How to Read a Utility Bill for Solar Sizing: Rate Schedules Decoded

Most solar quotes are sized from a single month of bills and a salesperson’s eyeball estimate. Two homes with identical monthly totals can end up with systems that vary by 30 percent in capacity, depending on rate schedule, seasonal swing, and how the installer reads the fine print. The utility bill is the foundation document for solar sizing, but only when you know which lines drive the math and which are noise. This guide walks through every section of a US electric bill, decodes the rate schedule codes that change the sizing assumptions, and lays out the exact formula installers and homeowners can use to translate kWh into kW. The same framework applies to commercial bills with demand charges and to net metering bills after the system is operating.

Why Your Utility Bill Is the First Document for Solar Sizing

The bill is the only source of truth for two numbers that determine system size: how many kWh the customer actually consumes, and how much each kWh costs after every charge is added. Marketing claims, monthly averages, and “I think I pay around 200 dollars” estimates are not inputs to an engineering calculation.

For solar professionals, the bill also flags constraints that change the design before any roof measurement happens. A customer on a demand charge plan needs a different system than one on a tiered rate. A customer on California’s NEM 3 export schedule has different payback math than one on retail-rate net metering in New York. A customer with a flat charge of 35 dollars per month will not reach a zero bill no matter how oversized the array is.

Reading the bill correctly removes three failure modes that recur across the industry. First, sizing on a single month instead of the full year, which misses seasonal load swings. Second, treating fixed charges as offsettable, which inflates predicted savings. Third, ignoring the rate schedule code, which decides whether evening exports are worth retail price or pennies. A 30-minute bill review before the site visit saves hours of post-install dispute.

A SurgePV-built proposal pulls these numbers directly from a bill image and validates them against the utility’s published rate schedule. Whether you use solar design software or a paper worksheet, the data extraction steps are the same. The rest of this guide is the field manual.

Anatomy of a US Electric Bill: The Six Sections

Every US residential and commercial bill contains the same six sections, even when utilities rename or reorder them. Knowing the function of each section lets you find the sizing data on any format.

Section 1: Service Account and Meter Information

This section lists the service address, account number, meter number, and the billing period (start and end dates). The billing period length matters because months are not all 30 days. A 32-day bill at the same usage rate will show 7 percent more kWh than a 30-day bill, and an installer who annualizes from a long month will oversize.

Also recorded here: meter type (typically smart meter, AMI, or AMR), service voltage (120/240 V single phase residential, 208 V or 480 V three phase commercial), and whether the read was Actual or Estimated. Estimated reads are unreliable for sizing. Request a re-read or use a different month.

Section 2: Rate Schedule Code

Printed near the top, sometimes inside a box labeled Service Plan, Rate Plan, or Schedule. Examples by utility:

The code is a contract identifier. Look it up on the utility’s tariff page to find the official per-kWh prices, peak hour definitions, fixed charges, and any minimum bill. Bills sometimes show summary prices but omit the full peak hour windows or seasonal price changes.

Section 3: Usage Summary

The total kWh consumed during the billing period, often shown as a single line under Usage This Period. On smart-metered accounts, the same section may also show daily average kWh, comparison to last year, and a 12-month chart.

For TOU plans, this section is split by Peak, Off-Peak, and Partial Peak (or Mid-Peak) kWh. Capture each separately. The Peak split is what drives evening exposure and battery economics.

For tiered plans, this section lists kWh consumed in Tier 1 (up to the baseline allowance), Tier 2 (up to the upper allowance), and sometimes Tier 3 or Tier 4 (high-usage tier). Each tier has its own price, and customers who routinely hit Tier 3 have higher marginal savings from solar because they offset the most expensive kWh first.

For demand charge plans, this section also lists kW demand for the period, typically the highest 15-minute average kW recorded by the smart meter.

