California’s utility companies have unveiled a plan to allocate $1 billion to a statewide charging station program, designed to meet the state’s rigorous emissions standards and extend the reach of electric and hybrid vehicles throughout the state. 

“Three major California utility companies are following the lead of the state’s clean transportation and emission-reduction goals by offering multiple programs to promote EV adoption by citizens and deployment by public and private agencies,” Digital Trends reported. “California Electric Transportation Coalition members Pacific Gas and Electric Company, Southern California Edison and San Diego Gas & Electric submitted applications to the California Public Utilities Commission for a variety of significant programs. All of the programs are aimed at moving the state closer to its zero-emissions vehicle goals.”

Keeping up with change

But environmentalist plans have not been the only driver of the state’s broad push toward more alternative energy-fueled transportation. Driverless vehicle technology, which could soon transform the business models of shipping and automotive companies, pairs naturally with zero-emissions technology. But the regulatory landscape, even in California, has not changed as swiftly as technological advances have progressed. 

“The overall goal is to facilitate the addition of tens of thousands of plug-in vehicle chargers at homes and businesses across the state, while further spurring the adoption of electric vehicles, particularly as a replacement to gas- or diesel-powered delivery trucks or buses,” Autoblog noted. “As it is, California accounts for almost 12,000 of the approximately 40,000 publicly accessible plug-in charging outlets in the country, according to the U.S. Department of Energy.”

Bigger batteries

In pushing for an all-in approach to rechargeable technology, California’s utilities sharpened a two-prong approach to the opportunities and challenges facing the state on alternative energy. While the widespread use of charging stations could help swiftly drive Californians toward the economic lead in new transportation infrastructure, utilities officials have also focused in recent years on trying to achieve a breakthrough in the stubborn problem of scaling up battery storage to meet state needs.

State engineers, the New York Times recently reported, “brought three energy-storage sites close to completion to begin serving the Southern California electric grid within the next month. They are made up of thousands of oversize versions of the lithium-ion batteries now widely used in smartphones, laptop computers and other digital devices.”

“One of the installations, at a San Diego Gas & Electric operations center surrounded by industrial parks in Escondido, Calif., 30 miles north of San Diego, will be the largest of its kind in the world, developers say. It represents the most crucial test yet of an energy-storage technology that many experts see as fundamental to a clean-energy future. Here, about 130 miles southeast of Aliso Canyon, the site of the immense gas leak in 2015 — the global-warming equivalent of operating about 1.7 million cars over the course of a year — 19,000 battery modules the size of a kitchen drawer are being wired together in racks. They will operate out of two dozen beige, 640-square-foot trailers.”

What’s more, the paper noted, former longtime state energy policy czar Susan Kennedy has been “keeping a close eye on the Southern California battery efforts,” although the energy storage startup she now runs did not participate in the Aliso Canyon project. 

Shifting sales

Beyond environmental or technological justifications for its new charging station plans, California’s utilities have simple self-interest in play as well. “The utility industry is looking to electric car-charging as one of the few areas of growth as the increased use of rooftop solar panels and energy-efficient appliances weakens power sales,” Automotive News observed. “Last month, regulators approved a scaled-down version of PG&E’s plan to invest in charging stations.”

Beginning 13 years ago, CalPERS invested heavily in real estate at the height of the housing bubble. From 2003 to 2006, the pension fund committed $46 billion to real estate investments, including ambitious projects in New York City and Sacramento that eventually went haywire. The result: In the year ending Sept. 30, 2009, CalPERS lost a stunning 49 percent of the value of its real estate portfolio. A November story in the Los Angeles Times depicted the nation’s largest pension system as only now digging its way out its disastrous investment choices in real estate.

Last week, CalPERS announced it would buy up to a 25 percent ownership stake in the 550-megawatt Desert Sunlight solar project near Joshua Tree National Park in eastern Riverside County, which was until recently the world’s largest solar plant.

CalPERS did so despite taking a bath on its clean energy investments in the 2014-15 fiscal year. However, analysts said that year was an outlier because of the abundance of cheap oil distorting energy markets. Meanwhile, there are many reasons investors are attracted to major solar projects, starting with the fact that state laws require utilities to buy steadily more renewable energy and that solar power technology used in large projects steadily grows more advanced.

