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Utilities on the trail to tiers

Electricity rate spikes move closer to reality

SDG&E "smart meter"
SDG&E "smart meter"

An administrative law judge for the California Public Utilities Commission has issued a proposed decision on a push by utility companies, including San Diego Gas & Electric, for a rate hike for lower-tier customers. If the proposal passes, heavy electricity users will get a discount that environmental groups decry as "a handout to utilities."

In brief, the utilities seek a new base charge of $10 to all customers' bills. To offset the extra revenue, they plan to drop charges for higher "tiers" of energy use, which cause electricity to creep up in price as consumers use an amount beyond their "baseline" allotment. SDG&E currently has four billing tiers, with the baseline and second tier (capped at 130 percent of baseline use) currently frozen under state law, a result of the fallout from the profit-driven energy crisis of the early 2000s.

Heavy energy users have argued that the tiered rate system is unfair because it penalizes customers with large homes or families, as well as those who live inland, where the lack of a temperate coastal climate causes them to rely more on heat and air conditioning, which drive up the bills.

Opponents of the new structure say that inland customers already receive a higher baseline due to regional differences. Those paying attention also say the utilities' proposal effectively burdens those who've invested in energy-saving technology and solar systems and those who conserve energy either out of green-mindedness or a low income; they will be subsidizing the wealthy and people who choose not to conserve.

Still, costs are high across the board — SDG&E's average rate of 21.1 cents per kilowatt hour of electricity used is well above the 17.5 and 17.6 cents charged respectively by Pacific Gas & Electric and Southern California Edison, the state's other two investor-owned utilities.

Under its proposal, SDG&E seeks to raise rates on Tier 1 consumers by 20.9 percent by the end of 2015, from 15.4 to 20.8 cents, while giving a 14.1 percent discount to users in the higher Tier 4 bracket, with Tiers 1 and 2 being combined in 2016 along with 3 and 4 to shrink to a two-tier system as early as this year.

The amount of power consumption covered under baseline allowances is also set to shrink in coming years, though constant users would be pushed into a less-costly (but still more expensive) rate tier.

Should the utility ever decide it has a decreased need for revenues, the commission document states, additional discounts would be offered to customers in the higher tier.

Within the decision, several unattributed quotes are listed from public hearings on the new rate proposal. The only two that appear to have come from the San Diego region were also from the only speakers cited in favor of the new policy:

“Under the current rate structure, thousands of low-income seniors, particularly those here in East County, are subsidizing some of SDG&E’s wealthiest customers who are fortunate enough to live in La Jolla and some of the other beach communities. I feel that the current structure is for the rates is unfair [sic]. It assumes that if you are in Tier 1, you are not — you’re poor. Many of the people that are in Tier 1 live closer to the coast. Therefore, they don’t have the electrical rates for air conditioning and services that we do out on the East County. The truth is if you live in Tier 1, you probably live close to the ocean or do not need the air conditioning. I live in Ramona. And I am in Tier 3 and Tier 4. No matter how hard we conserve and try, we cannot get out of Tier 3 and Tier 4.”

“The most important action to be taken is consolidation and narrowing (flattening) of the tiers," writes Karen V. Clopton, chief administrative law judge for the commission in a proposal released on April 21. "Because of the implementation of the rate freeze…users in the lower tiers pay significantly below the cost of generation, while users in the higher tiers pay significantly above cost. These prices are so far from cost that immediate change is necessary."

With that, Clopton advises utilities to continue with their plans to flatten rate tiers, implement the new base charge as early as this summer, and embark on a customer-outreach program to notify ratepayers still unaware of "no-cost and low-cost conservation measures" or how to read their utility bills.

"This decision might as well have been written on utility stationery," says Evan Gillespie, an energy expert with the Sierra Club. "The Commission basically handed the utilities exactly what they have been lobbying for…. It jacks up bills for low-income customers, lets energy hogs off the hook, and will slow the transition to clean energy. Meeting our climate goals just got harder."

No rate decisions have been finalized, and another pre-hearing conference is scheduled for June, when the matter will be discussed further.

