Rate Reform Center Stage

By Published On: April 20, 2012

There has been a perennial debate since rates were partially frozen for low-income and modest energy consumers during the 2000-01 energy crisis. Higher energy consumers whine that their rates have risen much more than ratepayers who use close to baseline levels or are protected by the state’s low-income assistance program. AB 1775 by Assemblymember Henry Perea (D-Fresno) is the vehicle this year to ramp up rate increases for low-income and low-energy consuming ratepayers. “The real issue is a need for rate reform,” said Assembly Utilities & Commerce Committee chair Assemblymember Steven Bradford (D-Inglewood.) “This is a small step.” AB 1775, according to Tom Bottorff, Pacific Gas & Electric senior vice president, eliminates a “huge subsidy” under which most of the utility’s fixed costs are borne by those with higher electricity usage. He said low-energy users pay on average about 12 cents/kWh while big energy users pay about 34 cents/kWh because of rate restrictions on the lower tiers. The utility filed an application with the California Public Utilities Commission earlier this year to change the baseline rate structure to move more baseline users to higher rate categories. The bill specifically authorizes the CPUC to allow private utilities to recover fixed costs if deemed reasonable and necessary to provide rate relief. The bill is supported by PG&E, Southern California Edison, and the Chamber of Commerce. It is opposed by ratepayer advocates and utility worker representatives who warn it shifts the rate burden. “It is a transfer from higher to lower energy usage within same geographic area,” said Assemblymember Nancy Skinner (D-Berkeley). “It sends a message to the CPUC that all other considerations are secondary,” warned Dan Kalb, Union of Concerned Scientists California policy director.

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