Commission Has Option to Fix Broken Residential Rate Structure

An alternate proposed decision would continue unfair rates.

May 26, 2015 | By Lauren Bartlett

Residential customers living in high-temperature areas would receive long-overdue relief from punitive high electric rates under a proposed decision that is being considered by the California Public Utilities Commission, but an alternate would continue unfair rates for those customers.

“High-usage customers who have little alternative to using air conditioning have been burdened with paying a disproportionate share of electric costs due to an unfair sharing of costs by low-usage customers for nearly 14 years since the energy crisis of 2001,” said Russ Garwacki, Southern California Edison (SCE) director of Pricing Design and Research.

“As costs of electric service have increased since 2001, customers who use air conditioning in hotter areas of California and those who have larger families have shouldered nearly all of those increases,” Garwacki said.

The proposal from two administrative law judges that is before the commission would bring customers back to a two-tier rate structure like before the energy crisis. Under the commission judges’ proposed decision, the more electricity that customers use, the higher the price they would pay, but high-usage customers would no longer shoulder nearly all the last decade’s cost increases.

Commissioner Mike Florio issued an alternative to the proposed decision on Friday that would continue unfair rates to those who need air conditioning during the summer. His proposed rates are similar to the crisis rates implemented in 2001.

The current four-rate tiers often result in summer bill spikes, punishing customers for using air conditioning during heat waves. Those customers with larger families, or who live in areas where high summer temperatures last four or more months per year are particularly penalized. A significant number of these customers are low- to moderate-income families with children or seniors on a fixed income.

Two administrative law judges worked through thousands of pages of evidence and heard two dozen witnesses during three weeks of hearings before issuing their proposed decision. SCE had proposed a two-tier rate structure, similar to that recommended in the judges’ proposed decision.

“The commission and the parties all recognize there is problem with the current rate structure and believe it is broken,” Garwacki said. “It’s a question of the degree of change. This alternative decision released Friday does not go far enough. The proposal from the judges positions us for a future that would be fairer to customers.”

Protections for low-income customers would remain in what is known as the CARE (California Alternate Rates for Energy) program. Nearly one-third of SCE’s customers are on the low-income rate where rates are discounted by about one-third. 

SCE also had requested a fixed charge of up to $10 for non-CARE customers and $5 for CARE customers. The proposed decision would allow SCE to propose a fixed charge beginning in 2019, at the end of the four-year period for phasing in the two tiers. The amounts for a fixed charge would be considered in 2018.

“The fixed charge would help pay for the power network we all rely on, regardless of how much energy each customer uses,” Garwacki said. “The fixed charge would be offset by lower energy charges on customers’ bills.”

“If the administrative law judges’ proposal is a fix to the current problem, Commissioner Florio’s alternate decision delays by years the relief customers deserve from the high rate tiers and only would implement a watered down solution that falls far short of fairness for our customers,” Garwacki said. “The alternate proposed decision would essentially maintain the status quo where summer bill spikes that penalize customers for using air conditioning during heat waves would continue.”

Adopting a new residential rate structure won’t result in a change in the overall amount of money SCE collects or the profit it makes; the issue is allocating costs fairly among customers.

Customers are encouraged to learn about how and when to use energy by going to:

Topics: Customer Service