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California Regulators Pass Higher Electricity Rates For Most Customers

Most California residential customers will see their electricity bills increase under a new rate structure passed Friday that raises rates on more efficient users while giving a break to big energy users.

The Public Utilities Commission unanimously approved the plan, which applies to the 75 percent of residential customers who get their electricity from Southern California Edison, Pacific Gas & Electric Co. and San Diego Gas & Electric Co. The investor-owned utilities serve more than 30 million people through more than 10 million accounts.

It is the first overhaul of the rate system since brownouts roiled California 15 years ago. Legislators at the time capped costs on basic use to protect households from huge swings in energy bills, prompting utilities commissioners to expand usage tiers and capture more money from higher users.


The new proposal reduces the current four-tier rate structure to two tiers, plus a surcharge for the highest electricity users.

Utilities have long complained that the steeply-tiered system means higher-use households have unfairly subsidized low-use households for years. They say that the gap has only increased, with low-use households not even paying for the cost of supplying electricity.

"It has no basis to cost, which is one of the central principles of rate-paying. Sometimes the good idea of the past lingers too long and the world changes," Public Utilities Commission President Michael Picker said.

More than a dozen people testified Friday, urging commissioners to adopt an alternative by Commissioner Mike Florio, which would have more greatly rewarded low-users. Florio, however, backed off his proposal in favor of a last-minute compromise approved Friday.

It's uncertain how many low-use households will see their bills increase because of Friday's vote. Ratepayer advocacy groups said they did not have enough time to analyze the new proposal.


But Mike Campbell, program director of the Office of Ratepayer Advocates, said he expects the majority of customers to see their bills go up, based on numbers from earlier proposals.

A previous analysis showed that at least 71 percent of PG&E customers and 100 percent of Southern California Edison customers would have seen monthly bills increase at least 10 percent under Florio's plan. Roughly 50 percent of customers of all three utilities would have seen bills increase at least 20 percent.

Russ Garwacki, director of pricing design and research at Southern California Edison, which serves 14 million people through 5 million accounts, said earlier in the week that the change will add "a few dollars" to a monthly bill while those who need to use electricity will see some relief.

"We're trying to make things more affordable for those upper-use customers because they are paying far more than their share," he said. "It's a matter of fairness."

Households receive a baseline of electricity at a low cost based on climate and season, but not on household size. Anything above that is charged at higher rates.

Utilities commissioners seemed unconvinced that household income correlates to energy use. They said wealthier households can afford to put in solar panels, and thereby reduce electricity use, while larger families may be stuck in high-temperature zones or apartments without built-in energy efficiencies.

The rate structure does not affect low-income customers who qualify for deeper discounts.

Environmental and consumer advocates, including the Sierra Club and The Utility Reform Network, expressed disappointment Friday. They criticized the Public Utilities Commission for presenting a revised proposal late Wednesday and voting Friday, which is a federal holiday, although not a state holiday.

In 2000, California's energy crisis prompted lawmakers to put in protections. In 2013, state lawmakers lifted many of those restrictions, allowing utilities to propose new rates.

The two tiers, with a price difference of 25 percent, are expected to be in place by 2019, as is a surcharge on the greatest users.

The plan adopted Friday also calls for pricing based on the time of use of electricity by 2019.