Utility think tank warns of ‘potential obsolescence’

But the downside is that making such investments amounts to betting that the status quo of electricity distribution won’t change much in coming years. Among those who question that premise are those with the most to lose from a change in the status quo: the nation’s utility companies. As solar power technology steadily grows more advanced on a small-scale as well as an industrial scale, the huge surge in solar panels on homes and businesses has led a think tank financed by energy utilities to question to issue a harsh warning:

If demand for residential solar continues to soar, traditional utilities could soon face serious problems, from “declining retail sales” and a “loss of customers” to “potential obsolescence,” according to a presentation prepared for the group. “Industry must prepare an action plan to address the challenges,” it said.

That’s from a Washington Post story last year headlined “Utilities wage campaign against rooftop solar.”

A September report in Forbes magazine included an interview with John Berger, CEO of Houston-based solar company Sunnova, who said utilities have plenty to worry about. “Residential solar has already become conventional energy,” Berger told Forbes. “The future will be baseload natural gas and residential solar. The coming solar boom will be just as big and important as the shale gas boom.”

Meanwhile, at least eight battery technologies offer the promise of storing solar power by day for use at night — the biggest obstacle to rooftop power largely supplanting the conventional electricity grid.

CalPERS’ investment in the Riverside County project may look safe now. But in coming years, it may look like a “solar bubble” mistake as small-scale solar takes off.

Under a new proposal put forth by Assemblyman Mike Gatto, D-Glendale, the new chairman of the Committee on Utilities and Commerce, the CPUC — long under fire for alleged lapses and mismanagement — “would be broken apart with many of its duties distributed to other state agencies,” U-T San Diego reported. Gatto, the paper detailed, “would place an initiative before voters as soon as November that would remove the commission’s regulatory authority from the California Constitution, effective July 1, 2018.”

Joined in the initiative by Assemblymen Scott Will, R-Santa Clarita, and Marc Levine, D-San Rafael, Gatto lambasted the CPUC’s performance. “The people of California are deeply concerned by the CPUC’s failures in recent years,” he said, according to California Newswire. “You have folks in the Bay Area justifiably concerned after a pipeline explosion, Orange County worried about nuclear waste, Sacramento and the Central Valley on edge with oil trains, and of course, Angelenos deeply concerned after a gas leak.”

The L.A. neighborhood of Porter Ranch has been sent reeling by massive emissions from a recent pipe rupture. The ordeal has added to a full plate of woes for the commission; “response to the San Bruno pipeline explosion in 2010 and the 2012 closure of the San Onofre Nuclear Generating Station have become the subjects of criminal investigations by state and federal prosecutors,” the Los Angeles Times observed.

Solar squabbles

The CPUC also recently ruffled feathers with a hotly contested vote on the way solar power is metered relative to traditional power. The commission cast its lot with the solar industry in “a dramatic 3-2 vote that saw two commissioners change their minds after a last-minute development favorable to the rooftop solar industry,” as the Desert Sun reported.

“The decision will require Southern California Edison and other utilities to keep paying solar-powered homes and businesses full retail rates for the electricity they generate. In an 11th-hour revision announced by Commission President Michael Picker on Wednesday, it will also ensure that solar customers don’t have to pay for the upkeep of transmission lines. The solar industry cheered that change, even as it prompted two commissioners to vote against a decision they said they otherwise would have supported.”

The move left some aggrieved. State “ratepayer advocates and the utilities, which lose out on electricity sales and some of the infrastructure costs that are bundled into retail rates, say that solar customers put an undue burden on nonsolar customers, who must make up that shortfall,” the New York Times noted.

Mustering support

Faced with news of Gatto’s plan, the commission signaled its hopes to forge ahead on the basis of support from other lawmakers. CPUC spokeswoman Terrie Prosper acknowledged “there is still much to do,” but added, “we look forward to working with the Legislature on any constructive and helpful reform initiative that is put forward,” as the Times reported. “Only by working together on real changes that have the ability to succeed can we make the CPUC stronger and more efficient, and our relationship with the Legislature more productive,” she said in a statement.

One bulwark for the commission has been the governor’s office. “Last year, Gov. Jerry Brown vetoed six bills that would have changed how the commission conducts business,” KQED recalled. “Three bills by now-Assembly Speaker Anthony Rendon would have established new oversight measures on the commission.

