Most Bay Area solar installers assume a 6.7% annual increase in PG&E electric rates over time.
GoSimpleSolar uses 5.0%. Here’s Why.
Over the past 10 years, annual PG&E electric rate increase has tapered from the traditionally accepted 6.7% annual rise. Using documented PG&E data available here, GoSimpleSolar determined the percent increase of rates in each tier over the past 10 years. This increase has been most prevalent in the higher cost Tier 3 and Tier 4 rates. Because most GoSimpleSolar clients incur most of their excessive charges from these higher rates, we have calculated a weighted average annual rate increase of 5.0%.
How does this affect your proposal?
We use this accurate, relevant information in our proposal process because the percent rate increase is a crucial element in determining long-term savings and other financial return information for your project. Using a decreased number slightly lengthens proposed payback period and minutely decreases the Investment Rate of Return (IRR) associated with your project, among other things. While other solar installers are inflating your expected returns, GoSimpleSolar strives to provide the most accurate, honest, up to date information in all aspects of our business so that you are satisfied with the long term results of your solar installation.
Looking into the Future
In late 2014, the California Public Utilities Commission approved rate hikes for 2015-16. It was reported by the CPUC that PG&E rate payers could expect an increase of 4.57% in 2015 and 5% in 2016.
Nearly all ratepayers are currently paying greater than 50% more for the same amount of electricity in 2015 compared to 2004. This rate of increase is expected to continue into the future and is visualized by the chart below. This “Cost of Doing Nothing” chart is generated in our proposal with information corresponding to your specific project.