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Paying the actual cost for electric service and contributing equally to maintain the power network are Southern California Edison’s (SCE) goals for a new residential customer rate structure.

The California Public Utilities Commission is evaluating proposals for how to change the residential rate structure, and it is expected to decide on a new structure next spring.

“High-usage customers have shouldered most of the new costs since the current rate structure was put in place during the energy crisis, and as a result, they’re subsidizing low-usage customers,” said Russ Garwacki, SCE director of Pricing Design and Research. “We believe the residential rate structure should be fair — customers should pay for the electric service they get, and everyone should contribute fairly to maintain the power network they all use.”  

Video Credit: Nicholas Roy, Joseph Foulk and Ernesto Sanchez

SCE is proposing a rate structure that more closely reflects the actual cost to provide electrical service to customers. Under SCE’s proposal, the number of tiers would be reduced from four to two, as it was for 20 years prior to the energy crisis. 

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

A fixed charge of up to $10 for non-CARE customers and $5 for CARE customers is recommended. The fixed charge would cover costs for the power network we all rely on, regardless of how much energy each customer uses. Because this proposal doesn't increase bills overall, all money received from the fixed charge will be used to reduce other portions of the bill. Also, because the proposed fixed charge covers less than one-third of the actual fixed costs, the remaining energy rates still provide a significant incentive to conserve.

The current residential customer rate structure was put in place during California’s energy crisis more than a decade ago. This structure resulted in high-usage customers subsidizing low-usage customers. Since the energy crisis, only about one-quarter of SCE’s customers have been paying for most of the investments made to improve electric system reliability and transition California to cleaner energy.

The commission established a comprehensive process for evaluating how to change the residential rate structure. SCE and the other investor-owned utilities are weighing in, as are the Office of Ratepayer Advocates and a variety of other public interest groups.

The commission also is holding hearings throughout California to get customer input about how to change the rate structure. In SCE’s service area, there will be hearings on Sept. 29 in Fontana, on Sept. 30 in Temple City and on Oct. 2 in Palmdale.

Changing the rate structure won’t result in a change in the overall amount of money SCE collects or the profit it makes; under SCE’s proposal, customers would more closely pay for their cost of using the power network and the electricity they use. The issue is fairness among customers.

Customers are encouraged to learn about how and when to use energy by going to: on.sce.com/ratechange.