CPUC changes tier system, implements minimum charge

Last week, the California Public Utilities Commission unanimously approved changes that would move electricity rates from four to two tiers.

“Most residential customers in California will see their electricity bills increase under a new rate structure passed … by state regulators,” reported ABC 7 News. The new plan essentially “raises rates on more efficient users while giving a break to big energy users.”

The tier overhaul was prompted by utility companies and regulators looking to charge based on the actual cost of providing power. According to the San Jose Mercury News, proponents of this new plan argued, “Low-usage customers have essentially been subsidized by high-usage ratepayers under the current system, which has been in place since the electricity crisis 15 years ago, when there was a push to encourage conservation.”

PUC President Michael Picker said in a prepared statement, “Rate reform is necessary to move us into a future where consumers have the tools they need to manage their own energy use, and can install new, clean technologies such as storage and renewables.

“Our decision helps align rates with the actual cost of service. It also builds a more nimble rate structure to allow us to add more and more renewables to the grid, and to encourage customers to use energy when we have excess renewables and to cut back during peak periods.”

The changes would also introduce the following items:

1. Time of use rates: By January 1, 2019, “residential customers will default to time of use rate … but can opt to remain on the tiered rate structure. Time of use rates reflect predictable daily changes in the cost of electricity service, and enable customers to reduce usage during peak hours when electricity prices are higher.”
2. Tier flattening glidepath and new rate structure: “The rate structure moves from four to two tiers with a 25 percent differential by January 1, 2019, and with a Super User Electric (SUE) surcharge introduced in 2017. … Some high usage customers currently paying above the cost of service will experience bill reductions, while some lower usage customers paying below the cost of service will experience bill increases.”
3. Fixed charges/Minimum bill: “The utilities must implement a minimum bill beginning in 2015 of $10 for non- 3 CARE customers and $5 for CARE customers.”

LADWP floats rate hike proposal

In addition, the Los Angeles Department of Water and Power on Wednesday also proposed rate hikes over the next five years.

According to CBS Los Angeles, the proposal would “raise more than a billion dollars for infrastructure repairs, including broken underground pipes and power poles.” The $1.3 billion in new funds would be split, with $230 million going to water projects and $900 million for power projects.

Rates would be increased across all spectrums of energy and water users. “If approved, low water and power users would see an increase of 2.4 percent or about $2 more a month, while average users would see a 3.4 percent increase equating to about $5 more per month. High users, though, would see a 5.4 percent raise, which comes out to about $18 a month.”

The DWP board will not vote on the increase until October; even after approval from the board, it must also be approved by the L.A. City Council and Mayor Eric Garcetti.

In the meantime, the DWP has planned four months of public outreach at business groups, neighborhood councils and other areas. Southern California Public Radio notes that the DWP “must overcome bad publicity from its poor oversight of $40 million given to two trusts run by its employee union, a recently-discovered embezzlement of several million dollars by an employee, and the botched rollout of its new customer billing system.”

Environmentalists who advocated for cleaning up air quality by shutting down old, obsolescent power plants are going to find that renewable power did not, in the long-run, bring about conservation-inducing tiered power rates. Moreover, this consolidation of pricing tiers will bring about the demise of rooftop solar power, which was economic only because the top two tiers for electricity were higher priced than the solar power.

Current pricing model

On April 21, the California Public Utilities Commission announced it was rolling out a new plan that would overhaul electric utility rates.

As shown in the adjacent chart, today, electric utilities charge for power based on four increasing rates.  The lowest rates is 15 cents per kilowatt-hour; and the highest more than double at 31 cents. The CPUC would reduce the price tiers to two and flatten the price difference between the tiers from 106 percent today to 20 percent by 2019.

The result would be that those with higher rates today will have their monthly electricity bill reduced and those at the bottom two price tiers will see their electricity bills increase.

AB327 phases out Top tiers of power rates by 2020

This is the result of California Assembly Bill 327 sponsored by Assemblyman Henry Perea, D-Fresno, which was signed into law by Gov. Brown on Oct. 7, 2013.  However, AB327 still provides for discounts for low-income electricity customers whose electricity bills do not exceed 30 to 35 percent of their income under the California Alternate Rates for Electricity program.

AB327 specifically states that the original reason for the four to five price tiers was to pay off the $42 billion bill accumulated due to the California Energy Crisis of 2001. That bill was loaded into Department of Water Resources power purchases to pump water through the State Water Project (see page 4 here). Conservation was never the primary purpose of the higher price tiers, which were expanded after 2001 so that wealthier customers would mainly pay off the huge debt incurred in 2001 to mothball older, dirtier power plants.

