Solar energy does not have any tiered rates. Utility companies sell electricity at tiered rates depending on the amount of electricity you use. You pay a different rate in each tier, the more electricity you use, the more you are charged per unit of electricity. The baselinerate is the lowest rate charged; as you use more electricity the rate charged increases. The unit of electricity you are charged for is the Kilowatt-Hour (kWh). By charging different rates for energy usage, the utility company is attempting to reward conservation by charging a lot more if you use higher amounts of energy; how nice of them. The less energy you use, the less per kWh you pay.

Most utilities have 3 to 5 rate tiers, the highest tier is almost always double the cost or more of the lowest tier. A solar power system will lower your electric bill substantially because it will first target the highest rate tiers. This works especially well because the cost of electricity at the first two tiers is mandated by law and all users receive the same rate, however the higher tiers are unregulated and rise dramatically and will only continue to rise at the mercy of the utility companies. Nationally electricity rates average a 5% increase annually, in California it is closer to 7%, and the trend is only picking up speed as fuel prices remain unsteady, supplies diminish, equipment gets outdated and of course inflation. Utilities, are finding it is more expensive to generate power. However, the market for electricity is growing; demand continues to rise despite new advances in energy efficient appliances.

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