If state regulators approve, a quarter of a million Californians scattered across Pacific Gas and Electric Co.’s vast service territory will, in March, begin paying different prices for power at different times of day.
It’s a glimpse of the future.
Starting in 2019, most Californians will pay “time of use” electricity rates, unless they specifically choose not to. Although some homeowners have already made the switch — particularly, electric car drivers and people who have recently installed solar arrays — most pay tiered rates that charge higher prices for heavy electricity usage.
Those tiered rates have long been the default for California utility customers. In 2019, time-of-use rates will become the default. And that sweeping change requires a little preparation.
So PG&E plans to select 250,000 customers from across Northern and Central California, tell them that their rates are about to change, and then move them to time-of-use rates over two weeks in March unless they object.
The pilot project, which will require the approval of the California Public Utilities Commission to take effect, will let the utility test different ways of alerting customers to the big switch. It will also show whether customers pay more overall — or less — under the new rate structure than under the old. The commission is tentatively scheduled to vote on the project in August.
“The way Californians are charged for energy continues to change,” said Aaron Johnson, PG&E’s vice president for customer energy solutions, in an email. “This pilot program will provide us with critical information to better serve our customers as we move toward transitioning to Time-of-Use rates in the coming years.”
The commission has been studying time-of-use rates for more than a decade and voted in 2015 to make them standard for most utility customers.
The premise is simple: By charging more when the demand for electricity reaches its daily peak, usually in late afternoonor early evening, time-of-use rates encourage people to shift some of their electricity use to other times of day. That, in turn, can lower the daily peak and reduce the number of power plants needed to supply it.
It could also help California make better use of its booming renewable power resources, since solar power plants reach maximum production from late morning through early afternoon, while wind power peaks at night.
PG&E’s pilot would divide the day into two periods: peak, lasting from 4 p.m. to 9 p.m., and off-peak, which would include everything else.
The customers chosen by PG&E to participate would have the opportunity to decline. And even if they started participating in the pilot project, they could drop out at any time.
Participants would also receive 12 months of “bill protection” from PG&E. If it turns out they paid more for electricity under the new rates than they would have under the old, the utility will pay them the difference with a bill credit after 12 months.
While many environmentalists have supported time-of-use rates, consumer advocates have been more wary. Shifting energy use to the morning or night is easier for some customers than others, they note.
“We don’t see time of use as a customer-friendly initiative or one designed to make electricity more affordable,” said Mindy Spatt, spokeswoman for The Utility Reform Network consumer group.
Retirees living in California’s hot interior valleys, for example, can’t turn off their air conditioners during peak summer hours without sweltering in their homes. And people who rely upon medical devices in their homes need access to them 24 hours a day.
PG&E customers whose bills already reflect the baseline use of a home medical device would be excluded from the March pilot project.
Rather than having the choice to opt out of time-of-use rates, Spatt’s group would prefer that the rates only be used for customers who opt in. The commission, however, chose otherwise.