Conserve and Save: Tiered Electric Rates Are Good for the Pocket and the Planet.

Thanks to California’s tiered rate system, lowering your usage can substantially lower your electric bill.  Here’s why:

Why do we have different rates for electricity on one bill?
California is one of the few states that has “inverted tier rates,” also called baseline rates.  Under this rate system, consumers are charged more if we use electricity above a minimum amount.  This minimum amount is the baseline.  

What’s the benefit of baseline rates?
There are two benefits to having baseline rates:

• First, it provides everyone with a basic amount of electricity priced more affordably than it would be if we were charged only one rate for all our usage.
• Second, the inverted tiers promote energy conservation because customers pay a higher price for using more electricity. Conservation helps customers avoid this higher price.
  

How is the baseline amount determined?
The CPUC bases baseline allocations on a percentage of average monthly usage.  For summer cooling, this percentage is 50-60%.  For winter heating, it is 60-70%.  

Does everyone have the same baseline?
Baseline allocations for both summer and winter differ in the various climate zones in California: ten for PG&E and six for Edison.  Customers with electric heating have different baseline amounts than those who don’t, and consumers with special medical needs have higher baseline amounts.

We have four or five different rates each month.  What’s going on with that?
The multiple tiers of above-baseline rates are fallout from the deregulation disaster.  Despite so-called “rate protections,” customers ended up footing the entire bill – about $40 billion – for Sacramento’s mistake.   Thanks to legislation sponsored by TURN, ratepayers using an essential amount of electricity (up to 130% of the baseline) are protected from having to pay more.  This essential amount of electricity covers the first two tiers of usage.  

But to cover the deregulation costs, customers whose electricity use is far above baseline are charged progressively higher rates for above-baseline kilowatts.  This means that consumers whose usage is way above the baseline amount pay a great deal for a portion of their electric use.  Since baseline is a percentage of the average usage in a climate zone, these “upper-tier” customers are using more than their neighbors.  For example, large homes with central air conditioning often fall into the upper tiers.

Doesn’t this discriminate against large families?
At TURN’s urging, Family Electric Rate Assistance (FERA) rates were created to help large households with lower incomes manage their electric bills.

Aren’t the baseline amounts too low?  And don’t some cities have unfairly high baseline amounts compared to mine?
TURN is analyzing whether baseline amounts should be recalculated to account for factors such as warming temperatures in California, changes in consumer electric use, and more accurate geographic delineations.  Overall, however, California law limits the maximum amount of energy that can be priced at baseline rates.  

Do customers have a voice?
The CPUC reviews baseline quantities every 3-5 years, during each utility’s rate case.  The CPUC holds public participation hearings as part of the proceedings to give consumers the opportunity to voice their concerns.  Notifications of public hearings are included with billing inserts when a utility rate case is being considered.  TURN members are also notified of upcoming opportunities for public participation.

How can I lower my energy bills in order to get into a lower tier?

• Find and destroy energy vampires, appliances and equipment that suck up power even when they are turned off, such as lamps, TV’s, toasters and stereos. Read more.
• Vacuum the coils on your refrigerator at least every three months.  The dirt build-up makes the refrigerator work harder to keep the contents cool and therefore uses more energy.
• Use a clothesline.  Read more.
• Wash clothes in cold water instead of hot.  90% of the energy a washing machine consumes goes to heating the water.   
• Your water heater is the second or third highest energy expense in your home. Try turning it down to 120°F.
• A 5° higher setting on your air conditioning thermostat will save about 10% on cooling costs.
• Take advantage of the energy efficiency programs paid for by utility ratepayers and replace some or all of your energy-using appliances, equipment and lighting with qualifying high efficiency products.  Income eligible households may be able to receive free upgrades through the Low Income Energy Efficiency Program administered by each utility.  Information about rebates and other financial assistance available for all residential customers is available on the Flex Your Power website. 

For more energy savings tips, click here.