“Another of the vetoed bills, by state Sen. Mark Leno, D-San Francisco, would have tightened rules on private communications between utility executives and state regulators. It also would have tightened conflict-of-interest rules and limited the CPUC president’s powers. And two bills from state Sen. Jerry Hill, D-San Mateo, would have set performance criteria for the agency and included commission meetings in transparency laws.”

As yet, the station noted, Gov. Brown’s office has not offered comment on the Gatto scheme.

The Los Angeles Times also reported on how solar subsidies often amounted to a transfer of funds from the state government to very wealthy Californians.

As the understanding grows that green energy policies create political winners and losers, a new U.S. Energy Information Administration report shows how rapidly California is advancing with solar power:

Solar generation from utility-scale facilities (capacity of 1 megawatt [MW] or greater) hit a monthly record high of 2,765 gigawatt hours (GWh) in June 2015. The June 2015 solar generation level represents a year-over-year increase of 35.8 percent relative to June 2014. …

Most of the growth in U.S. utility scale solar generation is in California. In June 2015, well over half (56.5 percent) of total solar generation came from plants in California. Arizona (13.4 percent), North Carolina (6.7 percent), Nevada (6.4 percent), and New Jersey (3.3 percent), respectively, followed California as the largest solar contributors to the grid.

But it’s not the utilities building “utility scale” solar facilities. It’s usually multinational corporations setting up solar facilities in the expectation that Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric will buy their electricity to meet the state’s ever more ambitious goals for renewable-energy generation.

The utilities still have enough influence that they managed to persuade the California Public Utilities Commission to adopt a new pricing structure in July that made individual homeowners and businesses that have installed solar panels pay more toward maintenance of the state’s electricity grid.

Utilities: Part of ‘green industrial complex’ or not?

This would seem to presage a future in which power utilities are part of a “green industrial complex” that conservative publications have long warned of — companies and institutions which seek to profit from government environmental mandates that appear popular in red states and blue states alike.

But that’s not how the nation’s investor-owned utilities think the end game of current green politics are likely to play out. As The Washington Post reported earlier this year, it had obtained secret documents from the Edison Electric Institute, a utilities trade group that believes that the growth of renewable energy is an existential threat — not something that can be gamed by rent-seeking with regulators and state legislatures:

If demand for residential solar continue to soar, traditional utilities could soon face serious problems, from “declining retail sales” and a “loss of customers” to “potential obsolescence,” according to a presentation prepared for the group. “Industry must prepare an action plan to address the challenges,” it said.

That action plan so far has focused on getting state utility regulators to make solar-panel owners pay more toward maintenance of the electric grid — an effort that worked in California but that the Post notes hasn’t worked well in most states.

So whom might the utilities find common ground with in their fight against a solar power future? As complaints from urban Democrats in the Legislature suggest, an obvious candidate is lawmakers who understand that cleaner power is usually costlier power.

So far in California politics, the factions that make up the Democratic coalition have managed to stay on the same page on the biggest issues of the day. But if utilities begin to use their clout to warn that poor people are hurt by AB32-style policies — a potentially potent argument in the state with the highest effective poverty rate — that could roil and possibly recast the politics of the Golden State.

“Buildings built in California starting in 2016 will have to comply with the nation’s toughest energy conservation standards,” the Central Valley Business Times reported. “The California Energy Commission has unanimously approved building energy efficiency standards that it says will reduce energy costs, save consumers money, and increase comfort in new and upgraded homes and other buildings.”

In single-family homes, that would amount to a drop in energy use by almost a third, relative to 2013 standards, the CVBT noted.

Cost and consequences

The New Residential Zero Net Energy Action Plan, as it has been dubbed, aimed “to establish a robust and self-sustaining market so that all new homes are zero net energy (ZNE) beginning in 2020.” Critics have reiterated longstanding objections to a statewide push of this kind, especially around the prospect of rising energy costs.

“The most complex issue will be valuing the homes, which will cost more upfront,” according to Greentech Media. “Currently, the CPUC is quoting an extra $2 to $8 per square foot after incentives. There will likely need to be incentives or creative utility billing, especially if the homes are providing demand-side services as the CPUC envisions. The CPUC says that the utilities are on board and will have to evaluate locational benefits of having net-zero homes on the system.”