Section 4: Detail of Current Charges

The itemized breakdown that turns kWh into dollars. The standard categories:

• Supply or generation charges: The cost of producing the electricity. Variable per kWh. Removable by solar.
• Delivery or transmission and distribution charges: The cost of moving power across power lines, substations, and the distribution grid. Usually variable per kWh, sometimes partially fixed.
• Customer charge or basic service charge: Fixed monthly fee for billing, metering, and account maintenance. Not removable by solar.
• Minimum bill or minimum delivery charge: The lowest amount you can be billed regardless of usage. Common in net metering markets.
• Demand charge: Per-kW fee on peak demand. Standard on commercial bills, present on a few residential rate plans.
• Franchise fees, public benefits, energy efficiency surcharges: Variable per kWh, sometimes flat. Mixed treatment under solar.
• State, county, and local taxes: Variable per kWh in most jurisdictions.

This section is where the effective rate hides. Divide the sum of variable charges by total kWh to get the rate per kWh that solar actually offsets. It is almost always lower than the marketing number a utility advertises.

Section 5: Net Metering or Solar Summary (Post-Install)

Once a solar system is operating, the bill shows additional line items:

• Imports or kWh delivered to you: Energy pulled from the grid (typically at night and early morning).
• Exports or kWh received from you: Energy sent to the grid when solar production exceeds home demand.
• Net usage: Imports minus exports for the billing period.
• Credit balance or carry-forward: Running balance of credits in kWh or dollars rolling into the next period.
• True-up statement: Annual reconciliation, common in California, that settles credits and charges once per year.

Different utilities use different labels for the same line items. Forward kWh and Reverse kWh appear on dual-register meters. Some bills list Energy Export Credits or Net Energy Metering Credits as separate dollar amounts.

Section 6: Account History and Payment

Last 12 months of bills as a chart or table. Useful for spotting trends. If only one bill is available, this section provides the annual context for sizing without requesting a separate history.

Rate Schedules Decoded: Fixed, Tiered, TOU, and Demand

The rate schedule is the single most important field on the bill for solar economics. Two customers with identical kWh consumption can have wildly different solar payback depending on which schedule they sit under. This section walks through the four common structures.

Flat Rate (Fixed Rate)

One price per kWh, all hours, all year. The simplest format. Bills show a single per-kWh price multiplied by total kWh, plus the standard customer charge. Common in regulated Southeast markets (Duke, Georgia Power, Alabama Power), parts of the Midwest, and some rural cooperatives.

For solar sizing, a flat rate is the friendliest design environment. Every exported kWh offsets a future imported kWh at the same value (under retail-rate net metering). The math is straightforward: annual kWh consumed minus annual kWh produced equals net usage, billed at the flat rate.

The flat rate is also the easiest to size for because the timing of generation does not change the savings. A south-facing array and a west-facing array at the same nameplate produce nearly identical bill reduction. Battery storage rarely improves payback unless the utility introduces a non-coincident peak charge or removes net metering.

Tiered Rate

Different price per kWh depending on cumulative monthly usage. Tier 1 covers a baseline allowance (often 200 to 500 kWh per month, varies by climate zone). Tier 2 covers usage above the baseline up to a defined limit. Tier 3 covers very high usage.

Example structure: Tier 1 at 0.18 USD/kWh, Tier 2 at 0.28 USD/kWh, Tier 3 at 0.45 USD/kWh.

For solar sizing, the tiered structure means the first kWh offset by solar is the cheapest, but the last kWh offset is the most expensive. A customer who uses 1,500 kWh per month and routinely lands in Tier 3 has a much higher marginal saving per offset kWh than a customer in Tier 1 territory. The bill data lets you calculate exactly how much of monthly usage falls into each tier and the dollar-weighted average rate.

A common installer mistake is using the Tier 1 price as the offset rate. The correct rate is the weighted average of tiers actually consumed, which can be 30 to 50 percent higher.

Time-of-Use (TOU)

Price per kWh changes by hour of day and often by season. Peak periods (typically 4 PM to 9 PM or 5 PM to 8 PM) carry the highest prices. Off-Peak periods (overnight and daytime) carry the lowest. Partial Peak or Mid-Peak (shoulder hours) sits between.

Modern TOU plans on California utilities show prices like:

TOU schedules dominate California (PG&E, SCE, SDG&E), are spreading in New York and Colorado, and are mandatory for new solar customers on California’s investor-owned utilities. The CPUC explains the transition on its Time-of-Use Rates page.

