PUC to Reassess Rate Hikes
Nine days after structuring the largest electricity rate increase in California history, state regulators on Thursday launched a reexamination of the unpopular baselines used to determine how much each residential customer will pay.
If the indicators are revised upward, as most expect, that would grant some customers relief from the rate hike but could necessitate future ones to generate enough revenue for power purchases.
The energy crisis put the esoteric term “baseline” on the minds of millions of utility customers. During recent hearings on a $5.7-billion rate increase, the California Public Utilities Commission heard a chorus of complaints from consumers who said their baseline was unrealistically low, exposing them unfairly to the rate hike.
“The most visible and controversial issue, other than the overall increase ordered, was the methodology used to spread the increased revenue requirement to residential customers,” the PUC said in voting unanimously to reassess baselines.
On March 27, the PUC approved rate increases for Southern California Edison and Pacific Gas & Electric Co. but exempted people in a low-income program and customers consuming less than 130% of their baseline, which is 50% to 60% of average residential usage, with allowances for climate and season. But other customers will pay more, depending on how much their consumption exceeds the baseline.
Reassessment of the baselines, commissioners said, will not be completed for the summer, when new rate hikes go into full swing, but it could be done by winter. Public hearings are scheduled for July.
Several commissioners acknowledged that an upward adjustment in baselines would bring in less money from utility customers and could create a funding shortfall for future power purchases.
“There is no question [the baseline] is out of whack,” Commissioner Richard Bilas said later. “But if the revenue base falls, where do you get the money? Another rate increase. This is the problem.”
Thousands of consumers contacted the PUC about the last rate increase and hundreds complained about difficulty in achieving their baseline allotments, even when they worked hard to conserve.
Baselines have been used to chart utility bills for the past quarter-century, and they are periodically updated.
The levels vary by area and utility. They are not adjusted by household size. And, critics say, they do not accurately reflect power needs of homes with computers, VCRs and microwaves.
“We heard lots of customers complain it’s not fair,” said Mindy Spatt, spokeswoman for Toward Utility Rate Reform. “For example, if you have lots of children who do not contribute income but use electricity, you could be at a disadvantage.”
Living below baseline may not be easy for many. Spatt, whose baseline for her San Francisco home is 258 kilowatt hours, goes so far as to dry her laundry on a clothesline, but was slightly above 130% of baseline in March.
Bilas’ home in Mendocino County has a baseline of about 280 kilowatt hours and he says he consumes more than 500. “I don’t know how anyone can live on the baseline,” he said. But he added, “I have a hot tub I can turn off.”
