Op-Ed: PUC may short-circuit California’s fair, progressive electricity rate policy
On Wednesday, the Public Utilities Commission will vote on new rules governing how most Californians pay for electricity. The proposal overhauls the rate structure at investor-owned utilities, including Southern California Edison, a structure that was put in place in the wake of the energy crisis to protect low energy users and to encourage conservation and clean energy.
FOR THE RECORD
Electricity rates: A May 18 Op-Ed article said the California Public Utilities Commission would vote May 20 on a proposed rate change at investor-owned utilities. The vote has been delayed for at least 30 days.
If approved, the plan would result in a pricing system that substantially lowers bills for a handful of high energy users and pays for that discount by raising rates on the majority of California households. It also would lower incentives to conserve energy or install rooftop solar. The new rules are out of touch with California’s ambitious clean energy vision and will hurt working families. The proposal deserves fierce pushback from the public and policymakers alike.
Today, electricity prices at the state’s private utilities, such as Edison, Pacific Gas & Electric and San Diego Gas and Electric Co., are divided into four tiers. The more electricity customers use, the higher the tier and the more they pay. This system was put into place to encourage conservation by high energy users. If they heed the economic signal of higher prices, it not only saves them money but also helps protect the environment and maintains a reliable grid. On hot days, for example, electricity supply and its infrastructure aren’t stretched as thin and utilities don’t have to default to expensive (and dirty) power generation or to rolling blackouts to meet the demand.
It is deeply troubling that the commission would consider dismantling this policy. The redesigned rate structure cuts the four-tier billing structure to a two-tier system with a minimal difference between tier one and tier two. Rates in the low tier go up, rates in the upper tier go down, thereby eroding the incentive to use less energy. On top of that, the proposal would open the door to a $10-per-month fixed charge for every household starting in 2019, no matter how much electricity each uses.
The rate structure and the fixed charge would have a major effect on our pocketbooks and on rooftop solar installation. The Public Utilities Commission acknowledges that “the majority of customers’ bills will increase as a result of the rate redesign.” And the increase would be regressive: Low-income households are mostly energy frugal; they will pay more. According to a California Energy Commission study, 41% of high-income households are high energy users; they will see their bills go down.
As for solar installations, according to our calculations, under the proposed new rates and fixed charge, no household would be able to recoup its investment in a solar system in less than 13 years. Customers often turn to solar for bill savings, and these changes would amount to a 25% tax on rooftop solar.
What’s driving the proposal? Monopoly utilities nationwide are struggling to respond to competition from solar companies. Instead of adapting their business model to the 21st century, utilities have launched a lobbying campaign to convince the public and the PUC alike that these changes are in everyone’s interest. We’ve seen time and time again the influence utilities have over the California Public Utilities Commission, and this is no different. Despite objections from ratepayer groups, environmentalists and clean-tech companies, the new plan is pulled directly from the utilities’ requests.
There’s a lot at stake. Clean energy is increasingly important in California’s economy; 54,000 Californians work in solar. That’s more than the number of employees at all three of the major investor-owned utilities combined. Then there’s the climate connection: California can’t afford to tap the brakes on clean energy if we want to meet the state’s climate objectives.
The PUC should put low-income customers and clean energy before special interests and reject this proposal.
Evan Gillespie is the director of the Sierra Club’s My Generation campaign in support of clean energy.
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