For solar sizing, TOU introduces a timing problem. Most residential solar production happens between 9 AM and 4 PM, when prices are at their lowest. Most consumption happens before 9 AM and after 4 PM, when prices are at their highest. Without storage, midday production gets exported and credited at the Off-Peak rate, while evening imports get billed at the Peak rate. The arbitrage gap can reduce solar savings by 20 to 40 percent compared to a flat-rate scenario.

Three practical implications for sizing on a TOU plan:

• Capture Peak, Off-Peak, and Partial Peak kWh separately from the bill. The Peak share is the part battery storage most directly addresses.
• Apply the export compensation rate (often different from the import rate) when calculating annual offset value. Under California’s net billing tariff, exports earn the avoided-cost rate, which can be 4 to 12 USD cents per kWh — far below the 30 to 55 USD cents charged for imports during peak.
• Consider west-facing or southwest panels to shift production later in the day, capturing more Partial Peak hours. The orientation trade-off costs 5 to 15 percent in total kWh but can add 10 to 25 percent in TOU revenue.

Deeper TOU analysis benefits from interval data rather than monthly aggregates. The companion guide on sizing from 15-minute interval data covers that workflow.

Demand Charge

Price per kW of peak demand, billed on top of (or sometimes instead of) per-kWh charges. The peak demand is usually the highest 15-minute average kW recorded by the smart meter during the billing period. Demand charges range from 5 to 30 USD per kW for commercial customers and 8 to 18 USD per kW for the residential demand plans in Arizona, Alabama, and parts of New Mexico.

Example commercial bill structure: Energy charge of 0.08 USD/kWh for all consumption, plus demand charge of 18 USD per kW on the month’s peak kW. For a customer with 5,000 kWh and 25 kW peak demand: energy cost is 400 USD, demand cost is 450 USD. The demand charge is more than the energy charge.

For solar sizing, demand charges change the design priority. Reducing peak kW matters more than reducing total kWh. A solar-only system reduces demand charges only if production reliably overlaps with the customer’s peak demand interval. For a commercial customer whose peak is at 2 PM in summer, this works. For an evening-peaking residential customer in Arizona, solar alone is ineffective and battery storage becomes the lever. See the demand charge entry for the engineering definitions.

Side-by-Side Comparison

The takeaway: not all kWh on a bill are worth the same. Sizing has to follow the rate schedule, not the headline price.

Step-by-Step: Extracting Sizing Data From Your Bill

This is the procedural core of the guide. The seven steps work for any US bill and translate directly into the inputs needed for system size.

Step 1: Pull 12 Consecutive Months of Bills

A single month is not a sizing input. Heating-dominant homes use 2x more in winter than summer. Cooling-dominant homes flip the pattern. Pulling 12 months captures both peaks.

Where to get them:

• Utility customer portal: Most US utilities offer PDF download or Green Button export. PG&E, SCE, SDG&E, and ConEd all support multi-month exports.
• Green Button Connect My Data: Standard format for utility data sharing, supported by 75+ million accounts.
• Direct request: Call utility customer service and ask for 12 months of statements. Free on request.
• Authorized third-party services: Utility API, Arcadia, Genability can pull data with customer consent, useful for installers handling many accounts.

Confirm none of the months are estimated reads. An estimated read substitutes the utility’s projection for an actual meter reading, often when the meter is inaccessible or smart meter telemetry failed. Estimated reads carry a label E or Est on the bill. Replace them with actual reads before sizing.

Step 2: Locate the Rate Schedule Code

Find the rate code in Section 2 of the bill (usually near the top or under Detail of Current Charges). Common formats:

• PG&E: E-TOU-C, E-1, EV2-A
• SCE: TOU-D-4-9PM, D
• ConEd: SC1 Rate 1 (flat), SC1 Rate 5 (TOU)
• APS: E-23 (demand), ECT-2 (TOU+demand)

Once you have the code, search the utility’s tariff page (often at utility.com/tariffs or utility.com/rates). Bills sometimes show only summary prices and leave out peak hour windows or seasonal price changes that affect annual sizing.

If the customer is unsure of their rate plan, the utility portal shows it clearly under My Account or Service Details. For solar professionals, the utility rate lookup workflow is part of every quote intake.

Step 3: Extract Total kWh Per Month

For each of the 12 bills, record the total kWh shown in Section 3 (Usage Summary). Sum for annual consumption.

