Objective: "Incent" Residents & Small Businesses to Use Less Energy

San Diego Gas & Electric Company (SDG&E) wants to bill customers based on the day or time of day when electricity is used, a change from current residential and small business amount-of-use billing practices at the regulated public utility. SDG&E wants to drive those residential and small business power customers from competing with high-rate business customers for scarce power resources during peak business hours.

SDG&E's proposed PeakShift at Home (PSH) rate system is designed to "incent" customers into using power late at night and on weekends rather than during the business day. PeakShift at Work (PSW) is the corresponding rate program for small businesses as opposed to large business consumers of electrical power.

According to Carlos Pena and Laura Earl, Sempra Energy attorneys for SDG&E in documents filed with California's Public Utilities Commission, "Dynamic pricing [proposed] rates are higher during peak periods, thus incenting customers to reduce their electricity usage. The rates are lower at all other times. ... The intent of PeakShift rates is to send customers a proxy price signal to encourage them to curtail usage when a ReduceYourUse Day is triggered."

Pena and Earl further stated: "Because this Application [A1007009] requests the adoption of rate designs that are substantially different from, and more complex than, the current flat rate structure for SDG&E customers, implementation of the requested rates will require significant customer support and education to ensure that customers have the opportunity to be informed of their new dynamic pricing options."

Pacific Gas & Electric Company (PG&E) recently spent well over $30 million to educate and gain the support of California voters to approve Proposition 16, a constitutional amendment scheme designed to discourage consumer choice aggregation (CCA) for lower-rate municipal power options. Proposition 16 failed at the ballot box.

SDG&E attorneys Pena and Earl estimate that over a six-year period from now until 2015, about $118 million will be spent in incremental costs for the dynamic pricing scheme, largely in "customer education and outreach, investments to information systems necessary to implement and provide the ongoing support for dynamic pricing to all customers, additional customer operations support and facilities costs" and other related matters. CPUC approval of Pena and Earl's SDG&E application will allow SDG&E to recover the $118 million in incremental costs from all of its ratepaying customers.

Despite the above-cited need to spend at least tens of millions on consumer education and outreach, the SDG&E attorneys insist that "PeakShift terminology is intended to be easily understood and user-friendly for use by these customer classes [PSH and PSW]."

Eric Wolff at the North County Times cited SDG&E spokesperson Stephanie Donovan, stating that "the new pricing is intended to cost consumers the same amount of money as they pay now, though some customers could save money by shifting their use away from off-peak periods." Readers can decide for themselves if shifting usage away from off-peak periods will result in savings at the higher peak period rates.

Wolff also quoted Caroline Winn, SDG&E vice president of consumer services: "We really believe that dynamic pricing, or time-of-day pricing, is just a natural extension of taking us into the smart-grid world... It provides more options, and really more control of our energy costs." Winn's comments appear to be consistent with SDG&E goals of sustaining the current level of customer "ratepayer-indifferent" payments while reducing SDG&E's peak cost of acquiring electrical power for sale during high-demand periods.

Lee Schavrien, senior SDG&E vice president for finance, regulatory and legislative affairs, verified the A1007009 application filed with CPUC. Previously, KUSI Turko Files reported Schavrien as saying that SDG&E executives having exclusive private resort and night-club dinners with CPUC commissioners was all right as long as all other parties were allowed to do the same. Of course, those statements by the SDG&E executive assume that the other parties opposing SDG&E could afford to do so at similar high-end dining venues.

Consequence: Continued High-End Sempra Energy Quarterly Dividends

As an investor owned utility, controlling costs at SDG&E means more retained earnings going out as shareholder dividends at Sempra Energy, the corporate holding company of SDG&E.

Last year, quarterly shareholder dividends were at the high end of Senpra Energy's target payout range from 35% to 40% of retained earnings. At the same time, Sempra Energy's infusion of working and other capital into SDG&E wildfire fire prevention and damages was comparatively non-existent.

At SDG&E, only about $7 million has been allocated so far to the utility's Sempra Energy shareholders in damages from the 2007 San Diego County wildfires, compared to $25 million in damages to be billed to ratepaying customers throughout the County of San Diego. Total SDG&E liabilities are anticipated to exceed the over-$1 billion in SDG&E's insurance policies for the 2007 wildfire season.

According to CPUC in 2002, "when a utility’s access to or possession of capital of any type is impaired, and its ability to discharge its obligation to serve is consequently threatened, the first priority condition requires its holding company to give the utility preference over all competing potential recipients of capital resources."

CPUC further observed that "it is not unreasonable to put the risk of a utility’s sudden or unexpected need for capital on its holding company, which has profited in the past from its ownership of the utility, and will profit in the future when the utility is returned to financial health, rather than on ratepayers, which do not earn profits from infusions of capital into the utility."


APPLICATION OF SAN DIEGO GAS & ELECTRIC COMPANY (U 902 E) FOR APPROVAL OF ITS PROPOSALS FOR DYNAMIC PRICING AND RECOVERY OF INCREMENTAL EXPENDITURES REQUIRED FOR IMPLEMENTATION (A1007009)

North County Times - ENERGY: SDG&E applies to charge for power by when it's used

Dear Customers: $25 Million Uninsured Wildfire Billing by SDG&E

KUSI Turko Files: Way Too Cozy! See video link for SDG&E VP Schavrien comments.

CPUC D0201039: INTERIM OPINION ON MEANING OF FIRST PRIORITY CONDITION Use PDF link to view & download entire D0201039 text.

Also see:

Union-Tribune: SDG&E wants to charge more during peak hours

NB On third-party request, above links may have been deprecated without blogger's input at website administrator's discretion.

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