The Sacramento Bee: California overhauls electricity pricing; rate hikes likely for many

Business & Real Estate
By Dale Kasler
dkasler@sacbee.com
July 3, 2015

• Biggest restructuring in 14 years for electricity ratepayers
• Move affects PG&E, Edison, San Diego
• Higher rates for up to 40 percent of customers

Regulators overhauled the state’s system for pricing electricity for millions of Californians on Friday in a move that they said will simplify the structure and bring rates closer in line with costs. Many customers who use the least amount of energy will probably see rate increases, but regulators said the system will be more fair.

The Public Utilities Commission voted 5-0 to approve the most significant restructuring of electricity pricing since the Legislature froze rates for many customers during the 2001 energy crisis.

The decision affects electricity customers of Pacific Gas and Electric Co., Southern California Edison and San Diego Gas & Electric Co. Although it will affect Yolo County and wide swaths of Northern California, it won’t affect the Sacramento Municipal Utility District or Roseville’s city-owned utility.

Michael Picker, president of the PUC, said the new structure could generate increases of about $5 a month for as many as 40 percent of three big utilities’ ratepayers, “but we really don’t know … . It’s a real grab bag as to how this is going to play out.”

Picker said the commission didn’t approve new rates Friday. Rather, it adopted a general structure, to be phased in over four years, with the exact details to be fleshed out by the PUC after hearing proposals from the big three investor-owned utilities.

“This is just a set of design changes,” Picker said in an interview. “(The utilities) will have to file stuff with us.”

The biggest change will be a flattening of rate tiers, which will narrow the price gap between the heaviest users and those who consume the least electricity. The result will likely be rate hikes for many of the lowest users.

The PUC’s reasoning? The Legislature froze rates in 2001 for the lowest-tier users, and since then costs have risen to the point that some of those users are paying below their actual cost. In that same time, prices have risen considerably for many customers who use more electricity. That “imposed ever greater inequities on large-family households that were pushed into higher tiers in hot climate zones,” the PUC said.

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