If you live in the Grand Canyon State, there’s a good chance you’re a customer of Arizona Public Service (APS) – they are the largest utility company in AZ, serving more than 11 million customers, including about two-thirds of the larger Phoenix metro region.
Many electricity customers throughout the country receive their electric bill every month and pay it without really diving into the details of what they’re actually paying for…and we’re here to help break it down. In this article, we’ll review the most important parts of your APS bill, and how that changes once you install solar panels.
- Your APS bill includes charges for electricity supply, transmission/distribution, and miscellaneous charges
- APS offers a variety of rate plans, including fixed-rate and time-of-use (TOU) plans
- Compare quotes on the EnergySage Marketplace to see how much you can save on your APS bills with solar
How APS calculates your monthly electricity bill
There are two important factors in determining how much you’ll owe on your electricity bill: your electricity usage and your rate plan/schedule.
How much electricity you use in a given month is calculated in kilowatt-hours (kWh). This number may change significantly from season to season based on your consumption habits – many people use more electricity during summer months when they run their air conditioning units, and will see lower electricity bills during colder months. It’s important to keep track of how your monthly electricity usage changes over time, rather than just looking at the overall cost of your bill. Seeing that your electricity bill is increasing because of an uptick in consumption (which you can control), rather than due to a change to utility rates, gives you the opportunity to change your electricity usage habits and save money.
Understanding your electricity consumption is especially important because this impacts which rate plans you’re eligible for; APS established tiers that specify the number of kWh of electricity you can use before jumping up a plan and paying a more expensive rate – more on that topic below.
Next up, rate plans: you may or may not know which rate plan you’re on (or even that you have the opportunity to change it). Many utility companies have default rate options for their customers that remain in place unless you proactively request to be on a different rate.
APS offers plans that not only vary in pricing, but in structure: two of the most common types are a fixed-rate plan and a time-of-use plan.
If you’re on a fixed-rate plan (e.g., Lite Choice, Premier Choice), you’re charged a fixed rate for each kWh of electricity you use. However, you’re placed on different fixed rate plans depending on how much electricity you use: if you use less than 600 kWh per month, you can be on the Lite Choice plan and pay a lower fixed rate for electricity. If you use more than that, your fixed-rate plan option is the Premier Choice which charges a slightly higher rate for each kWh of electricity.
APS’ time-of-use (TOU) plans (e.g., Saver Choice, Saver Choice Plus, Saver Choice Max), on the other hand, charge a different rate for electricity depending on the day, time, and season. This type of rate structure is called a “time varying rate”, since the cost of electricity varies based upon the time that you use it. You can benefit from lower rates during times when demand for electricity is lower (morning and late at night), but pay more during “peak hours” when demand for electricity is high (evening hours).
For more information on APS’ plan offering, visit their website.
Types of electricity bill charges
Electricity bills often have a lot of confusing terms and line-items, making it difficult to identify the all-in rate you’re paying for electricity. However, most of these line items can be categorized into three separate buckets: supply, distribution/transmission, and miscellaneous. These rates cover the electricity you use, getting the electricity to your home or business and any other charges and fees related to the maintenance of the grid.
It’s easiest to think of supply charges as paying for the actual electricity you use. APS labels most of their supply charges as “generation” on their bills. Utilities across the state of Arizona and the country charge different amounts for electricity supply depending on the power plant it comes from and the cost of the fuel (i.e., coal or natural gas). Supply charges also vary by season, with higher rates typically occurring in the hot summer months when demand for electricity is higher.
Distribution and transmission
Distribution and transmission charges, sometimes referred to as delivery charges, are the fees from APS to send you the electricity. The utility company uses these charges to build and maintain the poles and electrical wires that deliver electricity from power plants to your property. You can think of the delivery charge as effectively the same as paying for shipping and handling for any product you buy online.
You’ll notice these charges on your APS bill as “delivery service charges.”
In addition to paying charges for electricity supply and demand, utility companies often include a number of miscellaneous charges included on their bills. Sometimes, these charges are a fixed amount unrelated to how much electricity you use, while other times they’re presented as a volumetric rate, where you pay more each month based on how much you use. Some examples of this on an APS bill are the customer account charge, a billing charge, and an environmental benefits surcharge.
What will my APS bill look like after going solar?
After you install solar panels, you will continue to receive your monthly electricity bills from APS. Each monthly bill will include a summary of the amount of electricity you purchased (i.e. how much electricity APS delivered to you from the grid) and the amount of electricity you sold (i.e. how much solar electricity you exported to the grid). This is net metering in action: net metering is a solar incentive that allows you to claim credits for any excess solar electricity you send to the grid. (Note: Arizona export rates–the amount you are paid for excess solar sent to the grid–are lower than import rates–what you pay for electricity. This means the state doesn’t have 1-to-1 net metering. See our RCP discussion below for more context.) You can use these credits to counterbalance what you pull from the grid at times when your solar panel system isn’t generating enough electricity to meet your needs (like at night).
As is increasingly the case with solar shoppers elsewhere in the country, particularly in California, new APS customers with rooftop solar panel systems need to go on a time-of-use (TOU) plan. Both the electricity you sell and the electricity you purchased from APS will be divided into separate TOU buckets: on-peak, off-peak, and super off-peak. This is the amount of electricity you purchased and sold during each time period over the course of a month.
Net metering credits: RCP rates
Towards the bottom of your bill, you’ll also see a “Net electricity credit” balance: this shows how much credit you received from exporting solar to the grid. Importantly, unlike other states, Arizona does not provide retail credits for excess electricity you sell to the grid. Instead, APS customers sell their extra solar electricity at resource comparison proxy rates (RCP rates), which are slightly lower than retail values for electricity. What you see as the “net electricity credit” balance is the credit APS is providing based on how many kWhs of solar electricity you sent back to the grid and your applicable RCP rate.
RPS rates change each year, but once you go solar, you lock in your RCP rate for 10 years. Additionally, APS’ RCP rates cannot drop in value by more than 10 percent from one year to the next. From September 1st, 2019 until August 31st, 2019, this rate is $0.1045 cents per kWh.
Grid access charge
Importantly, if you choose to go on APS’ “Saver Choice” plan, you’ll also notice a new line item on your bill after going solar: the grid access charge. This fee, not a component of APS’ other TOU plans, is a charge for connecting your solar panel system to the grid. The value of the charge depends on the production of your solar panel system – the more you generate, the higher the fee. As of July 2019, this charge is $0.93 per kilowatt (kW) of generation. According to Solar United Neighbors, this comes out to around $4.65 per month for a 5 kW system, or $55.80 per year in extra fees.
Save on your APS bill with solar
Arizona gets plenty of sun – why not take advantage of it? Join the thousands of APS customers already saving on their electricity with solar! On the EnergySage Marketplace, you can receive up to seven quotes from local Arizona installers to compare. These quotes provide custom savings estimates based on your electricity usage, the rate you pay, and the solar potential of your property. If you’d like to start out with a rough estimate of solar costs and savings, try our Solar Calculator.