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SDG&E "smart meter"
SDG&E "smart meter"

An administrative law judge for the California Public Utilities Commission has issued a proposed decision on a push by utility companies, including San Diego Gas & Electric, for a rate hike for lower-tier customers. If the proposal passes, heavy electricity users will get a discount that environmental groups decry as "a handout to utilities."

In brief, the utilities seek a new base charge of $10 to all customers' bills. To offset the extra revenue, they plan to drop charges for higher "tiers" of energy use, which cause electricity to creep up in price as consumers use an amount beyond their "baseline" allotment. SDG&E currently has four billing tiers, with the baseline and second tier (capped at 130 percent of baseline use) currently frozen under state law, a result of the fallout from the profit-driven energy crisis of the early 2000s.

Heavy energy users have argued that the tiered rate system is unfair because it penalizes customers with large homes or families, as well as those who live inland, where the lack of a temperate coastal climate causes them to rely more on heat and air conditioning, which drive up the bills.

Opponents of the new structure say that inland customers already receive a higher baseline due to regional differences. Those paying attention also say the utilities' proposal effectively burdens those who've invested in energy-saving technology and solar systems and those who conserve energy either out of green-mindedness or a low income; they will be subsidizing the wealthy and people who choose not to conserve.

Still, costs are high across the board — SDG&E's average rate of 21.1 cents per kilowatt hour of electricity used is well above the 17.5 and 17.6 cents charged respectively by Pacific Gas & Electric and Southern California Edison, the state's other two investor-owned utilities.

Under its proposal, SDG&E seeks to raise rates on Tier 1 consumers by 20.9 percent by the end of 2015, from 15.4 to 20.8 cents, while giving a 14.1 percent discount to users in the higher Tier 4 bracket, with Tiers 1 and 2 being combined in 2016 along with 3 and 4 to shrink to a two-tier system as early as this year.

The amount of power consumption covered under baseline allowances is also set to shrink in coming years, though constant users would be pushed into a less-costly (but still more expensive) rate tier.

Should the utility ever decide it has a decreased need for revenues, the commission document states, additional discounts would be offered to customers in the higher tier.

Within the decision, several unattributed quotes are listed from public hearings on the new rate proposal. The only two that appear to have come from the San Diego region were also from the only speakers cited in favor of the new policy:

“Under the current rate structure, thousands of low-income seniors, particularly those here in East County, are subsidizing some of SDG&E’s wealthiest customers who are fortunate enough to live in La Jolla and some of the other beach communities. I feel that the current structure is for the rates is unfair [sic]. It assumes that if you are in Tier 1, you are not — you’re poor. Many of the people that are in Tier 1 live closer to the coast. Therefore, they don’t have the electrical rates for air conditioning and services that we do out on the East County. The truth is if you live in Tier 1, you probably live close to the ocean or do not need the air conditioning. I live in Ramona. And I am in Tier 3 and Tier 4. No matter how hard we conserve and try, we cannot get out of Tier 3 and Tier 4.”

“The most important action to be taken is consolidation and narrowing (flattening) of the tiers," writes Karen V. Clopton, chief administrative law judge for the commission in a proposal released on April 21. "Because of the implementation of the rate freeze…users in the lower tiers pay significantly below the cost of generation, while users in the higher tiers pay significantly above cost. These prices are so far from cost that immediate change is necessary."

With that, Clopton advises utilities to continue with their plans to flatten rate tiers, implement the new base charge as early as this summer, and embark on a customer-outreach program to notify ratepayers still unaware of "no-cost and low-cost conservation measures" or how to read their utility bills.

"This decision might as well have been written on utility stationery," says Evan Gillespie, an energy expert with the Sierra Club. "The Commission basically handed the utilities exactly what they have been lobbying for…. It jacks up bills for low-income customers, lets energy hogs off the hook, and will slow the transition to clean energy. Meeting our climate goals just got harder."

No rate decisions have been finalized, and another pre-hearing conference is scheduled for June, when the matter will be discussed further.

