SDG&E Sells Less Power, So It Hikes Electric Rates

SDG&E is raising rates to offset increased insurance costs as result of wildfires, the cost of smart meters, and expenses related to San Onofre Nuclear Generating Station. The company claims the increases are tempered by lower energy costs, but lower energy prices shouldn’t be offset by charging customers more for other expenses.

Residential electric rates are up this year for an odd reason—San Diego Gas & Electric sold less electricity than expected to homes, condos and apartments last year.

That meant it took in less money than it planned on.

“The result of the economic downturn really had an impact on us as a company,” said spokeswoman Stephanie Donovan.

And so it’s planning to recoup those expenses on this year’s rates.

The increases affect only residential rates. Rates for businesses, street lighting and other large users went down at the beginning of the year.

The increase means that a customer using 500 kilowatt-hours—a typical amount—will pay $80.90 for electricity this year, a $2.28 increase over last year.

A customer using twice as much electricity, 1,000 kilowatt-hours, will pay $227.08, or $5.97 more.

The increases both come out to less than 3 percent.

The Jan. 1 rate change reflects the complexities of how SDG&E figures how much it collects from people.

When you pay your power bill, you’re not just paying for the electricity delivered to your home. You’re also paying for the cables, towers and substations that get it there and make sure the lights stay on.

Regulators—the California Public Utilities Commission—figure out ahead of time what it should cost SDG&E to run its system, and parcel that out according to a forecast of how much power the company will sell.

When that forecast is off, the company gets to adjust its rates.

“We still have to maintain our system,” said Lee Schavrien, the SDG&E executive in charge of rates.

Sometimes that means rates go down. This time, it means they go up.
There’s other things going on as well.

Rates are being adjusted for increased insurance costs as result of the 2007 wildfires, the cost of adding smart meters, and expenses for maintenance to the San Onofre Nuclear Generating Station, but also for lower costs because contracts the state entered with power producers during the 2000-2001 energy crisis are now expiring.

Overall, including charges to commercial and other customers, rates for all of SDG&E’s will go down by 1.3 percent.

For residential customers, there’s another thing going on.

State law allows SDG&E to increase the subsidized rates that customers who use the least amount of electricity. Those rates apply to use below 130 percent of ‘baseline’—an amount of power that’s supposed reflect the minimum needed by a typical home.

The increase, based in part on inflation, comes out to 3 percent a year for power.

That change is designed to increase those lower rates and bring them more in line with what it actually costs SDG&E to make, or buy, electricity.


Rate changes will continue. SDG&E is expecting the cost of making and buying electricity to remain low, which has led to big rebates in the fall for customers who use a lot of electricity. But it’s asking for its biggest rate increase in a generation a year from now.

Still, the company says that the poor economy has generally led to lower bills—primarily because natural gas is relatively cheap.

If it gets the rate increase it’s asking for, the typical monthly gas and electric bill in 2012 will be $130, or about $10 less than at the beginning of 2009, Donovan said.

Consumer advocates aren’t sure that’s a good deal, arguing that lower energy prices should not be offset by increase in the cost of infrastructure.

“The CPUC has been allowing the utility companies to live high on the hog for too long,” said Mindy Spatt, a spokeswoman for San Francisco-based TURN, The Utility Reform Network, which was opposed to rate hikes for smart meters and energy efficiency incentives to the power companies.