Progressive Pricing Coming to End

Evan Gillespie of the Sierra Club says of the new rate structure:  “It jacks up bills for low-income customers, lets energy hogs off the hook and will slow the transition to clean energy.”

Bottom line for customers in PG&E, Edison, and SDG&E service areas:

• Use very little electricity? Pay more than you did last year.
• Use a lot more electricity? Pay less than you did last year.
• Use an average amount? Pay about the same as last year.

But the era of Progressive pricing of electricity, where coastal ratepayers used 50 percent more power but paid 100 percent higher rates, will be coming to an end in 2020.

Current Electricity Price Structure for Regulated Public Utilities:

By Katy Grimes

SACRAMENTO — A Sacramento couple recently had their baby ripped from their arms at their home by Sacramento Child Protective Services workers, with the help of local police, after telling a Sacramento hospital they wanted a second opinion on treatment for their baby.

According to the family, Anna Nikolayev tried to leave Sutter Memorial Hospital and take her baby Sammy, 5 months old, to another hospital for a second opinion, when she was threatened with a call to the CPS. Sammy was born with a serious heart condition. After a nurse at Sutter Memorial tried to give Sammy medicine that a doctor later explained should not have been administered, Anna became nervous about the quality of Sammy’s care. She expressed her desire to receive a second opinion from another doctor.

Anna Nikolayev said she didn’t like the care Sammy was receiving from Sutter, and felt the doctors and nurses were “pressing us to do surgery.” She was told by the hospital workers, “You are free to leave this hospital, but your baby is not.” The hospital refused to discharge Sammy.  And they notified the CPS.

Anna put Sammy in his stroller, left Sutter Memorial and went directly to Kaiser Hospital. She met with a doctor there who said Sammy was free to go home, and didn’t need immediate surgery. The second doctor wrote that Sammy was cleared to go home with his parents. “I do not have concern for the safety of the child at home with his parents,” the Kaiser doctor wrote in the medical release from the hospital.

CPS shows up

The next day, CPS and the police showed up at the family’s home, claimed they had a warrant and the authority to take Sammy. Anna asked to see the warrant, but the authorities wouldn’t show it to her. What they had was a CPS order, generated in their offices, not a court order signed by a judge.  Thanks to Anna’s quick thinking, there is a home video of this abusive government action, in which one police officer can be heard telling Anna, “I’m going to grab your baby and don’t resist and don’t fight me, okay?”

Second doctor’s note

The Nikolayevs showed police the note from the second doctor, but to no avail. Police forced Alex Nikolayev to the ground. “This is like living under communist regime,” Nikolayev told News 10 the next day, as shown in the above YouTube. He and Anna are immigrants from Russia, which for 74 years was run by a communist government.

CPS took the baby away, claiming “severe neglect.” Sutter Memorial released a media statement explaining the qualifications of the doctors and nurses, but said, “Our nurses and physicians are bound by law to call Child Protective Services if they believe a pediatric patient’s health is in danger.”

Lawmaker wants audit of CPS

Assemblyman Donnelly is now demanding an audit of Child Protective Services.

Donnelly first contacted a Deputy Director at CPS. “The first question I asked them is, ‘Are these parents abusive? Do you suspect that they are guilty of neglect or something along those lines.’ And they said, ‘Absolutely not; 99.9 percent these are just normal parents.’ And I said then, ‘What the Hell are you doing?'”

Donnelly said CPS told him, “We don’t answer to Assemblymen.”

Donnelly wrote a letter to Sherri Heller, CPS Director, demanding to know under what authority was CPS acting by removing Sammy from the Nikolayev home for seeking a second medical opinion.

Heller responded to Donnelly in a two-page letter filled with legal codes justifying the CPS decision to take the Nikolayev baby:

“The law is clear: if there is imminent risk of serious harm to the child and there is insufficient time to obtain a court order to remove the child from the care of the parents, the social worker or law enforcement officer can remove the child. The legal term is ‘exigent circumstances.’…

“The laws and policies that guide agency practice are designed to ensure that there are adequate protections for the rights of everyone involved, while placing priority on children’s health, safety, and well-being.” 

“I am shocked and appalled an agency of Sacramento County would go so far to remove a child from the care of his able and loving parents,” Donnelly said.

On June 5 at 9 a.m. there will be a rally for the baby on the South steps of the State Capitol led by Donnelly. After that, he will lead a 10 a.m. hearing to audit the policies and procedures of the Sacramento County Child Protective Services regarding child seizures.