Most SDG&E Customers Don't Know Which Plan They're On — Let Alone Whether It's the Right One
SDG&E offers residential customers two main types of rate plans: tiered rates (Schedule DR) and time-of-use rates (TOU-DR1 and TOU-DR2). Most people were defaulted onto a TOU plan starting in 2019 and never looked back.
The problem? Neither plan is universally cheaper. The right choice depends entirely on when you use electricity and how much you use. And if you pick wrong, you could be paying hundreds more per year without realizing it.
This guide breaks down both plan types side by side so you can figure out which one actually works better for your household.
TL;DR
- Tiered (Schedule DR) charges more per kWh as you exceed baseline — bad for high-usage households, indifferent to when you use power
- TOU-DR1 has 3 pricing tiers by time of day — cheaper if you can shift usage to super off-peak hours
- TOU-DR2 has 2 pricing tiers by time of day — simpler, but no super off-peak discount
- Heavy evening users (4-9 PM) tend to pay more on TOU; high-usage households tend to pay more on tiered
- Solar changes the math — a flat-rate PPA undercuts both plans during peak hours
How Tiered Rates Work (Schedule DR)
SDG&E's tiered plan — officially Schedule DR — is the simplest rate structure. You pay a flat per-kWh rate regardless of what time of day you use electricity. But there's a catch: the rate goes up as you use more.
Two Tiers Based on Baseline Allowance
SDG&E assigns every customer a baseline allowance — a set number of kWh per month at the lowest rate. Your baseline depends on your climate zone and the season:
| Tier | Usage Range | What It Means |
|---|---|---|
| Tier 1 | Up to 130% of baseline | Lowest per-kWh rate |
| Tier 2 | Above 130% of baseline | Higher per-kWh rate |
The baseline allowance varies, but for many San Diego households it's roughly 350-500 kWh/month in summer (higher in hotter zones to account for AC). Once you exceed 130% of that allowance, every additional kWh costs significantly more.
Approximate Tiered Rates (Schedule DR, 2025-2026)
| Tier | Summer Rate (approx.) | Winter Rate (approx.) |
|---|---|---|
| Tier 1 (up to 130% baseline) | ~$0.30/kWh | ~$0.30/kWh |
| Tier 2 (above 130% baseline) | ~$0.38-$0.40/kWh | ~$0.38-$0.40/kWh |
Rates shown are approximate total rates including all charges, based on SDG&E's published Schedule DR tariff tables. Actual rates vary by CCA status and change periodically. Verify current rates on SDG&E's pricing page.
Who Tiered Rates Hit Hardest
Tiered rates penalize high total usage. If your household uses a lot of electricity — say 800+ kWh/month — you'll blow through the baseline allowance quickly and spend a significant portion of your bill at the higher Tier 2 rate. Larger homes, families with multiple people, and homes running AC through San Diego summers are the most affected.
Key characteristic: On the tiered plan, when you use electricity doesn't matter. Only how much you use matters.
How Time-of-Use Rates Work (TOU-DR1 and TOU-DR2)
Time-of-use plans charge different rates depending on when you use electricity. The trade-off: the total amount matters less, but the timing matters a lot.
We cover these in detail in our full TOU explainer, but here's the quick comparison:
| Feature | TOU-DR1 | TOU-DR2 |
|---|---|---|
| Pricing tiers | 3 (on-peak, off-peak, super off-peak) | 2 (on-peak, off-peak) |
| Peak hours | 4-9 PM daily | 4-9 PM daily |
| Weekend vs. weekday | Different rates | Same rates every day |
| Super off-peak available? | Yes (overnight, midday weekends) | No |
| Summer on-peak rate (approx.) | ~$0.47-$0.55/kWh | ~$0.47-$0.55/kWh |
| Summer off-peak rate (approx.) | ~$0.30-$0.35/kWh | ~$0.30-$0.35/kWh |
| Summer super off-peak (approx.) | ~$0.25-$0.30/kWh | N/A |
| No-risk guarantee? | Yes (1 year, not for solar customers) | Yes (1 year, not for solar customers) |
Who TOU Rates Hit Hardest
TOU rates penalize peak-hour usage. If your household's electricity consumption is concentrated between 4 and 9 PM — which is the case for most families — you're paying the highest rate for a big chunk of your monthly bill.