For TOU plans, capture three numbers per month: Peak kWh, Off-Peak kWh, Partial Peak kWh (if applicable). The peak share is what battery storage most directly attacks.

For tiered plans, capture kWh consumed in each tier. The weighted average rate is what solar offsets, and tier-level granularity lets you calculate marginal value per offset kWh.

Sample data template:

This is the working data sheet. From here every downstream calculation flows.

Step 4: Separate Variable Charges From Fixed Charges

In Section 4 of each bill (Detail of Current Charges), classify each line:

Variable (solar offsets these):

• Supply or generation
• Delivery or transmission and distribution (mostly variable)
• Franchise fees (where assessed per kWh)
• Energy efficiency surcharges (where assessed per kWh)
• State sales tax on electricity (variable)

Fixed (solar does not offset these):

• Customer charge or basic service charge
• Minimum bill or minimum delivery charge
• Meter charge
• Some line items labeled Distribution Service Charge are fixed

Separate category:

• Demand charge — addressable only with peak-shaving battery or precisely timed solar production
• Public goods charge, climate credit, or other policy-driven line items — treat per-utility

A typical residential bill in California 2026 has 12 to 18 USD per month in fixed charges (the new PG&E Base Services Charge, for instance, is roughly 24 USD per month at full rollout for non-CARE customers). In Texas, the typical fixed delivery charge from Oncor is around 4 to 6 USD per month, but variable delivery is high. Each market has its own structure.

Step 5: Calculate the Effective Energy Rate

Divide the sum of variable charges (the ones solar offsets) by total kWh for the billing period. This is the effective rate.

Worked example: A customer in Northern California with 11,300 annual kWh and the following annual variable charges:

• Generation: 1,580 USD
• Delivery: 1,820 USD
• Variable taxes and surcharges: 290 USD
• Total variable: 3,690 USD

Effective rate = 3,690 USD ÷ 11,300 kWh = 0.327 USD/kWh

The marketing rate for the same customer might be quoted as 0.39 USD/kWh (the headline tier or peak number), but solar only offsets the variable charges. Sizing financial projections off the marketing rate inflates predicted savings.

For tiered plans, the effective rate is the dollar-weighted average across tiers. For TOU plans, calculate it separately for Peak, Off-Peak, and Partial Peak, because each will be offset at a different value.

Step 6: Adjust for Future Load Changes

Historical consumption is the baseline, but most customers add load over the system’s 25-year life. Common additions:

• Electric vehicle: 3,000 to 4,500 kWh per year per vehicle, depending on annual miles and vehicle efficiency. A 12,000-mile-per-year sedan at 3.5 mi/kWh adds 3,430 kWh annually.
• Heat pump (space heating): 2,000 to 6,000 kWh per year, depending on climate, home envelope, and whether replacing gas, oil, or electric resistance. Replacing electric resistance reduces consumption. Replacing gas adds consumption.
• Heat pump water heater: 1,000 to 1,800 kWh per year.
• Pool pump (variable speed) or pool heater (electric): 1,500 to 3,500 kWh per year.
• Home addition or ADU: Highly variable, 3,000 to 8,000 kWh per year per occupied space.
• EV truck or commercial fleet vehicle: 5,000 to 12,000 kWh per year.

For projects with planned additions, add the expected kWh to the historical baseline before sizing. Utilities typically allow sizing to 100 to 120 percent of historical consumption, and documented planned additions sometimes qualify for higher limits. Confirm interconnection rules before submitting.

Future load planning is the single most impactful adjustment most installers miss. A customer who buys an EV one year after install converts what looked like a 100 percent offset system into an 80 percent offset system, with the gap billed at retail prices.

Step 7: Run the System Size Formula

The core formula:

System size (kW DC) = Annual kWh ÷ (Peak Sun Hours × 365 × Derate Factor)

Where:

• Annual kWh = Total adjusted annual consumption (Step 6 result)
• Peak Sun Hours = Local average kWh/m²/day, available from NREL PVWatts or the SurgePV irradiance database
• Derate Factor = Net system efficiency after losses (typically 0.78 to 0.84)
• 365 = Days in the year

Worked example for an 11,300 kWh annual home in Phoenix, AZ (6.5 peak sun hours):

System size = 11,300 ÷ (6.5 × 365 × 0.82) System size = 11,300 ÷ 1,946 System size = 5.81 kW DC

The same home in Boston, MA (4.2 peak sun hours):

System size = 11,300 ÷ (4.2 × 365 × 0.82) System size = 11,300 ÷ 1,257 System size = 8.99 kW DC

The Boston system needs 55 percent more capacity for the same offset, because each kW produces fewer kWh per year in lower-irradiance climates.

