San Francisco, CA — A statewide process to change the way Californians are charged for their energy will take another step towards completion on March 1. The goals of the changes are to help ensure the price customers pay for energy is more closely aligned with the cost of providing them with safe, reliable and clean energy service, to simplify rate structures and to encourage energy conservation.
The process to modernize and simplify California’s electric rate system aims to balance rate tiers and eventually moving to a time-of-use rate structure. These changes were developed jointly between PG&E and the California Public Utilities Commission (CPUC) and supported by many consumer interest groups.
What is happening
The March 1 changes will simplify the structure for Pacific Gas and Electric Company’s (PG&E) rate plans:
Reducing the number of tiers from three to two tiers, to simplify the rate structure.
The introduction of a High Usage Surcharge to encourage energy conservation.
In addition to the structural changes, electric transmission rates will increase on March 1, with residential customers seeing a 2.1 percent increase in this portion of their bills. Even with these increases, PG&E customers’ bills are still below the national average, based upon the most recently available data.
Why is it happening
The current electric rate structure was established during the 2001 energy crisis. It’s outdated, complex and confusing for customers.
For years, in order to encourage energy conservation and efficiency, the costs of PG&E’s service to maintain the energy grid and ensure reliable electricity service were disproportionately placed upon customers who found themselves in the higher tiers – most often impacting those who live in hotter climates.
While conservation and efficiency programs have been and continue to be very successful, the electric rate structure resulted in an imbalance between how customers in the lower and higher tiers pay for what it costs to provide them with service.
How changes impact customers, support a cleaner California
The March 1 changes may help those who find themselves in higher tiers due to the need to cool their homes during hotter months. After the changes are implemented, customers who need to use more energy may see lower bills, while customers who typically able to use less energy may see higher bills.
“Since 2010, KernTax has advocated for these types of structural rate changes. We are pleased to see meaningful progress towards a more fair and equitable electric rate system. KernTax will continue to work with PG&E, the CPUC and others to make sure that the goals to more closely align the costs we all pay for energy is reflective on what it costs to deliver that service to customers, regardless of climate zone, are reached,” said Michael Turnipseed, executive director of the Kern County Taxpayers Association, one of the consumer groups that supported these changes.
These changes are designed to support California’s ambitious clean energy goals to combat climate change. Customers who use more than four times the baseline amount of electricity will receive a High Usage Surcharge. The baseline amount of electricity for each customer depends on their location, the season and their home heating system. Less than 10 percent of residential customers will likely incur the High Usage Surcharge. The surcharge:
Only applies to customers on PG&E’s tiered electric rate plans.
Is intended to encourage energy conservation among customers whose electricity use is significantly higher than typical households.
“We understand that any change to the way our customers are accustomed to being charged for energy may cause some questions. We want all of our customers to know that we’re here to help them understand these changes and manage their energy costs. We offer new rate options as well as free programs and tools to help customers take control of their energy use and make smart choices,” said Deborah Affonsa, vice president, Customer Service, PG&E.
Ways to take control of energy use
The most powerful tool customers have at their disposal to