The California Public Utilities Commission approved a three-year rate hike for Pacific Gas & Electric’s low-income customers. In addition, many residents that consume levels of electricity near average baseline levels also are set to see their rates rise. Most of the increases are to take effect June 20. Regulators May 26, however, rejected the utility’s request to add a separate $3/month line item for households that use amounts of power at average baseline levels and an additional $2.40/month charge for low-income customers. “Rates for higher tiers have risen precipitously” the last decade, said CPUC president Mike Peevey. He authored the decision that won a 4-0 vote. The designated utility bill changes, which have summer and winter rate pricing, is revenue neutral, said Peevey. Rate increases in PG&E’s lower rate tiers are to be offset by decreased rates in the top tier, with most of the changes to go into effect in late June. Commissioner Tim Simon said the approved decision “appropriately brings rates closer to the true cost of service.” The decision concludes that the rate plan makes “the most significant changes in residential electric rate design in the last decade.” The targeted rate increase comes in the midst of the persistent economic downturn. There is an associated rise in the number of ratepayers receiving utility bill subsidies under what is known as the California Alternate Rates for Energy (CARE) program. “Millions of California families are struggling to keep the lights on and still afford food and rent, and these families need protection,” stated Stephanie Chen, Greenlining Institute’s senior legal counsel. During the height of the 2000-01 energy crisis, a law--AB 1x-- was passed to shield low-income ratepayers, as well as customers whose energy use falls within 130 percent of baseline, from rate hikes. According to Peevey, that has resulted in a quarter of the ratepayer base bearing rate increases and subsidizing other customers. Tom Bottorff, PG&E senior vice president of regulatory affairs, said the higher rates are attributed to several factors, including the state’s renewable mandate and the California solar roofs initiative. The California Manufacturers & Technology Association and other large energy user representatives have protested their members’ rates for years. In response, SB 696 was implemented in January 2010 to allow limited rate increases in the lower tiers. Among the customers that have paid rising bills are those living in regions where summer temperatures and air conditioning use are high, driving up energy consumption and bills. Peevey said there has been a 46 percent rate increase in “real dollar terms since 1991.” PG&E rates are divided up into four different pricing structures. The approved decision lowers the baseline shielded from increases. “The reduced baseline percentage moves more usage into the higher-rate Tier 3 rate,” according to the decision. It would lead “40 percent of above-average CARE users to see bill increases of over 14 percent, averaging approximately $11.60 per month,” the ruling adds. Peevey released an alternative decision that would have allowed a $3 monthly charge for households that use baseline levels of power and $2.50/month for CARE customers, but pulled it off the agenda. He was advised the additional charge conflicted with existing law. “Despite histrionics some attach to this, customer charges are not a new concept.” Peevey said. This week’s decision is a subset of PG&E’s massive general rate case pending before the commission, which governs rates over a three-year cycle. Regulators also approved a targeted rate hike for Southern California Edison customers in the lower rate tiers not receiving CARE bill subsidies. Under the resolution adopted 5-0, rates for the lowest energy users in Edison’s territory are to increase 0.97 percent this June. Customers in the next energy use bracket, Tier 2, are to see 3 percent utility bill increases. Like PG&E’s rate increase approved this week, higher rates in Edison’s lower rate tiers are expected to drop rates in the higher tiers, creating rate neutrality. Simon defended high end ratepayers, saying the rate redesign keeps people with “big homes and swimming pools” from being “demonized.”