As Greentech Media noted, planners have built in some would-be loopholes designed to make progress on ZNE without imposing the new standards too quickly: “Homes can be ZNE-ready, rather than actually being energy-neutral. That could mean they are solar-ready, for instance, but perhaps don’t have solar panels already installed.”

But even supporters of the plan have cautioned that executing on its goals may be a daunting challenge. At the Huffington Post, one analyst noted, “as California’s clean power goals rise, new capacity could begin to slow.”

“Some planned large projects are now on hold due to financial problems. Others face environmental challenges, such as threats to bird flyways and desert habitats. Large-scale solar plants, particularly those using solar thermal technology, are losing appeal to investors as photovoltaic panel prices plunge. And utilities, having largely reached their current renewable procurement targets, have few new projects in the pipeline. What’s more, the federal solar investment tax credit program for new utility projects drops from 30 percent to 10 percent after 2016, and ends completely for individuals.”

Unifying the grid

Nevertheless, optimism among policymakers and activists has remained high — largely because of the role of technological innovation centered in California. Apple and Google have embarked on so-called “grid-scale” renewable energy projects, while Tesla has pushed into the home energy storage business.

But some experts have implied that the problem of rising energy costs could best be addressed by linking up the net-zero energy industry with the zero-emission automobile industry. “A recent California study estimated that utility companies could earn $2.26 to $8.11 billion in net revenues from large-scale commercialization of EVs,” as reported in Fortune. “This is sufficient to allow utilities to invest both in installing charging infrastructure and return some of the revenues to their customers in the form of lower rates.”

By supplying ubiquitous EV charging stations, observers surmised, utilities could eventually recoup electrical power from cars embedded into the same flexible grid as homes. “The value of having a flexible load on the grid will grow even further with higher amounts of wind and solar,” Fortune continued. “Electric vehicles can be programmed to charge during peak solar or wind generation periods, preventing this valuable electricity from being wasted. In the future, electric vehicles could increase their value by putting electricity back into the grid as well[.]”

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. “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 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 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 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. “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 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.”

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:

The fees are owed on service to prepaid wireless customers in California from 2005 to 2012. The money is earmarked for the state’s public purpose program, which applies subsidies and discounts to six designated groups and programs.

The telecom giant has agreed to pay the $11 million, which includes accrued interest. The commission has twice this year considered the issue, then dropped it at the last minute.

Verizon for years has disputed the debt, although the company in 2009 made a payment of $44,957, records show.

The plain fact is that Verizon “didn’t think that the surcharges applied to them,” said Christopher Chow, a spokesman for the Public Utility Commission. “This is a proposal that they provided to satisfy any claim the [commission] has. And this would avoid further action from the commission.”

Verizon declined to comment.

Disputed user fees

The fee in question shows up on a customer’s phone bill as a surcharge of varying percentages for each of the six programs the money subsidizes. That percentage ranges from 2.4 percent to provide discounted or free services to low-income households to .35 percent for a fund aimed at ensuring phone service costs are the same in rural and urban areas.

The latter fee was established in 1996 with the goal of “promoting affordability of basic telephone service in high cost areas.”

An Associated Press inquiry found in 2007 that the arrangement forced cell users to subsidize land-line phone service even in upscale areas like Malibu.

At that time, a representative of the utility commission’s ratepayer advocacy office said that particular subsidy should be eliminated.

The dispute between the state and Verizon began when a state audit in 2008 discovered the utility had failed to remit some user fees, including those collected on prepaid wireless services. Verizon claimed those revenues were not taxable. According to a utility commission narrative of the case:

“Although Verizon submitted a partial payment in response to the audit findings, Verizon refused to pay the unpaid surcharges for its prepaid wireless services. Verizon continued to maintain that prepaid wireless services were exempt from surcharges as concluded by the … audit.”

It is the provider’s responsibility to remit collected fees to the state and does so using an web-based filing system.

Others on the hook for public purpose fees

As the state notified Verizon, it also became aware that TracFone had failed to remit public purpose money.

TracFone’s fracas with the state dates back to 2003, when it claims it was told the sale of prepaid wireless phone cards were not subject to public purpose fees.

