Electricity rates could be changing; those who use less could pay more

The California Public Utilities Commission is getting close to releasing changes to electricity rates, a reform effort spawned by concerns about fairness in tiered pricing put in place after the 2001 energy crisis.

But utilities, ratepayer advocates, and environmental groups don’t exactly agree about what’s fair.

Southern California Edison and other investor-owned utilities propose to raise rates for people who use less energy, and lower rates for people who use more.

“Since 2001, the higher usage customers have been paying more than their fair share,” says SCE’s Russ Garwacki, in a promotional video. “The lower usage customers have been paying less than their fair share. So this particular proceeding is all about rate fairness.”

In California, electric rate tiers work like cellphone data plans. Stay within your basic allotment, you’ll pay one rate. But as you use more electricity, you’ll pay higher rates per kilowatt hour. Edison argues people paying for electricity in its two highest tiers are basically subsidizing ratepayers in the lowest tiers by $600 million a year.

One part of Edison’s proposal is a higher base charge, the fee paid by every customer for the right to connect to the grid through the utility. Edison proposes to raise that charge up to $10 over a number of years, with a fee of half that for customers who quality for low-income pricing.

Assemblyman Henry Perea sponsored the legislation authorizing reform for the rate structure set after the energy crisis. Before it became law, he told KPCC he believed a higher base charge would be more fair.

"We should all have some skin in the game in terms of maintaining the infrastructure, so that the burden doesn’t fall more on one group of ratepayers than another," Perea said. 

But ratepayer advocates say the higher base charge is regressive, and they argue that utilities including Edison haven’t offered much proof of higher fixed costs in the procedural hearings.

Edison also wants to flatten rates, shrinking the cost difference between pricing tiers, so that higher users pay just 20 percent more than than basic users, rather than 130 percent more. 

That smaller price difference is an invitation to waste energy, argue environmental groups including the Sierra Club.

California’s regulations have been aiming for conservation of energy for decades. Since the state passed AB 32, its landmark effort to cut the state's contribution to global warming, energy conservation is even part of the state's efforts to lower its carbon emissions that are contributing to climate change. Environmentalists worry Californians won't conserve as much if there isn't a strong incentive to save.