Dive Brief:
- San Diego Gas & Electric (SDG&E) will begin to transition its residential customers to new rates imposed by the California Public Utilities Commission (CPUC) this month, City News Service reports, moving from the current four-tiered structure to a three-tiered structure.
- In Spring 2016, the investor owned utility will move to the two-tiered rate structure ordered in a July ruling by the CPUC.
- To increase customer understanding of the rate reform, SDG&E is providing an explanation of the initial changes on its website.
Dive Insight:
The CPUC voted unanimously in early July to flatten current rates, push for time-of-use (TOU) rates by 2019, and make other changes to how utilities bill.
SDG&E, Southern California Edison, and Pacific Gas and Electric, California’s investor owned utilities, hailed the change as a step toward rate fairness. The state’s utility watchdog condemned the decision, the ratepayer advocate is concerned about impacts on low-income customers, and solar advocates are studying the new rates.
The new structure “fully comports” with the three rate design principles needed to transition to “smart rates” that will lead to “a smart future,” Regulatory Assistance Project Sr. Advisor Jim Lazar told Utility Dive.
The first principle is that customers must be able to connect to the grid “for no more than the cost [to the utility] of connecting to the grid,” Lazar said. “The maximum $10 per month customer charge, after 2018, easily covers the cost of a connection.”
Second, grid services and power should be paid for in proportion to how much and when they are used. TOU rates price electricity higher when it is in higher demand.
Finally, customers should get fair and full compensation for the power they send to the grid. With TOU rates and net energy metering in place, distributed generation owners will pay the appropriate price for electricity but “if they can supply power to the grid at high-cost hours, they will receive higher bill credits.”