The state came back in 2009 and advised that the cards, used for intrastate calls, were indeed subject and that TracFone owed money for unpaid public purpose fees since 2003.

After prolonged negotiations, the Public Utility Commission found in 2012 that TracFone was on the hook for the money – $24 million in back fees.

Verizon agreed shortly after that decision that it would pay its money owed, according to state spokesman Chow.

TracFone has paid the $24 million but has asked the utility commission for a rehearing on its case. No meeting has yet been scheduled.

For Verizon, the pending payment – which has not yet been disclosed to investors, according to a review of SEC filings and investor meeting transcripts – is one more hit in California.

Last month Verizon agreed to pay $3.4 million to the Federal Communications Commission to settle a complaint about a service outage in northern California that left 750,000 residents without 911 services for several hours in April 2014. The commission estimated that 6,600 911 calls went unanswered, “although, fortunately, it  appears that no one died as a result,” the agency noted in a report.

Nationally, Verizon tops the list of service disagreements with customers that end in arbitration.

Ratepayers “pick up the slack”

Wireless users in California pay 16.04 percent in taxes and other fees, the 25^th highest in the U.S., according to mywireless.org, a consumer advocacy group.

Verizon’s failure to remit its fees means “other ratepayers have to pick up the slack,” said Chris Ungson, program manager at the state’s ratepayer advocacy office.

“What happens is that the rates, which are set every year, are set higher because of that failure to remit.”

A representative for mywireless, the Washington, D.C.-based group that claims to represent wireless users, declined to comment.

Ahhh. SMUD wants to prepare rate payers for the future. I know that I feel better about my $370 electric bill.

This is the garbage bureaucrats think will pass muster with rate payers. Last year at this time, my electric bill was about $100 less. The same has happened with my PG&E bill – both are inexplicably higher, and during a much warmer, dryer winter.

For your reading pleasure, I’ve copied the entire “2012 Rate Restructuring: frequently asked questions.” I’ve added a few of my own thoughts and comments (in red), where the SMUD creative writing surpassed even Harlequin Romance novel standards.

Reader Warning: Be careful – you may need a barf bag before you finish. I hope SMUD didn’t pay a PR firm to write this drivel.

“Rate Restructuring,” in the words of SMUD:

Why is SMUD proposing to restructure its rates? 
SMUD wants its rates and charges to better align with the costs they are meant to reflect, including the cost of electricity and the cost of maintaining the infrastructure that supports a reliable power-delivery system. Proposed changes would move charges closer to that ideal. The “ideal” of a reliable power delivery system involves proposed changes that involve higher rates. I get it. 

For small commercial customers, a key part of the proposed restructuring is to have rates better reflect the cost of electricity when it is used. This would encourage customers to reduce usage during the summertime hours of peak demand, when electricity is most expensive. Read the general manager’s report on rates and services.

The small commercial customer will take the biggest hit – as usual. They don’t have high-paid lobbyists or big unions to fight back. And don’t forget the rate payers in higher socioeconomic zip code areas.

Given all of the subsidies, discount programs and free government stuff to low-income households, the middle class neighborhoods are probably bringing home a great deal less – especially since we are taxed on our earned income.

Is SMUD doing this to increase its revenues?
No. (Of course not) The proposed restructuring is designed to be “revenue neutral” for SMUD. It would not be a general rate increase, and it would not produce any increase in SMUD revenues. However, the restructuring could impact some customers because components of the rates are changing. SMUD has done it this way, and used this creative language so that no one will notice that they are not subject to CPUC oversight with a general rate case hearing… not that anyone should ever be subject to CPUC oversight…

“Revenue neutral” is secret code language for we are hiding the increase elsewhere, but rest assured, we will eventually collect. 

What are the most significant elements of SMUD’s proposal to restructure rates?
SMUD is proposing small increases in fixed monthly service charges to recover a higher proportion of the total infrastructure costs associated with providing service to residential and small commercial customers. These costs include equipment such as wires, poles, transformers, and substations. (Medium and large commercial customers already pay closer to their proportionate share of these fixed costs in monthly charges that don’t depend on how much electricity they use.) You won’t notice a “small increase,” right?

