SoCal Gas & SDG&E Customers Dodge a Bullet: Regressive Rate Scheme Defeated

California has long recognized that tiered rates keep an essential amount of gas affordable, and requires a lower “baseline” rate that serves to protect consumers who use relatively less gas. The Sempra Utilities proposed to turn that system on its head by increasing the “fixed” charges all customers would have to pay each month, and changing the way rates are calculated, all of which would have both driven up bills for lower income, lower usage customers and undercut conservation and energy efficiency efforts.

Sempra did its best to treat the proposed changes to the rate structure as no big deal, but TURN exposed what the scheme really meant: the vast majority of customers would see their blls go up, with lower usage customers seeing the greatest increases, while higher usage customers would have enjoyed decreases, without making any effort to cut back on their usage. A majority of local customers who spoke out at public hearings opposed the plan.

The worst impacts would have been on vulnerable customers who can least afford higher bills- low-income families and senior citizens. The majority of SDG&E customers living in multi-family housing would have paid AT LEAST a whopping $90 extra per year, even if they weren’t using any more gas than before. For SoCalGas, almost all customers in small, multi-family dwellings would have ended up paying more.

Not only would Sempra’s scheme have undermined incentives to conserve, but as TURN pointed out, it also would have worked against the energy efficiency measures ratepayers are already funding. “The fixed charge means lower charges per therm, so the savings from an appliance that uses less therms will be eroded,” said TURN general counsel Bob Finkelstein. “In fact, the changes could have actually resulted in HIGHER consumption, and hence increased greenhouse gas emissions, contrary to state policy. Sempra appeared to be completely clue less,” Finkelstein said, “ignoring not only the environmental impacts but also the higher bills that most of their customers would see.”

The CPUC agreed with TURN and our allies at ORA (Office of Ratepayer Advocates) that the changes Sempra wanted would be harmful to customers and rather than boost conservation at this crucial time, could actually set conservation back. Sempra’s attempt to sneak in a new, illegal method for calculating tier differentials was also rejected.