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Comments
8

George Orwell would be proud

April 23, 2015

What does this mean for people who have solar installed?

When we who suffer under SDG&E are already paying rates that are the highest for the continental US (I have been told that only Hawaii has higher rates for power), how can it be said that "these prices are so far from cost"?

April 23, 2015

It means that if the plan is implemented, you'll pay an extra $10 per month. And if you don't go over your baseline allowance currently, you'll pay an extra 20.9% on top of the $10.

If, despite your solar system, you still use considerably more than your baseline allowance and plan to continue to do so, you might see a wash or even a savings as compared to now, depending on how much electricity you're actually consuming.

April 23, 2015

It's in SDGE's best interest to have more electricity used, not less. If usage goes up they can then come back and say they need more generation capacity and that ratepayers should cover the cost. This particularly hurts those who conserve or provide their own power source as they will pay the highest rates. I put solar on my roof in 2006 and generate power when it is needed most on hot midsummer days. Whatever I don't use goes into the grid and SDGE reluctantly pays $.035 per KWH for the power while charging users15-25 cents for the same kw. Users in east county should be looking into solar to cut their costs.

April 23, 2015

Dave Rice: Could the recent California 4th District appellate court decision on tiered water rates apply to electricity tier rates?

"On April 20, 2015, the Fourth District Court of Appeal issued its widely-anticipated decision in Capistrano Taxpayers Association Inc. v. City of San Juan Capistrano, ruling that tiered rate structures designed to encourage water conservation, such that high users pay a progressively higher fee, violate Proposition 218 if they are not tied to actual costs of service."

"...fees for providing a property-related service, such as water delivery, must be proportional to the cost of providing that service, and ... fees cannot be charged for a service unless the service is actually used by, or immediately available to, the property owner."

April 23, 2015

I believe this decision is related to municipal water districts, as opposed to investor-owned utilities. Water districts don't exist to make a profit, but the primary goal of the utilities (municipal utilities in Los Angeles and Sacramento aren't included here and very well could fall under Prop 218) is to make money for shareholders, which only happens when ratepayers are charged more than the actual cost of service.

April 23, 2015

Guess I just got screwed on the ROI on my 30K solar system. 😡😭

April 23, 2015

Everyone needs to understand that we the Ratepayers are being RIPPED OFF by the CPUC, which includes all the rate increases that their self appointed ALJ choose to approve. The entire process is rigged as the ongoing investigation into San Onofre clearly illustrates. Also remember that even Governor Browns sister is on the Board of Sempra so that is yet another "connection" that that needs to be included in #SanOnofreGate. (The new Twitter hashtag that will allow you to keep up to date on the ongoing investigation into the multi-billion $ SCE-CPUC ripoff).

I think that everyone involved (NRC, the NRC Region IV, SCE, SDG&E, Senator Boxer, The CPUC, most of our elected Officials and even our MSM) are now trying to cover their own "tracks", since it is clear that #SanOnofreGate involves them all at various levels because none of them stepped up and spoke out about this multi-billion dollar ratepayer ripoff; choosing instead to "lay low" seeking to retain favor (VERY BIG donations) of these Powerful Utilities. We are lucky to have the SD Reader, Michael Aguirre, Maria Severson and now Jeff McDonald of the UT adding ever more information about this debacle:

Bill would ease CPUC appeals http://www.utsandiego.com/news/2015/apr/21/cpuc-appeals-bill-rendon/all/?print Cases could be brought in Superior Court under proposed amendments By Jeff McDonald3:50 p.m.April 21, 2015

===> The real issue is whether ratepayers are going to accept yet another Utility RIP-OFF or will they simply roll over and pay their bills like good little sheep while BIG Business gets yet another discount. Also, don't look to UCAN for any ratepayer help since they are clearly in bed with the CPUC, in order to get money from the CPUC, even though they have a recent track record of doing nothing positive for SD ratepayers; their Board needs to be asked to resign, so that another Board can be appointed (composed of honest people) that will actually promote for what is best for SD ratepayers, instead of just what is best for UCAN Board members!

April 24, 2015

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