The derate factor accounts for the cumulative effect of inverter efficiency (96 to 98 percent), DC and AC wiring losses (1 to 3 percent), soiling (1 to 5 percent), shading (0 to 15 percent depending on site), temperature derating (2 to 8 percent depending on climate), and inverter clipping (0 to 3 percent). NREL PVWatts defaults to 0.86 for utility-scale assumptions; residential roof projects typically use 0.78 to 0.82 because of shading, soiling, and lower-quality wiring.

Cross-check the calculated size against the utility’s interconnection cap. Most US utilities allow up to 100 percent of historical consumption, some allow 110 to 120 percent. Sizing above the cap requires interconnection committee review and is often denied for residential.

For installers using solar design software, the size calculation feeds directly into stringing, inverter selection, and proposal generation. SurgePV automates the kWh extraction from bill images, looks up the rate schedule against utility tariff databases, and runs PVWatts-equivalent sizing in seconds. The generation and financial tool layers TOU revenue and export rate compensation onto the energy production model.

Reading Commercial Bills: Demand Charges and Time-of-Use

Commercial bills follow the same six-section structure as residential bills, but Section 4 is dominated by demand charges and Section 3 includes 15-minute peak demand alongside total kWh. A 50,000 sqft warehouse and a 50,000 kWh residential complex can have similar annual energy but completely different solar payback because of how demand is structured.

What a Commercial Demand Charge Looks Like

Sample line items from a commercial bill:

• Energy charge: 32,400 kWh × 0.082 USD = 2,656.80 USD
• Demand charge (on-peak): 85 kW × 18.50 USD = 1,572.50 USD
• Demand charge (off-peak): 92 kW × 6.20 USD = 570.40 USD
• Facilities charge: 240.00 USD
• Total: 5,039.70 USD

Energy is 53 percent of the bill, demand is 42 percent, and fixed charges are 5 percent. A solar system that reduces kWh by 50 percent reduces only the energy component. If solar production does not overlap with the customer’s peak demand intervals, demand charges remain almost unchanged.

When Solar Reduces Demand Charges

Solar reduces demand charges only when production reliably overlaps with the customer’s peak demand window. For a warehouse with 8 AM to 5 PM operations and peak load at 1 PM, a south-facing array can shave 60 to 80 percent of summer peak demand. For a restaurant or retailer with evening peak (5 PM to 9 PM), solar shaves almost nothing without storage.

The 15-minute interval data on commercial bills (often available via Green Button or utility direct request) shows exactly when the peak occurs each month. A peak that recurs in the same 15-minute window each day is predictable and can be designed around. A peak that drifts across hours requires a battery to address reliably.

Time-of-Use on Commercial Bills

Commercial TOU is similar to residential TOU but with deeper peak/off-peak spreads. PG&E’s E-19 rate, for example, distinguishes summer peak (12 PM to 6 PM) from summer partial peak (8:30 AM to 12 PM and 6 PM to 9:30 PM) from off-peak (other hours). Each carries different per-kWh prices and different demand charges.

For commercial solar design, this means oriention, tilt, and inverter strategy follow the rate schedule. A west-facing array captures more late-afternoon peak hours. A south-facing array maximizes total kWh. Sizing software that ignores the rate schedule produces a generic max-kWh design that may not be the most profitable design.

Service Voltage and Interconnection Limits

Commercial bills also flag service voltage (208 V three-phase, 277 V/480 V three-phase, or 12.47 kV primary) and service amperage. Solar inverter selection has to match service voltage, and large systems sometimes require a service upgrade if the customer’s existing transformer cannot handle the export. The bill section labeled Service Information or Account Details is where you find this.

