SDG&E looks to raise minimum bill 400%, citing solar-driven cost shift

Dive Brief:

  • San Diego Gas & Electric earlier this summer said it wants to raise its minimum bills by almost 400%, along with a $10 fixed charge, a move the utility says is necessary to combat the $420 million annual cost shift between residential customers with and without solar panels.
  • By next spring, the utility wants to raise the minimum bill to $1.26/day, or $38.19 per bill based on a 30-day billing cycle, effective March 1, 2020. Some vulnerable groups of customers would be eligible for a 50% discount on the minimum bill, according to SDG&E.
  • Several groups want to keep the minimum bill where it is, around $10, with no fixed charge. According to The Utility Reform Network (TURN), a minimum bill charge should be crafted so that customers with lower usage don’t wind up paying higher bills.

    Dive Insight:

    As California adds more renewable and ​distributed energy, SDG&E told the state’s Public Utilities Commission (CPUC) that its proposal for a “modest” fixed charge for all residential customers “is a critical first step toward an evolving rate design.”

    “For the California utilities to continue to evolve to provide the services that the commission and customers want, then all customers who use and benefit from the grid will need to start to share in the cost of building, maintaining and operating it,” SDG&E said in its June testimony.

    That means rates that allow for a fixed charge to recover fixed costs from all customers, according to the utility. “The antiquated rate design model of recovering fixed costs in volumetric rates is no longer a viable option that can promote fairness to all customers.”

    SDG&E says its work to overhaul rates is consistent with 2013 legislation that required utilities to reduce the number of energy pricing tiers, incorporate time-of-use pricing, allow for a fixed charge of up to $10/month and “provide solutions to the increasing cost burden on customers who do not have private rooftop solar.”

    Not everyone agrees that solar customers cause cost shifts, however. Research from the Lawrence Berkeley National Laboratory concluded that “for the vast majority of states and utilities, the effects of distributed solar on retail electricity prices will likely remain negligible for the foreseeable future.”

    SDG&E, however, has more than 150,000 solar customers and says hundreds of millions in costs are shifting. The utility says its request is similar to approaches that local water and sewer districts have used to maintain infrastructure.

    In its own comments filed in May, TURN said it would recommend a “more deliberate and pragmatic approach toward a minimum bill.”

    The consumer advocate told regulators it would prefer rate designs that assure some revenue recovery from customers with very low loads, while designing the minimum bill so that it does not raise the bills for customers consuming low amounts of energy consistently — for instance, customers living in the smallest multi-family dwelling units, second homes, vacant buildings and solar customers with zero or negative net energy bills.

    SDG&E officials say if the CPUC approves, the utility would be looking to implement the bill changes in spring 2020.