Rising electric rates spark CA fight

by James Poulos | June 1, 2015 7:32 am

[1]A new plan under consideration by the state Public Utilities Commission has Californians up in arms over the prospect of higher rates for less electricity usage.

Dueling schemes

“Under the current rules, homes served by Southern California Edison pay higher prices for higher electricity use. That would still be true under the new rules, but the pricing differences wouldn’t be nearly as stark, with costs rising for those who use the least and falling for those who use the most,” the Desert Sun reported[2]. “The new rules would also mandate a minimum bill for all residential consumers, set at $5 for some low-income customers and $10 for everyone else.”

The proposed pricing system resulted from a prolonged research effort. Both the PUC and the utilities that would be affected by the change quickly moved to rebut criticism. “Utilities have framed the proposed changes as a matter of fairness, arguing that above-average energy users are currently subsidizing below-average energy users,” the Sun noted. “High-end users, the thinking goes, are paying more than their fair share to maintain the electric grid, while low-end users are paying less than their fair share.”

The PUC will have to keep working if it wishes to reach a unanimous consensus on its own proposal, however. One commissioner, Mike Florio, has put forth a much different plan, backed by the alternate energy and environmental advocacy groups that dismissed the PUC plan.

“I’m concerned the tier flattening of the Proposed Decision shifts too many costs from high-usage to low-usage customers,” Florio said[3] in a statement. “Low-usage customers typically have fewer means of conserving; their consumption is already limited to basic needs.”

Activists were cautiously optimistic that Florio could have an outsized influence, perhaps nudging the PUC to consider making revisions to the dominant plan. As Utility Reform Network staff attorney Matthew Freedman told[4] the Sun earlier this month, “I’d like to say there was an audible gasp from the utilities, but there was not. From our perspective, it’s very encouraging to see that there’s an alternate on the table.”

Golden Staters worried about their fate will be kept in suspense for at least another month. “The California Public Utilities Commission will consider both options and a decision is not expected until the agency’s June 25 meeting at the earliest,” according[5] to the San Gabriel Valley Tribune.

Opening greener markets

The debate has played out over a high-profile spike in energy technology — a marked turnaround from the days of Solyndra’s bad PR and ultimate failure. For that, California has owed Elon Musk, the serial entrepreneur who recently unveiled Tesla’s new “Powerwall” home battery units.

Nevertheless, as the Wall Street Journal observed, the market for home batteries hasn’t expanded quickly. “Even Mr. Musk concedes the battery doesn’t make much economic sense right now for individual homeowners; grid power is still cheaper than solar-battery combinations. But a trend toward sharply higher electricity prices may change that,” the Journal noted[6]. “The cost of traditional grid power is rising, while solar power costs are plunging.”

In his book on successful ventures, Musk’s fellow superstar entrepreneur Peter Thiel has argued that startups should seek monopolies in areas where robust, competitive markets do not yet exist.

Faced with the proposed changes to California electrical rates, environmentalists have claimed that electricity providers are jacking up rates to head off big losses to cheaper solar. “Monopoly utilities nationwide are struggling to respond to competition from solar companies,” argued[7] the Sierra Club’s Evan Gillespie in the Los Angeles Times. “Instead of adapting their business model to the 21st century, utilities have launched a lobbying campaign to convince the public and the PUC alike that these changes are in everyone’s interest.”

Source URL: https://calwatchdog.com/2015/06/01/rising-electric-rates-spark-ca-fight/

---