For systems above 500 kW DC, the interconnection process becomes a parallel project with its own timeline and cost. Reading the bill to understand service capacity and historical peak demand is the input to deciding whether a 500 kW or a 750 kW design is feasible without infrastructure upgrades. See the commercial solar transformer sizing guide for the engineering side.

After Solar: How the Bill Changes

Once the system is operating and net metering or net billing is in effect, the bill changes shape. Understanding the new format matters for two reasons: customers will call asking why they still have a bill, and installers need to verify the savings match the proposal.

New Line Items

• kWh delivered or imports: Energy from the grid to the home. Higher in winter (less solar production) and at night.
• kWh received or exports: Energy from the home to the grid. Higher in summer and midday.
• Net kWh or net usage: Imports minus exports. Negative net usage means more was exported than imported, generating a credit.
• Credit balance: Accumulated credits in kWh or dollars, depending on the program. Carries forward month to month.
• True-up statement: Annual reconciliation that converts unused credits to cash (rare) or zeroes them out, and assesses any remaining minimum bill.

Net Metering vs. Net Billing

The two compensation structures behave differently on the bill.

Net Metering (NEM 1, NEM 2): Exports are credited at the retail rate (often the same per-kWh price as imports during the same time period under TOU). Common in 30+ US states. Highest solar economics.

Net Billing (NEM 3 in California, NBT, value-of-solar tariffs): Exports are credited at a wholesale or avoided-cost rate, typically 4 to 12 USD cents per kWh, far below the retail 30 to 55 USD cents charged for imports. The discount makes self-consumption (using solar at the time of production, often via battery) more valuable than export.

In a NEM 1/NEM 2 market, an 8 kW system on an 11,000 kWh home reaches a near-zero bill. In a NEM 3 market with the same system and consumption, the same customer may still pay 30 to 50 USD per month because evening imports at retail price exceed midday exports at avoided cost. The CPUC’s Net Energy Metering page tracks the policy details.

True-Up: Annual Reconciliation

In California and several other markets, monthly bills show running credits but actual settlement happens once per year on the true-up statement. The true-up:

• Tallies 12 months of imports and exports.
• Applies the relevant rate to each.
• Calculates the net balance owed (or carried forward).
• Cashes out excess credits at a wholesale rate (often pennies per kWh).
• Resets the credit balance to zero.

Installers should warn customers about the true-up. A monthly bill near zero for 11 months can be followed by a 400 USD true-up if the system is undersized for winter consumption. A monthly bill near zero for 11 months can also be followed by a true-up payment to the customer (rare) if the system is significantly oversized.

Common “Why Do I Still Have a Bill?” Scenarios

1. Fixed customer charge: 8 to 25 USD per month regardless of solar.
2. Minimum bill or minimum delivery charge: Some utilities enforce a minimum monthly amount even for net-zero customers.
3. Time-of-use mismatch: Solar production at off-peak prices, evening imports at peak prices.
4. Net billing discount: Exports earn less than imports cost.
5. Demand charges: Persist even with high solar offset on commercial accounts.
6. System underperformance: Soiling, shading, or inverter issues reducing actual production below proposal.
7. Increased consumption: New EV, heat pump, or occupancy change since the proposal.

Walking the customer through these items at handoff prevents most post-install dispute calls.

Common Bill-Reading Mistakes That Distort System Size

Across thousands of quotes, the same handful of mistakes recur. Each one bends the calculated size by 5 to 25 percent.

Mistake 1: Sizing on One Month of Data

A single August bill captures peak air conditioning. A single January bill captures peak heating. Neither represents the annual average. Always use 12 consecutive months. If only one bill is available, the customer needs to request a full year before the proposal closes.

Mistake 2: Using the Marketing Rate Instead of the Effective Rate

The headline kWh price advertised by the utility is rarely the rate solar actually offsets. The effective rate is the sum of variable charges divided by total kWh. It is usually 20 to 40 percent lower than the headline number once fixed charges, demand charges, and non-offsettable line items are stripped out.

Mistake 3: Treating Fixed Charges as Offsettable

Customer charges, meter charges, and minimum bills do not go away with solar. Proposals that promise a zero bill in the marketing copy but ignore fixed charges generate complaints. State the fixed component clearly in the savings projection.