Key characteristic: On TOU plans, when you use electricity matters as much as — or more than — how much you use.
Side-by-Side: Tiered vs. TOU
| Factor | Tiered (Schedule DR) | TOU-DR1 | TOU-DR2 |
|---|---|---|---|
| What drives cost | Total usage (kWh/month) | Time of day + total usage | Time of day + total usage |
| Pricing tiers | 2 (baseline, above baseline) | 3 (on-peak, off-peak, super off-peak) | 2 (on-peak, off-peak) |
| Peak hours penalty | None — same rate all day | 2-3x off-peak rate | 2x off-peak rate |
| High-usage penalty | Yes — Tier 2 is ~25-30% more | Minimal — rate is based on time, not tier | Minimal — rate is based on time, not tier |
| Best for | Heavy evening users who stay within baseline | Flexible users who can shift to super off-peak | Users with moderate, evenly-spread usage |
| Worst for | High-usage households over baseline | Heavy 4-9 PM users | Heavy 4-9 PM users |
| Complexity | Simple — just track total kWh | Moderate — track time of day + day type | Simple — just track peak vs. off-peak |
| Can switch? | Yes | Yes | Yes |
Enter your bill to see which rate works against you
Our calculator shows you whether your usage pattern is getting penalized by your current plan — and what solar could save you regardless of which plan you're on.
When Tiered Is Cheaper
The tiered plan tends to be cheaper when:
- Your usage is concentrated in the evening (4-9 PM). On TOU, that's the most expensive time. On tiered, it doesn't matter when you use power.
- You stay within your baseline allowance. If most of your usage falls in Tier 1, the tiered rate is reasonable and predictable.
- You have an EV and charge overnight. Wait — actually, overnight charging is cheapest on TOU-DR1's super off-peak. Tiered doesn't reward overnight charging.
Example: A household using 400 kWh/month with 50% falling in the 4-9 PM window might pay less on the tiered plan because the TOU peak-rate surcharge on those hours could outweigh the tiered rate's slightly higher baseline cost.
When TOU Is Cheaper
TOU plans tend to be cheaper when:
- You can shift heavy usage outside peak hours. If you can run the dishwasher at 10 PM, charge your EV overnight, and pre-cool the house at 2 PM, TOU rewards that behavior.
- Your total usage is high. If you're consistently in Tier 2 on the tiered plan, the penalty for exceeding baseline can be worse than the TOU peak surcharge — especially if you can shift some usage off-peak.
- You have an EV and charge overnight. TOU-DR1's super off-peak rate (typically midnight-6 AM) is the cheapest electricity you can get from SDG&E.
- You're home during the day. If you work from home or are retired, your daytime usage falls in off-peak or super off-peak hours, which are much cheaper.
Example: A household using 800 kWh/month that charges an EV overnight and shifts laundry/dishwasher to off-peak could save meaningfully on TOU-DR1 vs. being stuck in Tier 2 on the tiered plan.
The Uncomfortable Truth: Both Plans Are Expensive
Here's what most comparisons don't tell you: whether you're on tiered or TOU, you're still paying some of the highest residential electricity rates in the country.
- Tiered Tier 1: ~$0.30/kWh — still nearly 2x the national average
- TOU off-peak: ~$0.30-$0.35/kWh — same story
- TOU on-peak: ~$0.47-$0.55/kWh — roughly 3x the national average
Optimizing your rate plan can save you $20-$80/month depending on your usage pattern. But the real savings come from not buying SDG&E electricity at all during peak hours — which is exactly what solar enables.
What Solar Does to Both Plans
Solar changes the math on both rate plans — but it helps most on TOU, where the savings are most dramatic during peak hours.
On the Tiered Plan
Solar reduces your total consumption from the grid, which can keep you in Tier 1 or reduce how much you pay at the higher Tier 2 rate. The more of your own electricity you generate, the less you buy from SDG&E at any rate.
With a PPA at ~$0.18-$0.22/kWh, you're replacing Tier 1 (~$0.30/kWh) and Tier 2 (~$0.38-$0.40/kWh) electricity with cheaper solar power.
