Electricity Deregulation Blog

ENERGY: California utilities ask regulators to upend power rates

 

Heavy users would get discount; light users would pay more

California’s three largest utilities have asked regulators to restructure electricity rates, raising prices for low-usage customers and lowering them for the highest.

If successful, the move would upend the rate regime put into place by lawmakers after the 2000-01 meltdown of California’s utility deregulation.

San Diego Gas & Electric Co., Southern California Edison and Pacific Gas & Electric Co. have independently applied to the California Public Utilities Commission to allow them to change their rate structures.

The utilities use a four-tier system to group ratepayers. The users of the least amount of electricity are in Tiers 1 and 2. These users would see increases of 5 percent, or just under a penny per kilowatt-hour more.

Taking into account variations in peak and off-peak pricing, SDG&E spokeswoman Denise King said that works out to about $3 more per month for a home that uses 500 kwh. Heavier users of electricity, who make up Tiers 3 and 4, would see drops of 4 percent, or 1.3 cents per kilowatt-hour. King says that’s roughly $4 per month for a 1,000-kwh user.

The rates for low-usage customers have been frozen since 2001, when the Legislature locked them in as a part of Assembly Bill 1x. The law was intended to encourage conservation by penalizing electricity consumption above a “baseline” amount. In the years since, higher-usage customers have absorbed regular increases until they have been paying more than twice as much per kilowatt hour.

“Customers paying in Tiers 3 and 4 have been essentially subsidizing the usage in the lower tiers,” King said.

In the spring, state Sen. Christine Kehoe, D-San Diego, sponsored legislation allowing for a modification of the rates. Gov. Arnold Schwarzenegger signed the bill into law in the midst of his 230-bill signing frenzy in October.

The new law unfreezes the low tier rate. Annual increases for Tier 1 and 2 customers will be tied to the Consumer Price Index, with a minimum increase of 3 percent and a maximum of 5 percent.

King emphasized in her comments that the new law was supported by advocacy groups. The Utility Reform Network, an advocacy group based in San Francisco, lobbied in the Legislature to protect the rate freeze, but felt they had to compromise on a new rate structure in the end.

“We reluctantly agreed to that because there was a lot of political pressure to get rid of the rate freeze completely,” said Mark Toney, TURN’s executive director. “What we’ve preserved for the baseline rate is, we’ve preserved limits for how much those go up; they cannot go up more than 5 percent per year at the very most.”

The law also protects low-income users enrolled in the California Alternate Rates for Energy program from any increase.

Some environmentalists were put out by the proposals.

“From a policy perspective, even through electricity is tiered, it doesn’t really help conservation,” said Marco Gonzalez, an attorney with the Coastal and Environmental Rights Foundation. “They should use conservation incentive-based tiering.”

SDG&E has asked the PUC to merge its application with those of the other two major utilities, and they’ve applied for speedy approval. If the rates are confirmed by the PUC on Dec. 17, they will take effect on Jan. 1, 2010.

By ERIC WOLFF – ewolff@nctimes.com

Call staff writer Eric Wolff at 760-740-5412.

 

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