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Understanding Your Electricity Rates  & How To Lower Your Cost With High Efficiency Air Conditioning


Your electric costs are made up of Tier 1, Tier 2, and Tier 3 charges that appear on your bill. During the summer high-demand month's, the tier system is used as an incentive for residential customers to conserve energy. Tier 1 is the amount of power needed for services such as basic lighting, heating, and refrigeration. Beyond Tier 1 are two more tiers, each with a higher rates. Tier 2 is where most 12 year and older Air Conditioning units end up in the bracket. So the more energy you use, the more you will pay. During the winter months, when demand is lower most homeowners are usually in Tier 1, Tiers 2 and 3 are billed at the same rate in some cases however almost all homeowners with older Air Conditioning equipment will pay the dreadful Tier 3 cost per kWh.


Hotter temperatures cause refrigerators and other electrical appliances such as your Air Conditioner to work harder and use more energy.  Based on that and recommendations from the California Energy Commission, the LADWP & So Cal Edison have divided Los Angeles into two temperature zones to ensure basic energy use for their customers. People who live in the hotter parts of the city, Zone 2, are allowed a little more energy in Tier 1 than people who live in the cooler areas of Zone 1. 

The amounts of kilowatt hours (kWh) in each tier are based on a 30 day billing cycle.

 Zone 1 Zone 2

Tier 1First 350 kWhFirst 500 kWh

Tier 2Next 700 kWhNext 1,000 kWh

Tier 3Above 1,050 kWhAbove 1,500 kWh

How Does My Old Air Conditioning System Correlate With My Kilowatt Usage? 

Most homes built over 12 years ago had builder model 10 SEER Air Conditioning Condensers and or Heat Pumps Installed. No matter if it's a standard split or roof top package unit, your home had the minimum efficiency unit available at that time. Let's be honest, In most Santa Clarita & Antelope Valley homes the builders are always thinking about how do they save a buck. Well, the first way is to make sure the lowest grade equipment is installed for cost cutting purposes. Now before we debate this issue, yes there are some new builders that are concerned about energy costs and our environment and now we see more and more home's with High Efficient Air Conditioning systems in SCV and surrounding areas. With that said lets get back to the main topic, Your Energy Bill. 

As an Air Conditioning unit becomes older, it begins its decline in effectiveness and efficiency around year 10. Most manufacturers have several lines that will go the distance of 20 years plus, however I guarantee your tract home was not lucky enough to get that model. The compressor as the main heart and soul of your system can become energy starved based on several factors. The first and most common is amp draw. This is the amount of power being consumed at start up and at full running mode. Like all units they have a larger start up amp draw requirement however once it is in running mode, the unit goes into FLRA otherwise known as Full Load Running Amps. To not get confusing and over the top about amp draw, its a basic theory. As you AC unit becomes older, it requires more power & electricity to start it up and of course more power & electricity to keep it running. Most homeowners start to wonder after 10 to 15 years, why is my electric bill so high in the summer months??? Well its simple, that old energy wasting Air Conditioner is the main cause. Most homeowners believe that if its not broke, don't fix it! Well that 's the worse thing you could do. Just because the unit is still running, doesn't mean its not broke. Like any industry, Air Conditioning condensers are not built to stay efficient for more than 12 years. Thats the true and brutal insight, and trust me, Ive worked for 2 major manufactures as a design and sales engineer. The bottom line here, any unit over 12 years old is putting you at risk of being in the top TIER 3 level of power usage during the summer months and that can be painful. The only way to reduce high Tier level spending is to install high efficient Air Conditioning equipment and or go Solar. Since we are not a solar company all I can share is a personal opinion. My belief is why spend on average of up to 35k to just reduce the brutal summer months of kilowatt usage? Sure you can lock in rates and the tax incentives are great as well. Just think for a second, if you can reduce up to 65% of your highest Tier and overall become more comfortable in your home at a third of the cost of solar, why not consider an Air Conditioning upgrade first?  

So now the easy question, how do homeowners living in one of the most hottest valleys in the Los Angeles region, otherwise known as Santa Clarita & Antelope Valley deal with high energy cost? Its' simple, first you need routine maintenance on your old system to make sure your refrigerant levels are factory correct and more importantly, correct for your particular home. The standard working system should see between 40 and 45 degrees discharge air (Air Temp FromSupply Register) when all things are working correctly such as ducting, furnace blower motor, compressor, etc. Now remember, your old freon unit may be keeping up with the heat load for now, however the compressor itself is using more 220 volt energy to do so. The best way to put this, units that are 12 years and older should be considered an efficiency risk and replaced with today's minimum 14 SEER Air Conditioner. In most cases, this simple coil and condenser replacement will offer you up to a 30% energy reduction and reduce your TIER rating in the first 30 days. Sure we have higher efficient systems that can improve your overall spending by up to 65% with modern day variable speed communicating technology and we could expand on that during an in home consultation if you so choose. Let's however not lose focus on keeping things budget conscious and considering a modern day environment friendly system rated at 14 SEER either. This simple type of energy upgrade to your home can deliver great savings and in the end not break the bank in doing so. 

So to simply recap our discussion here. The biggest concern is lowering overall energy consumption and in the end equipment such as Air Conditioning systems and other 220/240 volt equipment in your home are the biggest culprit. It's time to truly weigh the differences, do you as a homeowner spend more money on electricity and repairs keeping that old Air Conditioner alive, or do you take the initiative to invest now and become worry free of breaking down during the Hot summer months? Yes it's an investment, however think of it as a smart decision that can begin to put money back into your pocket from the day that you start it up. To me thats money in the bank and truly worth the piece of mind...

Written by,

Ken Shipman President /CEO

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