Do customers understand their bills?

A friend reached out to me because he was having high bills from his electric and gas utility. I have known him for a long time. He’s an IT specialist and has worked at companies like IBM and EDS. Let me call him Adam.

Adam and his wife live in a two-story, four bedroom house that was built in 1990 and whose size is 2,300 sq. ft. Some of his bills were in excess of $500 a month.

He has auto bill pay but gets a printed bill by mail (many turn off that feature). But he never looks at his bill. I asked to see them. He handed over six recent bills to me.

I took them home to study. I noticed that he was buying power from a community choice aggregator (CCA, in his case it was MCE) and that he was on PG&E’s default TOU rate (E-TOU-C).[1]

I also noticed that his usage in the mild-weather month of March was slightly above 1,000 kWh and the same was true in April. To my surprise, it came down considerably in June (around 500 kWh) and rose somewhat in July and August (around 700 kWh). The bills stated that he had gas heating.

The peak period ran from 4 to 9 pm and his usage in the peak period in March and April was around 20% and in July and August, the much warmer months, it rose to 25%, presumably because the central air conditioner was running. Adam was budget conscious and said he only turned it on around 10 days a month.

His bill stated that he was in baseline territory X. That was used to determine his baseline allowance. He was essentially on a two-tiered rate combined with a two-period TOU rate and he got a credit on the amount of electricity that lay in the first tier, i.e., the baseline quantity which varied by climate zone. He did not understand exactly what I was saying and I decided to not push the topic.

Adam was not sure what to do to lower his bills. He asked me for ideas on how to lower his bills.

I asked him to show me his central air conditioner, his furnace, and his thermostat. He did not know that HVAC accounted for the bulk of his usage (of course, he did not know the term HVAC either). He did not know that he had gas heating. Nor did he know that his water heater worked off gas.

His central a/c was installed in 1990 and had not been replaced. It was rusted. I could not find a manufacturer’s label on it and was unable to determine the manufacturer or model number. I am guessing the SEER rating was no more than 10 nominal, but more like 6-7 in practice, given its age.

Strangely enough, I was unable to find the gas furnace in his garage but did locate his water heater.

The thermostat was not programmable. He had turned it off. The internal temperature was 75 degrees and he and his wife were comfortable with it. The house must be well insulated because it was 95 degrees outside (I know the central a/c in house, located just 10 minutes from his house, was running at that time).

Then I asked to look at his PG&E meter. He did not know where it was. We found it in a closed, external cabinet. He did not know it was a “smart meter.” It was showing a reading of 0.4 kW, which was consistent with the fact that only a refrigerator, some lights, and some electronics were probably running. He did not know what the 0.4 kW meant, nor did he know that if the value stayed constant for an hour, that would mean the house was consuming 0.4 kWh. Of course, he did not know a watt or a watt-hour so I ended up a tutorial along the way (that’s what happens when people bring me into a conversation about their energy bills).[1]  

I told him if the house just consumed 0.4 kWh per hour for the entire month, his monthly usage would be 288 kWh and at 34.4 cents a kWh, his bill would be $99.02. I told him if he was living in Texas, his will would be a third of that amount.

Of course, the 0.4 kW would rise as more loads kicked in (such as laundry, dishwashing, more lights, TV, and, of course, the central a/c). His lowest usage across the six months was 500 kWh a month, which I told him was quite reasonable. I wish I had turned off his central a/c by turning on the thermostat and setting it to 70 degrees. Then we would have seen how that meter reading went up to 3-5 kW. Something to do next time when I visit him.

But I could not figure out why his usage was 1,000 kWh in March and April. I said you should talk to PG&E about that.

I asked Adam if he had checked his web portal. He said no, even though he has an account. Reminded me of what a VP of a Midwestern utility told me when I was giving a talk to their executives on the salience of customer-centricity. “Oh, we have a new website.” That’s wonderful, but how many customers use it? “Oh, that I don’t know.”

I said you can log into their website and find your best rate. Maybe the default TOU rate is your best option (one of your bills says that it is). Or maybe it is not.

I said your usage profile going back a decade is stored in PG&E’s databases. The data comes from your smart meter. They use your last 12 months to compute your bill under different rates and recommend what appears to be the lowest cost rate for you. I thought he would be pleased to know that. Instead, he was concerned that the utility was spying on him via the smart meter and also suspicious that the utility would recommend to him the rate was best for him.

I was going to ask him to use the Green Button on PG&E’s website to download his 15 minute usage data going back years to help understand the variation in usage across hours, days, weeks and years but decided to save that for a future conversation.

Adam did not know what a TOU rate was so I explained it to him (never thought I would live to see that moment). He said, “Why would they put me on my rate without me knowing it.” I had no answer. I did not want to get into all that “nudge” stuff.

“What’s in it for me?” I said if you reduce your usage from 4 to 9 pm, you will save money. “But that’s when my wife and I do most of our activities.” So, I explained to him that he can continue to have his dinner at the usual time and watch TV. All they need to do is shift their laundry and dishwashing and adjust their thermostat by a couple of degrees. I was failing to convince him. He kept thinking PG&E had tricked him into receiving service on a TOU rate so they would get more money out of him.

He also did not know that he was getting his energy through MCE – again, that was a default rollover.

I told him he could compare his usage with that of 100 neighbors on the PG&E website. I was surprised he had not done that already. He did not seem interested in knowing how much energy was being consumed by his neighbors. Adam said, “Isn’t that like spying into the lives of others?”[2]

I advised Adam to call PG&E and request an audit. I said I would give him a dozen questions to ask them.

PS In prior meetings, he has inquired about the benefits of buying an EV and I have given him the specifics. I did not mention heat pumps to him. That would have been a LONG discussion…

Conclusions

Of course, Adam is just one customer but a highly educated professional in the IT industry. Very busy to check his bill or to log into the web portal of the local utility. On a TOU rate without knowing it. Buying power from a CCA without knowing it. Not sure whether his house is heated with electricity or gas. Not programming his thermostat: just turning it off manually (I have seen even people with Nest thermostats doing it). Not sure where the gas furnace is located (probably has not been serviced since he moved into the house in 1996).

I am not saying Adam is the norm. I sure hope Adam is not the norm. He may be a standard deviation or two from the norm. Even then, there are probably hundreds of thousands if not millions of customers in the US like Adam.

What does that say about us? As an industry, we have failed to educate and inform our customers on how to use energy efficiently.  

APPENDIX: DO I UNDERSTAND MY ELECTRIC BILL?

For decades, I was on a tiered rate and also on a TOU rate. My bills were like Adam’s. I understood them perfectly, which does not mean I liked them. They were way too high. In 2015, two monthly bills for electricity and gas exceeded $500. In February 2016, I made a significant investment in energy efficiency and replaced my HVAC equipment, installed additional attic insulation, and reduced duct leakage.[3] They were still too high so in December 2019, I invested in 25 solar panels and paired them with a battery.[4] The electric bills finally became manageable.[5]

But I lost my ability to read the details in the bill. They were several pages long, and grew by a page a month, in the end reaching 14-15 pages.

The PG&E solar hotline person had forewarned me when I was making the switch to solar paired with storage and asking her what electric rate should I pick: “You will only be able to understand two of the fifteen pages.” She was right. I have talked to a few other customers who have solar and storage and they all are befuddled with their multi-page bill. It might as well be in Egyptian hieroglyphics.