CPUC Balks on Residential Rate Reform Proposal

Under pressure from solar and low-income customer advocates, the California Public Utilities Commission delayed acting on a sweeping residential electricity rate restructuring plan May 21, buying time to develop a counter proposal.

Before the meeting, solar industry workers protested outside the agency’s San Francisco headquarters. Solar and low-income advocates urged regulators to proceed with caution in changing rates.

The commission now plans to take up rate reform later in June.

In the interim, its Low Income Oversight Board plans to review the proposed rate restructuring plan May 28, said Commissioner Catherine Sandoval.

Commissioner Mike Florio earlier this month said he plans to develop an alternate to the proposed decision (Current, May 7, 2015). His alternate should be released on May 22, Florio said Thursday.

The proposal the commission delayed considering would affect homes where more than 33 million Californians reside. Environmental and consumer advocates maintain it would raise the power bills for most residential customers served by the state’s investor-owned utilities, perhaps as many as 90 percent.

Utilities maintain the plan is needed because big residential power users have been unfairly covering too many of the fixed costs of servicing small users to the point that it’s straining their pocketbooks.

The proposed rate reform package aims to:

• Impose a $10 monthly minimum bill for most people and a $5 monthly minimum bill for the poor, with the possibility of changing that to a $10 fixed charge ($5 for the poor) come 2019;

• Flatten today’s four-tier structure—adopted in part to incentivize energy conservation—to two tiers and narrow the differential in per kWh charges from around 2 or more for today’s upper tier to 1 for the lowest tier to a ratio of 1.2- to-1 (e.g., today in Pacific Gas & Electric territory usage is billed at to 33.5 cents/kWh in the top tier compared to 16.4 cents/kWh in the lowest tier and under the proposal it would be billed at 23.5 cents/kWh in the top tier and 19.5 cents/kWh in the low tier);

• Raising the rates for the poor by up to about 50 percent over the next three years; and • Moving to time-of-use rates for all by 2019, which would dramatically increase what it costs to use power on the hottest days of the year. The proposal came in response to a law passed in 2013, AB 327, requiring the commission to re-examine residential power rates to eliminate cross-subsidies. To help it do so, the law empowered the commission to lift a rate freeze for low-income and small power users imposed by the Legislature after the 2000-01 energy crisis in the wake of utility deregulation. The law also empowered the commission to impose fixed charges.