To offset the increase in the fixed service charge and minimize impacts on residential customers, SMUD would slightly reduce its kilowatt-hour prices for electricity usage. In addition, SMUD would shorten the summer billing season from six months to four months (June through September). Rates per kWh will continue to be higher in the summer billing season than the rest of the year, reflecting market costs. Only a utility bureaucracy can “shorten the summer billing season.” Even Mother Nature can’t do that.

For all small commercial customers, SMUD is proposing “time-of-use” rates. Customers would be charged more for power between the peak usage hours of 3 and 6 p.m. on weekdays in summer, when electricity is most expensive. SMUD would shorten the summer billing season and reduce the kWh price of electricity on all “off peak” hours.
SMUD proposes to institute a late fee of 1.5 percent on the current amount due if SMUD does not receive full payment within three business days of the due date on the bill. And if you don’t pay within 3 business days, Rocko and Guido might make a collection visit. 

How would rate restructuring affect customers’ bills? Duh – the bills are going up, and  some by as much as 50 percent. Just ask those small commercial customers…
Most customers would see very little change in their electricity bills on an annual basis, and SMUD rates would remain more than 20 percent lower than PG&E’s electricity rates on average.

SMUD projects that in 2012 the average bill impact for approximately 90 percent of all residential customers will be less than $2 a month. Some residential customers would save money on an annual basis. Eighty-seven percent of residential customers who have electric heat would see bill changes averaging less than $2 a month. Who will save money? Low-income rate payers? Solar customers? Government offices? 

Seventy-five percent of small commercial customers (drawing 21 to 299 kilowatts) and 7.5 percent of very small commercial customers (drawing less than 21 kW) would save money in 2012 under the proposed changes. For 95 percent of the very small commercial customers, bill impacts would be less than $10 a month on an annual basis. My husband owns several small commercial warehouses – his SMUD rate just went up this billing cycle by 50 percent, and one-half of the buildings are empty. 

For information on projected bill impacts beyond 2012, see Addendum 2 to theGeneral Manager’s Report and Recommendation on Rates and Services.

What types of customers are apt to have higher electric bills under the proposal?
Small and very small commercial customers who use a lot of power during the peak hours of 3 to 6 p.m. on weekdays in the summer billing season (June through September) – when electricity is most expensive – could have higher bills on an annual basis unless they shift power consumption to off-peak hours. What about certain zip codes, and small business owners with empty buildings? 

Residential customers who have gas heat and use very little electricity may pay slightly higher bills because of a proposed increase in the fixed monthly charge, which is designed to recover more of the fixed costs of the infrastructure for the power delivery system.  For these customers, the maximum impact in 2012 would be $2.80 a month. Brilliant! Penalize customers who use less electricity.

Eighty-seven percent of residential customers who have electric heat would see bill changes averaging less than $2 a month.

To encourage energy efficiency, customers on the Energy Assistance Program Rate (a discount rate for qualifying low-income residents) will pay the standard rate for electricity use that exceeds their “base usage” plus 600 kilwatt-hours a month. (Base usage is 700 kWh in the summer billing season and 620 kWh the rest of the year for customers with gas heat.)

How would low-income customers on the Energy Assistance Program Rate be affected by the proposal? blah blah blah blah blah
SMUD projects that 90 percent of these customers would save money in 2012, while the 10 percent who have energy use that exceeds the discount cap will see their bills go up if they don’t reduce their power usage. Of course they will save because I am going to be paying a bigger part of their share, along with very small and small businesses.

Customers on the low-income rate would continue to get a 35 percent discount on base electricity usage and a 30 percent discount on up to 600 kWh of additional (“base-plus”) electricity usage in any given month. Hey! I am a member of the historically low-paid media… what about a discount for us? For electricity usage in excess of that, customers would pay the standard residential rate. This proposal was designed to encourage energy efficiency. (Base usage is 700 kWh in the summer billing season and 620 kWh the rest of the year for customers with gas heat.) These customers would see no change in their fixed monthly service charge of $3.50 in 2012.

Beginning in 2013, the fixed monthly charge would increase $1 each year, topping out at $8.50 in 2017, and there would be a corresponding decrease in kwh charges for electricity use. For information on projected bill impacts beyond 2012, see Addendum 2 to the General Manager’s Report and Recommendation on Rates and Services.

Skip this section – this will only make you crazy.

