Lower usage customers may see higher bills this summer
Southern California Edison customers in the Coachella Valley and across Southern California could see a major increase on their bills in the near future, including successive hikes for a basic monthly fee that would rise from 94 cents now to $10 in 2017.
This and other changes are part of a restructuring of electric rates Edison, Pacific Gas & Electric and San Diego Gas & Electric want to push through the California Public Utilities Commission as part of a larger move to maintain their profits in the face of the growth of rooftop solar.
Each utility has proposed a slightly different rate redesign package, but certain components are similar, such as the jump in basic fees. Edison’s proposal includes a leveling of the current tiered rate structure, from four tiers — with highest rates more than twice the baseline rate — to two tiers with only a few cents between baseline and nonbaseline rates.
The amount of power included in the baseline rate would also drop. Baselines vary across different climate zones and seasons, and also depend on a home’s energy mix. Edison’s baseline is now 53 percent of average residential use, but would be reduced to 50 percent.
Such changes were allowed, but not required, under a law passed last year that ensures solar customers will continue to get paid for the excess energy they feed into the grid, but opened the door for the $10 fee and tier reductions.
The PUC must hammer out the details of these changes, which are being intensely contested by the utilities and solar, ratepayer and environmental groups in a multiplying stream of briefs.
Under the most recent schedule issued by PUC President Michael Peevey, public evidentiary hearings could be held Nov. 3-21, with a proposed decision expected in March 2015.
Under the current tiered structure, Edison’s rates in the lowest, baseline tier are 13.2 cents per kilowatt-hour, rising to 30.4 cents per kilowatt hour in Tier 4.
The two-tier structure would by 2018 take the utility’s baseline rates to 16.2 cents per kilowatt-hour and nonbaseline rates to 19.5 cents per kilowatt-hour.
The basic fee would jump from 94 cents now to $5 in 2015, $7.50 in 2016 and then $10 in 2017. Low-income customers in the special California Alternate Rates for Energy (CARE) program would pay half the new basic fee rates, and also lower baseline and nonbaseline rates.
A recent notice Edison sent to its customers contained examples showing that such changes could add an extra $4.50-$6.56 to monthly bills for ratepayers with using 500 kilowatt-hours per month or less. But those whose monthly use is more than 500 kilowatt-hours could see their bills drop $5.46-$12.53.
Edison officials said average use in its service territory ranges from 500 to 600 kilowatt-hours per month.
With summer electric bills as high as $500 per month, Ken Glassman of Rancho Mirage could be among the Edison customers seeing a small drop in their bills, but he still opposes the increase in the basic fee and cut in baselines.
“These charges are extremely high for the people living in the desert,” he said. “There’s not enough offset.”
“Our main position is that the commission should proceed carefully to make sure any changes do not unduly impact people in the Central Valley and hot climate zones,” said Marcel Hawiger, staff attorney for The Utility Reform Network, a San Francisco-based ratepayers’ advocacy group. “We think we should keep tiered rates because they help conservation and they help customers using less than average amounts of electricity have affordable bills.”
The examples in the Edison notice were based on bills in climate zones along the coast in Los Angeles and in western Riverside County. In the Coachella Valley, Edison estimated rate increases for those using 500 kilowatt-hours or less per month would be $4.62-$5.36, while those using more than 500 kilowatt-hours per month would see reductions of $3.99-$5.02 per month.
The Imperial Irrigation District does not have a tiered rate system. Its basic electric rate is 7.8 cents per kilowatt-hour, plus an Energy Cost Adjustment fee, currently set at about 4.2 cents per kilowatt hour, which covers the district’s costs for buying fuel or power from outside sources.
Ratepayers also pay a monthly customer charge, now $3.60, intended in part to cover infrastructure costs.
In a Feb. 28 filing with the PUC, Edison maintained the changes to its rate structure are needed because the four-tier system results in “an annual subsidy of over $600 million paid by higher-usage to lower-usage residential customers.”
The four tiers, and the significant difference in rates between baseline and the top tiers, were established in the aftermath of California’s 2001 energy crisis and were aimed at capping rates for the lower tiers, Edison said in the filing.
The company also said the changes would not increase its revenue, but only “affect the way… authorized revenues are allocated among residential customers.”
Edison and other utilities have also argued that the increasing number of ratepayers with rooftop solar has also resulted in these customers not paying their fair share of system infrastructure costs, which have been picked up instead by nonsolar owners. Successive increases in the basic monthly fee would correct that imbalance.
At Hot Purple Energy in Palm Springs, president Nate Otto said the typical payback period for a 10-kilowatt system is now about seven to eight years. Edison’s proposed rate changes could stretch that out an extra year, he said.
Susannah Churchill, West Coast regional director for Vote Solar, a San Francisco-based advocacy group, said her organization does not oppose simplifying rates to better reflect utilities’ costs for providing reliable electricity. But she sees the rise in the basic fee as potentially “discriminatory.”
“We could have flatter tiers and still have good incentives for Californians to go solar,” she said. “The commission could do both these things.”
Edison summer rates going up?
As an interim step in the rate redesign package being debated at the California Public Utilities Commission, summer electric rates for Southern California Edison customers could go up an average 1.6 cents per kilowatt hour.
The details of the changes are spelled out in a potential settlement filed with the PUC March 4 by Edison and five consumer and environmental groups.
Baseline rates currently set at 13.2 cents per kilowatt hour would go up 12 percent to 14.9 cents per kilowatt hour, while Tier 4 rates would rise 5 percent, from 30.4 cents to 31.9 cents.
The goal of the changes is to begin leveling the difference between baseline and Tier 4 rates.