On the TOU Plan
Solar has an even bigger impact on TOU because of the peak-hour math:
| Comparison | Rate |
|---|---|
| SDG&E TOU on-peak | ~$0.47-$0.55/kWh |
| Solar PPA rate | ~$0.18-$0.22/kWh |
| Savings during peak hours | ~$0.25-$0.37/kWh (50-65%) |
Every kWh of solar you self-consume during peak hours saves you the difference between the SDG&E peak rate and your PPA rate. That's where the biggest dollar savings are.
Under NEM 3.0 (Net Billing Tariff), self-consumption is more valuable than exporting — so the strategy is to use your own solar during the day and store excess in a battery for peak evening hours.
The Bottom Line on Solar + Rate Plans
Regardless of which rate plan you're on, a solar PPA at $0.18-$0.22/kWh undercuts SDG&E's rates on both plans. The savings are most dramatic on TOU during peak hours, but significant on tiered rates too.
How to Choose Your Rate Plan
Still unsure? Here's a practical decision framework:
| Your Situation | Best Plan | Why |
|---|---|---|
| Heavy evening usage (4-9 PM), low total usage | Tiered (Schedule DR) | TOU penalizes your peak usage; tiered doesn't care when you use power |
| High total usage, can shift some to off-peak | TOU-DR1 | Tiered punishes high total usage; TOU-DR1 rewards shifting to super off-peak |
| EV owner, charges overnight | TOU-DR1 | Super off-peak rates are the cheapest; consider EV-TOU-5 if available |
| Work from home / home during the day | TOU-DR1 | Daytime usage falls in off-peak or super off-peak, avoiding peak rates |
| Moderate usage, can't shift much | Try TOU-DR2 | Simpler structure, one-year no-risk guarantee lets you test it |
| Solar customer | TOU (required under NEM 3.0) | Solar customers under NBT are placed on TOU; self-consumption maximizes savings |
The No-Risk Test
Both TOU-DR1 and TOU-DR2 offer a one-year no-risk guarantee: if you pay more on the TOU plan than you would have on the tiered plan, SDG&E credits the difference. Note: this guarantee is not available for solar customers.
If you're not sure which plan works better, try a TOU plan for a year. If it costs more, you get the difference back. It's a low-risk way to find out.
Key Takeaways
- Neither plan is universally cheaper — it depends on when and how much electricity you use
- Tiered rates penalize high total usage; TOU rates penalize peak-hour usage
- TOU-DR1 rewards load-shifting with super off-peak rates; TOU-DR2 is simpler but has no super off-peak
- Both plans are expensive — even the "cheapest" SDG&E rate is well above the national average
- Solar undercuts both plans — a PPA at $0.18-$0.22/kWh saves you money on either rate structure
- The one-year no-risk guarantee lets you test TOU without financial risk (not available for solar customers)
Related Reading
- Why Are SDG&E Bills So High in San Diego? — Full breakdown of what's driving SDG&E costs up
- SDG&E Time-of-Use Rates Explained: Why Your Bill Spikes After 4 PM — Deep dive into how TOU plans work and when peak hours hit
- PPA vs Buying vs Leasing Solar in San Diego — Compare financing options for going solar
Stop Guessing — Let Us Run the Numbers
Figuring out which rate plan is cheaper shouldn't require a spreadsheet and a crystal ball. And honestly, whichever plan you're on, solar at a flat rate undercuts SDG&E's peak pricing by 50% or more.
Stop guessing — get a free consultation and let us run the numbers for your actual bill, usage, and roof.
Call or text: (619) 396-7530
Sources
1. SDG&E Residential Pricing Plans: https://www.sdge.com/residential/pricing-plans
2. SDG&E Schedule DR Total Rates Table (effective 2/1/2025): SDG&E Schedule DR Tariff
3. SDG&E Schedule TOU-DR1 Total Rates Table (effective 1/1/2026): SDG&E TOU-DR1 Tariff
4. SDG&E Schedule TOU-DR2 Total Rates Table (effective 1/1/2026): SDG&E TOU-DR2 Tariff
5. EnergySage — SDG&E Time-of-Use Rates Guide: https://www.energysage.com/electricity/sdge-tou-rates/
6. Protect Our Communities Foundation — SDG&E Facts: https://protectourcommunities.org/facts-on-sdge/
Free Solar Consultations helps San Diego homeowners understand their options and connect with trusted solar providers. We serve the entire SDG&E service territory. Call (619) 396-7530 or book your free consultation online.