Expect your energy bill to rise over the next few years.
The California Public Utilities Commission voted last week to approve major rate changes sought by Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric, and their decision is being met with great controversy.
Fewer Energy Usage Tiers
Currently, pay rates for energy consumers are divided into multiple tiers- where the more energy you use, the higher your rate will be. For example, those in the fourth tier have a rate that is twice as high as those in the first tier, who use the least amount of energy. However, with the changes approved Friday, the difference between what high energy usage customers and low energy usage customers pay will shrink. By 2019, the number of tiers will be reduced from four to two, with a price difference of just 25 percent between the tiers.
Critics of the new plan are saying that fewer tiers will severely diminish incentives for reducing energy consumption and utilizing green energy such as solar power. Many are also worried that this change will lead to a redistribution of wealth from low-income to high-income families, arguing that wealthier people tend to use the most energy and are the ones who will benefit the most from this restructuring.
However, the commissioners behind the reform claim that the link between income and electricity use isn’t as strong as many believe. They say that many high-energy using customers are large families that have no choice but to consume more energy, or desert-dwellers that rely on constant air conditioning during the summer months to stay cool. The new plan, they say, is fairer for all consumers.
The new plan does, however, include one penalty for the so-called “energy hogs”. For those who consume over 400% of the baseline electricity usage, they will see a surcharge that hikes their rate up to double that of the low-energy users.
Another change that the restructuring will bring is different rates for energy usage during different times of day, with the highest rates in the afternoon. The plan, the commissioners say, can potentially reduce the strain on the state’s power grid when electricity demand reaches its daily, late-afternoon peak by encouraging customers to shift the bulk of their energy usage to off-peak hours.
Incorporating these time-based rates could help the state incorporate more solar power into the energy mix. Solar power plants hit their maximum output just after noon, so these time-based rates will provide more incentive for those wishing to avoid the higher rates to switch to solar.
Overall, the majority of Pacific Gas and Electric Co., Southern California Edison and San Diego Gas & Electric Co. can expect to see their energy bills increase as the new plan is phased in.