Mistake 4: Ignoring the Rate Schedule Code

Two homes with identical annual consumption can have radically different solar economics if one is on a flat rate and the other is on a TOU plan with low export compensation. Pulling the rate schedule code and looking up the official tariff is non-negotiable.

Mistake 5: Skipping the Estimated Read Check

A month flagged as Estimated is the utility’s projection, not actual meter data. Estimated reads can be 20 to 40 percent off true consumption. Always replace estimated months with actual reads before sizing.

Mistake 6: Forgetting Future Loads

EVs, heat pumps, pool heaters, and home additions are common additions during the system’s operating life. A system sized to 100 percent of historical consumption becomes 70 to 85 percent of actual consumption two years later. Plan ahead by asking about expected additions and adjusting the baseline.

Mistake 7: Confusing Demand kW With Average kW

Peak demand on a commercial bill is the highest 15-minute average kW, not the home’s average load. A 1.5 kW average load home can have a 4.5 kW peak demand. Commercial customers especially need to understand this difference because demand charges scale with peak, not average.

Mistake 8: Annualizing From a Single Quarter

Quarterly bills (common in some jurisdictions) cover a 90-day window. Multiplying by 4 to get annual usage ignores seasonal variation. Use 12 monthly bills, four quarterly bills, or a true 365-day record.

Mistake 9: Missing Net Metering Banked Credits

For existing solar customers being resized, the bill shows the current banked credits. Adding a battery or expanding the array changes the credit accumulation pattern. Ignoring the existing balance leads to incorrect future bill projections.

Mistake 10: Using a Generic Derate Factor

The system derate factor depends on the specific site (shading from a chimney, oak trees, neighboring buildings) and equipment (inverter brand, panel quality, wiring runs). Defaulting to 0.86 (the NREL PVWatts utility-scale baseline) for a shaded residential project overestimates production by 5 to 12 percent. Run a shadow analysis before finalizing the derate factor.

Bill-to-Solar Extraction Worksheet

The following worksheet is the structure SurgePV and most installer intake forms use to capture bill data systematically. Fill one per customer at the quote stage.

Customer & Service

Rate Schedule

12-Month Usage

Charges Breakdown

Future Load Planning

Sizing Calculation

This is the intake document. Once completed, the rest of the proposal flow (panel layout, inverter selection, stringing, pricing) plugs into automated workflows like those built into solar proposal software.

Country and Utility Variations Worth Knowing

The framework above is built on US bill conventions, but solar professionals in other markets apply the same logic against different label conventions.

United Kingdom

UK domestic electricity bills show kWh consumption against a unit rate (per kWh) and a standing charge (daily fixed fee). Most domestic customers are on a single unit rate, although Economy 7 and Economy 10 tariffs split day and night rates. The Smart Export Guarantee (SEG) replaced the Feed-in Tariff for new installs in 2020 and pays per kWh exported, with rates varying by supplier (typically 3 to 15 pence per kWh in 2026).

For UK sizing, the standing charge is the fixed component that solar does not offset, and the SEG rate is what export compensation looks like. The battery solar system design UK guide covers the British-market specifics.

Germany

German bills (Stromrechnung) list Grundpreis (fixed annual fee) and Arbeitspreis (per-kWh variable rate). Self-consumption (Eigenverbrauch) is the dominant economic driver because the feed-in tariff has dropped below the retail rate. The system size formula is the same, but the optimization target shifts to maximizing self-consumption rather than maximizing export.

Australia

Australian bills list consumption in kWh, a daily supply charge (fixed), and feed-in tariff rates (per kWh exported). Time-of-use is widespread, especially in NSW, Victoria, and South Australia. The federal Small-scale Renewable Energy Scheme (SRES) creates STCs upfront, separate from the per-kWh export compensation.

Spain

Spanish bills (factura eléctrica) split into término de potencia (power term, based on contracted kW) and término de energía (energy term, per kWh). The power term acts like a capacity charge or a soft demand charge. Self-consumption surplus compensation depends on whether the customer opted into compensación de excedentes (typically capped at the energy term value per kWh). See solar self-consumption rules Europe for the regional comparison.

