Pacific Gas & Electric\u2019s medium and large commercial and industrial customers with solar energy systems will see lower utility bills under a new tariff regulators\u2019 unanimously approved Dec. 18. The new rates are \u201cfairer and more cost-based,\u201d said California Public Utilities Commission president Mike Peevey, who authored the adopted alternate. He said his alternate reflects the aim of rate design, which is to \u201creflect the costs imposed on the system.\u201d Commissioner Mike Florio noted the alternate included data showing \u201cthe real inequity in the ways the summer peak demand charge is applied\u201d to larger businesses. Southern California Edison and San Diego Gas & Electric previously adopted lower rates for the two categories of businesses at issue, but PG&E attempted without success to block it. According to the ruling, about 22,500 businesses with and without solar are in the affected tiers, E-19 and E-20. That is out of about 631,600 commercial and industrial PG&E ratepayers. The new tariff applies to businesses in these tiers with demand greater than 499 kW over three months and more than 999 kW over three months. Under the new rates, medium and large businesses with installed photovoltaic systems hooked to the grid are to pay less for utility capacity costs. At the same time, they are to be paid more for excess solar energy they send back to the grid at peak times. The utility capacity costs dubbed \u201cnon coincident demand,\u201d includes generic utility distribution, transmission and generation charges. The tariff is known as \u201cOption R,\u201d which the rejected proposal by administrative law judge Doug Long dismissed as \u201cboutique rates.\u201d It was proposed by the Solar Energy Industry Association. \u201cOption R sets the stage to grow this segment of the solar market,\u201d said Rhone Resch, SEIA president. Regulators agreed to the lower capacity costs because of the \u201cinaccuracy\u201d of the current capacity charges in PG&E\u2019s time-of\u2013use rates for these two classes of ratepayers. \u201cThe inaccuracy is due both to the fact that customers\u2019 individual maximum peak period demands may not coincide with system peaks and to the failure of demand charges to appropriately recognize the benefits of load diversity,\u201d states the alternate. The CPUC also approved a settlement between the solar association, Edison and Office of Ratepayer Advocates, under which the utility agreed to increase the cap on its Option R rate from 150 MW to 400 MW.