of electricity produced, by calculating total electricity produced minus electricity consumed.

The utility company then takes the output data from the meter, and uses it to calculate the amount of net metering credits earned, assigning the appropriate dollar amounts to your energy balance.  Your utility company then reimburses you for the electricity you contributed through net metering credits (applied at the same rate they charge per kWh of consumed energy). As shown above, one of Solect’s customers has accumulated so many net metering credits, they have not had to pay an electric bill for the past two billing periods - helping to offset significant operating costs associated with their business. For more information on how net metering works, check out our Net Metering 101 post from last month.

So how does a solar array impact your actual electric bill? There are a number of ways.

  • Offset electricity consumption from self-generation: the most obvious impact of going solar is to avoid of electricity costs by producing your own electricity. You can also take advantage of the net metering reimbursement for excess electricity produced, credited to offset the grid electricity consumed.
  • Lower demand results in lower rates: Electric companies typically charge higher delivery rates for increased use of electricity, increasing rates with a tiered model. When your property demands less electricity from the grid, you are charged at a lower tier, thus saving additional money on your bill.
  • Lower Peak Demand: When you go solar, you lower your peak demand, which is the highest demand for energy at one time in a billing period. Solar panels fulfill at least some of your electricity demand whenever the sun is shining, which reduces your overall demand on the grid, as well as your peak demand. Solar typically generates the most energy during periods of peak demand, and can actually benefit the entire grid during these times.

Additionally, solar energy creates more certainty around your long-term budgeting for energy costs.  While utility company prices fluctuate, energy from the sun is always the same price - free. In fact, your solar electric savings will increase value over time as utility electric costs increase, keeping your energy supply at a steady baseline.

Want to see your electric bill shrink? Take your property solar, and let the savings shine.