Italy

Italian bills (bolletta elettrica) show consumption in kWh by F1, F2, F3 time bands (mandatory TOU for most customers above 3 kW contracted power). The Ritiro Dedicato (RID) and Scambio sul Posto (SSP, being phased out by 2025/2026) determine export economics. For new installs, the new TIAR (Testo Integrato Autoconsumo) framework applies.

The point: rate schedule decoding is a universal exercise. The variable names change, but the structure (variable energy + fixed fees + export compensation + demand or capacity charge) is consistent across mature solar markets.

Frequently Asked Questions

How do I read a utility bill for solar sizing?

Pull 12 consecutive monthly bills, locate the kWh usage line on each, and sum them for annual consumption. Identify the rate schedule code printed on the bill, separate supply charges from delivery and fixed charges, and note any time-of-use or demand line items. Divide annual kWh by 365 to get daily kWh, then divide by local peak sun hours and a 0.8 derate factor to estimate system size in kW.

What is a rate schedule on an electric bill?

A rate schedule is the contract code that defines how a utility prices each kWh you consume. It specifies whether you are on a flat rate, tiered rate, time-of-use rate, or demand charge plan, and it lists the per-kWh price for each tier or time period. The code is usually printed near the top of the bill or under the line item Detail of Current Charges, with names like E-1, E-TOU-C, R-3, or Schedule TOU-D.

What kWh number should I use to size a solar system?

Use 12 consecutive months of total kWh consumption summed into one annual figure. A single month is unreliable because winter heating and summer cooling can swing usage by 2 to 3 times. If only partial history is available, weight the available months toward the missing season or request an interval data export from the utility. The annual total is the input to the sizing formula.

Does time-of-use pricing change how I size a solar system?

Yes. Under time-of-use rates, solar exported at noon often earns 30 to 70 percent less per kWh than the price you pay during the evening peak. A flat-rate sizing model overstates savings on a TOU plan. Account for the export rate, the peak import rate, and the timing mismatch when calculating offset, and consider battery storage if the evening peak makes up most of the bill.

What charges on my electric bill cannot be eliminated by solar?

Fixed customer charges, meter charges, minimum monthly bills, franchise fees, and some local taxes are independent of consumption and remain after solar offsets your kWh import. In most US markets these total 8 to 25 dollars per month. Demand charges based on peak kW also persist unless solar production reliably covers your peak demand interval or a battery shaves that peak.

How do I tell if a customer is on a TOU or tiered rate plan?

Look at the Detail of Current Charges section. A tiered plan lists usage in steps (Tier 1, Tier 2, Tier 3) with a price for each tier. A time-of-use plan lists separate kWh totals for Peak, Off-Peak, and sometimes Partial Peak hours with different prices. A flat rate shows one kWh price for all consumption. The rate schedule code at the top confirms which plan applies.

What is a demand charge and does it apply to residential solar?

A demand charge is a per-kilowatt fee billed on the customer’s highest 15-minute power draw in the billing period. It is standard on commercial and industrial bills and appears on some residential rate plans in Arizona, Alabama, and parts of New Mexico. Solar can reduce demand charges only if production reliably coincides with the customer’s peak draw, which usually requires a battery to handle evening peaks.

Should I size a solar system to 100 percent of annual usage?

Most utilities cap interconnection at 100 to 120 percent of the previous 12 months of consumption. Sizing to 100 percent of annual kWh covers consumption on an annual basis but does not guarantee a zero bill because of fixed charges, TOU mismatch, and export rate discounts. For customers planning an EV, heat pump, or home addition within 2 years, sizing to 110 to 120 percent is common when the utility allows it.

Closing

Three action items for the next quote:

• Pull 12 months of bills before any roof measurement. Sizing on one month is the most common cause of post-install dispute. Twelve months is the minimum reliable input.
• Find the rate schedule code and look up the full tariff. Headline prices on a bill rarely match the effective rate, and the rate plan determines whether battery storage is a luxury or a payback driver.
• Adjust for future load before locking the system size. Document any planned EV, heat pump, or addition in writing and apply the kWh estimate to the baseline. Most customers add load within the first 3 years.

The utility bill is the most underused document in the solar sales cycle. Every line it contains is engineering input, not background information. Reading it carefully is the difference between a system that performs to the proposal and a system that lives in the inbox of a customer service team for the next 5 years.