The 2001 electricity crisis forced California’s Legislature to implement higher prices for the top rate tiers and freeze rates for the lowest tiers. After 14 years, the CPUC is reforming residential rates to narrow the price variance and promote renewable technology.
Commissioner Liane M. Randolph said, “The CPUC will work hard in the coming months and years to implement this decision, move toward a new time of use rate structure to allow pricing to reflect the realities of today’s grid, and ensure that the utilities devote adequate resources to consumer education and outreach.”
Reformations will be phased over several years, but consumers’ wallets are already feeling the effects. Pacific Gas & Electric Company (PG&E), San Diego Gas & Electric Company (SDG&E), and Southern California Edison Company (SCE) condensed their four rate tiers to three.
This tier reconstruction has caused a significant rate increase for lower usage customers and a notable decrease for higher usage. By January 1, 2019, utilities will only consist of two tiers, with a 25 percent cost difference between them.
Solar and energy efficiency advocates oppose this new rate structure in fear that it will jeopardize conservation efforts by deterring high usage consumers from investing in renewables.
For this matter, a Super User Electric (SUE) surcharge designed to penalize consumers who use more than 400 percent of the allocated baseline will be introduced in 2017. To keep the pressure on energy guzzlers, the SUE surcharge will increase to 219 percent of the Tier 1 rate by 2019.
Effective January 1, 2019, residential customers will default to Time-of-Use (TOU) rates. The cost of electricity will depend on the time of day energy is used. The cost is higher during peak hours (late afternoon and early evening) but cost less during all other times.
The TOU rate structure will provide incentives for customers to utilize renewable technology and permit more control over their monthly bill. For more information on TOU rates, visit SCE’s and PG&E’s websites.
To ensure all consumers are contributing to the grid service cost – including those who use little or no power– a minimum bill rate of $10 for non-CARE customers and $5 for CARE customers was implemented in 2015.
Furthermore, utilities are required to implement an outreach program for Tier 1 customers to learn about no-cost and low-cost conservation measures. They are also expected to encourage energy conservation and help reduce the demand on the service grid.
“I am pleased that the end result protects consumers from a fixed charge, and that a Super User Electric surcharge will apply to those who use the most electricity,” said Commissioner Mike Florio. “We must continue to send price signals that reward conservation and discourage wasteful usage.”