Overall, proposed changes in Energy Assistance Program Rates would be “revenue neutral” for SMUD, meaning the changes would neither increase nor reduce the revenue SMUD collects from this group of customers.

Will SMUD do anything to help customers who might have higher bills as a result of rate restructuring?
SMUD encourages customers to take advantage of its wide range of programs to improve energy efficiency. For all residential customers, SMUD has – among other things – a comprehensive, whole-house solution called the Home Performance Program, rebates on energy-efficient appliances, and loans for investing in improvements such as dual-pane windows. For qualifying low-income customers, SMUD also offers special efficiency programs such as home weatherization, in addition to discounted rates.

For commercial customers, SMUD offers energy audits, product rebates, energy tracking services and help with retrofit projects, among other things. For more information, click here. And you can finance the upgrade and energy retrofit costs – for a small fee, of course…

SMUD Loan terms (link here)… 

• We offer secured financing at a fixed interest rate of 8.75 percent. (Wow! calling Rocko and Guido…)
• We charge an application fee of $200 per loan. We will return this fee if we decline the application. 
• Generally, we make loans for up to 10 years or, the remaining term of any senior lien…

How is SMUD letting customers know about the proposed rate restructuring? 
Complete information on the proposal is posted on smud.org. In addition, SMUD is conducting a public outreach campaign to explain the proposal to customers. 

The campaign includes approximately 100 presentations for business associations, civic organizations and neighborhood groups. (To request a presentation, contact Rosanna Herber at SMUD, 916-732-5850 orrherber@smud.org.) Media outreach, print ads and bill inserts are part of the effort. Contact Rosanna Herber? The bumptious, browbeating, Sacramento activist Rosanna Herber? I’ve been a party to a few of Herber’s presentations … I don’t see the soft-sell approach here. (local knowledge disclaimer)

How can customers comment on the proposal or get answers to their questions about rate restructuring?
SMUD welcomes feedback from customers. Customers may submit written comments through Aug. 4 to rates@smud.org or to Rates Administrator Rob Landon, Mail Stop A451, SMUD, P.O. Box 15830, Sacramento, CA 95852-1830. Dear Rob, *$!!@*%$? … Sincerely, Katy

Customers who have questions or would like to request a hard copy of the General Manager’s Report and Recommendation on Rates and Services may call the rates hotline, (916) 732-6222, or e-mail rates@smud.org.

When will the SMUD Board of Directors decide on restructuring, and when will changes take effect?
The SMUD Board is expected to vote on rate restructuring on Thursday Aug. 4 at at 6 p.m. in the SMUD Headquarters Auditorium. Most of the changes will go into effect on Jan. 1, 2012. When was that meeting? I don’t recall the “public outreach” on that one… did I miss the memo, or the notice in my bill, or the public meeting with my neighborhood association which removed me from its email list?

Why is SMUD proposing to increase the monthly service charge?
SMUD needs to increase the fixed monthly service charge for residential and small commercial customers because the current charge does not cover the true cost of maintaining the infrastructure that enables reliable power delivery through a robust electric grid. This includes the cost of poles, wires, transformers, and substations, which must be covered even if an individual customer is not using any electricity. “A robust electric grid” which the Legislature and Governor have just sliced and diced with the Renewable Portfolio Standard, requiring 33 percent renewable energy from wind, solar, biomass, and geothermal. Hey Al Gore – the planet does not have a fever… it’s leaders have a spending and a serious B.S. proble

Okay – I am not going to subject you to the rest. If you are a glutton for punishment and have no life, here is the link to the rest of the drivel.

However, I could not resist the final question:

Why is SMUD changing some of its terminology for rates?
SMUD is changing some of its rate terminology in an effort to better define for customers what they are paying for and why, to introduce customers to some new concepts, and to prepare for the future. (Because, rate payers are too dim to understand a rate increase if SMUD doesn’t use the flowery lingo.) This part of the rate restructuring is called the SMUD Clear Terms^SM Initiative… but there is no link to read this clever-sounding “initiative.” 

However, the downtown Sacramento Sierra Curtis Neighborhood Association (home-away-from-home to many legislators) has information. And, this is the same neighborhood association which Rosanna Herber served as President for several years, and she is currently a member of the Curtis Park Energy Stars Steering Committee. Hmmm.

