SDGE Proposes Rate Change
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November 6, 2009 – SDG&E wants to increase rates for customers that use less energy and decrease the rates for those who use the most energy. San Diego Union-Tribune staff writer Onell Soto explains the plan.
Related story: SDGE Proposes Rate Change
GLORIA PENNER (Host): San Diego Gas and Electric is proposing a rate change that has local residents scratching their heads. The utility wants to charge a higher rate to the people who use the least electricity while lowering the rates for the customers who use the most. Here to explain why SDG&E has proposed the rate change is Onell Soto, staff writer for the San Diego Union-Tribune. What is the reason SDG&E gives for proposing this change? ONELL SOTO (Union-Tribune): It goes back to 2001 and the energy crisis; the Legislature froze the rates at that point for the lowest energy users. But as you use more energy, those rates were not frozen and so they went up. The costs have gone up significantly since then and all the rate increases have gone to the tiers, there's a tier basis for this. They've gotten out of whack. SDG&E says they need to bring the rates in line and this was actually a compromise, they had wanted to get rid of the tiers all together. This was a compromise that consumer groups joined them on that said "OK, we'll raise them up a little bit, five percent a year or so, and we'll lower the higher ones to bring them closer in line with what electricity actually costs." PENNER: That is really interesting -- so that if I'm a big electricity user, I'm actually going to see a drop in how much I pay overall? SOTO: You may see that. The other part of this is that SDG&E is asking for a rate increase for fire liability insurance, but it also says that electricity has gotten cheaper to get, so it's asking for a drop on that. We don't, they haven't calculated how it's all going to work out, but yes, your bill would go down if you use a lot of electricity. Your bill would go up if you don't use very much. PENNER: So it appears as though low energy users like people who work hard at conserving or have solar are actually being penalized. SOTO: They are going to have to pay more money, but they have been getting electricity for less than it costs to produce and they'll continue to get electricity for less than it costs to produce. PENNER: How can SDG&E make any money if it costs more to produce the energy than people are paying for? SOTO: Because they've been charging the people at the higher end that extra money. So just to put it into perspective, when this went into effect in 2001, the tiers were 13 cents for the lower tier and 15 cents for the higher tier. Today, it's 13 cents for the lower tier, 33 cents for the higher tier. All the increases have gone on the higher tiers. PENNER: What are businesses saying about this? Because it seems to me that they're going to benefit from this because I'm sure they're using more energy let's say than a homeowner who lives all alone in a little cottage. SOTO: Well, this is adjusting the residential rates, it's not the business rates. PENNER: Not the business rates, OK. SOTO: So the business rates, they've already been dealing with the rate increases overall and they haven't had that locked in. PENNER: OK, and the residents and the business owners who -- you're not talking to the business owners -- what do they have to say about this? SOTO: Well, they have been fairly vocal on this. PENNER: They have? SOTO: They feel like this is a penalizing of them, like their efforts at trying to save electricity haven't paid off, like they're being penalized for having saved electricity. Although I have seen some residents say that they support this idea. It all depends on where you fall in the energy usage perspective. And another part of the way these rates are structured, another impact of it is, if your electricity -- one month you might be on the lower end, another month, say there's a heat wave, you're going to be on the higher end and your bill might be double or triple what it usually is. PENNER: Just very quickly Onell, do you expect that the Public Utilities Commission's going to go for this one? SOTO: They have indicated that they like this idea. So I would be surprised if they didn't go, but I never predict what the PUC is going to do. PENNER: Well thank you very much, Onell Soto. SOTO: Thank you.