We are in the midst of the greatest utility rate structure change over the last 15 years!
If you get electricity from Southern California Edison, you’ll probably pay more starting Wednesday — and bigger rate changes are on the horizon for all California utilities.
Wednesday’s rate hike stems from a controversial decision by the California Public Utilities Commission, which last year gave Edison, PG&E and SDG&E permission to lower electricity rates for homes that use the most energy and raise rates for homes that use the least energy. Edison expects bills to go up for about 89 percent of residential customers in its “hot zones,” including the Coachella Valley. Desert homes that use more than 900 kilowatt-hours per month over the summer will probably see their rates go down, the utility estimated earlier this year.
The rate restructuring follows earlier changes in October, when Edison, PG&E and SDG&E started requiring most homes to pay at least $10 per month, even if they use less than $10 worth of electricity. For low-income families enrolled in the California Alternate Rates for Energy program, the minimum bill is $5 per month.
Consumer watchdogs and environmental groups have slammed the public utilities commission for approving the rate changes, saying they reward energy hogs, punish conservation and reduce the incentive for homes to go solar. Commission members and utility officials, though, have described the changes as a matter of fairness, saying high-usage customers have unfairly subsidized low-usage customers for years.
Right now, homes pay for energy in four tiers (previously five tiers), with rates rising as energy use crosses the threshold into each tier. The first block of energy doesn’t cost very much, per unit of energy; the fourth block costs the most. Starting June 1, the number of tiers will be reduced from four to three, with the cost of energy in the lowest tier going up and the cost of energy in the highest tier going down.
“You have this distortion effect where tiers 1 and 2 were held in place over the course of many years. Tiers 3, 4 and 5 started, like an accordion, stretching upward,” Paul Phillips, a utilities commission staffer, said during a presentation at Tuesday’s forum. “For those of you who were consuming in tiers 3, 4 and 5 — frankly, you were paying too much.”
“It always made sense to me that if you use more of a limited resource, you should have to pay more for it,” he said.
Right now, electricity costs the same for residential customers no matter what time of day they use it. But starting on Jan. 1, 2019, electricity prices will vary depending on the time of day. Energy will cost more when demand is highest — typically in the evening, when people come home and solar panels stop producing electricity. It could be less expensive during the middle of the day, when solar power floods the grid.
“A lot of people still do not understand the information that comes to them in the mail with their bills, are not as educated or as informed. People speak different languages. People have low literacy levels,” Ana Montes, director of organizing for The Utility Reform Network, said at Tuesday’s forum. “Many more people will not get that information, so they will not be able to determine what the best rate is for them, and make a choice.”