A Simple Glossary of Common Rate Terms

This glossary can help you make the most informed decisions about your energy plan and when you use and save energy. We’ve written it in “plain English” so it’s easy to use and easy to understand.

Baseline Allowance: The baseline allowance is a critical part determining electricity pricing, and ultimately, how much a customer’s bill will be each month. It establishes the amount of energy the average household needs to run basic appliances for cooking, lighting, etc. The baseline allowance is determined by three factors:

  1. The climate zone a customer lives in – coastal, inland, mountain or desert
  2. The season; during summer months (June 1 – October 31), the baseline increases as energy demand across the state rises
  3. The type of service (electric and gas, or just electric) at the customer’s residence.

California Public Utilities Commission (CPUC): A five-member state regulatory body that oversees the electric and natural gas operations of SDG&E and other investor-owned utilities to ensure their customers have safe and reliable energy service at reasonable rate.
Climate zones: Four zones across SDG&E’s service area that represent similar geographic and climatic characteristics: Coastal zone, Inland Zone, Mountain Zone, Desert Zone. Approved by the California Public Utilities Commission, these climate zones are used to create the baseline amounts that go into calculating residential electric and natural gas bills.
High-usage charge: A state-mandated charge that applies to energy consumption that reaches a threshold of more than four times the baseline allowance in one billing cycle.
Kilowatt hour or kWh: The unit we use to measure and bill energy. For example, a 1,000-watt drill needs 1,000 watts (1 kW) of power to make it work and uses 1 kWh of energy in an hour.
Off-peak hours: Hours of the day that have low energy demand resulting in lower prices. In general, off-peak hours are all hours outside of 4 p.m. to 9  p.m. Various energy pricing plans can have “super off-peak” time periods that offer even lower prices.
Peak hours: Hours of the day that have high energy demand resulting in higher prices. Peak hours are 4 p.m. to 9 p.m. everyday.
Residential rate tiers: Rate tiers are part of a customer’s bill and correspond to higher prices as the customer uses more energy. If a customer goes from tier 1 to tier 2, they will pay more for the energy they use in tier 2. Prices and tiering vary by pricing plan. Prices and tiers are set by the CPUC. Tiers were established to promote energy conservation.