JAN. 23, 2012

By KATY GRIMES

California legislators are pushing a bill through the system for a bankrupt solar subsidy program, despite a $200 million shortfall. And while the large shortfall would make most subsidy beneficiaries go belly-up, California legislators seem willing to make sure the debts are paid — by utility ratepayers.

The definition of “bankrupt” is “unable to pay debts.” But with the California Public Utilities Commission approving rate hikes, it seems that the debts will indeed be paid — by utility ratepayers.

In the Senate Energy, Utilities and Communications committee, legislators entering the hearing room at the Capitol on Tuesday morning immediately sought out lobbyists before the hearing began. Quiet talks took place and information packets exchanged hands demonstrating prearranged agreements and harmony on the issues. The lobbyists were energy company lobbyists and supporters of green technology — two groups that haven’t always seen eye to eye, unless both are benefitting financially.

Several of the bills heard by the committee were about the recent PG&E gas line explosion in San Bruno last September, with proposals for additional industry regulations.

But the issue dominating the hearing centered around San Diego Democratic Sen. Christine Kehoe. She was armed with a bill, SB 585, sponsored by the Solar Alliance. It would extend the solar subsidies and incentives provided to commercial businesses, government entities and homeowners in the state seeking to add solar systems to buildings, property and homes.

The California Solar Initiative (CSI) is a $3.3 billion program paid for by utility ratepayers. It then provides the incentives for solar systems. Kehoe said that the CSI program has created 36,000 solar jobs in California.

However, the CSI program is suffering a shortfall — a very serious shortfall of $200 million.

Instead of abandoning the program because it is upside down, Kehoe is seeking to extend it, and have ratepayers foot the bill. “It’s essential to extend the program for ratepayers to fully realize the benefit,” said Kehoe.

Kehoe Solar Pork

The California Center For Sustainable Energy, a non-profit organization “dedicated to Greening Your World,” located in Kehoe’s district, is the administrator for San Diego Gas and Electric’s CSI program. “Our role as administrator of the program really puts us in touch with the marketplace,” said Andrew McAllister, the program director. “And San Diego is the most solar city in the nation.”

McAllister, who testified with Kehoe, said that is it vitally important that “California” becomes a brand name for solar. McAllister said the solar incentive program has gone to one-half public sector and one-half private sector. “The public sector side is very important,” said McAllister.

McAllister also explained that the incentives, from now on, will be smaller because the larger incentives already were swallowed up by the big utility companies.

McAllister talked about “assessing market transparency and market consistency as the program moves forward,” suggesting that there may have been a problem with this.

In July 2010, the CPUC announced “three years into the state’s 10-year solar program, California is already 42 percent of the way towards its general program goal in the territories of the investor owned utilities.” But also last summer, the CPUC admitted that there would be no funding to meet the goals of the non-residential solar installations because the uilities had been given all of the money allotted to them, and more, by the PUC.

The CPUC voted to shift $40 million from the administrative budget for CSI to the non-residential program.

And the CSI incentive program paid larger incentives to government entities “because they are not eligible for the federal tax grants and credits.

Opposition

Representatives from the utility companies lined up to testify in support of Kehoe’s bill. But not everyone present was supportive.

“The residential ratepayer will take the brunt of the $200 million shortfall,” said Lenny Goldberg, representing the Utility Reform Network (TURN), which is made up of small ratepayers.  Goldberg said that residential ratepayers cover approximately 50 percent of the collections, and when the CPUC allocated incentives to the residential, non-residential and government/non-profit sectors, in was inequitable. TURN argued that that if revenues are going to be collected from ratepayers, the revenues should be in proportion to the incentives received.

Sen. Alex Padilla, D-Pacoima, told Kehoe that the committee is “forced to take a look at what was the cause of the overuse of funds,” and asked that, before going forward, “take a look at the root causes” of the shortfall.

Edward Randolph with the PUC said that last summer they suggested a reduction of the incentive rate the government receives, and a transfer of the $40 million.

“I like CSI, but my area is having a taxpayer revolt over it and the tier system,” Sen. Jean Fuller, R-Bakersfield, said. She urged the PUC to change the program so that ratepayers don’t take the brunt of the shortfall.

Padilla asked Kehoe to address the shortfall problem before the bill makes it to the floor of the Senate. Then each member of the committee voted to pass the bill.