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Relief ahead for some PG&E patrons

Top tier charge drops by more than 20 cents per kwh

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Relief ahead for some PG&E patrons

It will cost some PG&E customers in Manteca, Lathrop, and Ripon less this summer if they use the same electricity as a year prior.

HIME ROMERO/The Bulletin

POSTED March 27, 2010 1:54 a.m.
Turning on the air conditioning this summer won’t be as costly for some PG&E residential customers.

PG&E is advocating a rate structure that could mean significant savings for bigger uses of electricity starting June 1.

The utility’s application before the California Public Utilities Commission accomplishes the reduction by eliminating two of its five tiers put in place decades ago at the state’s insistence in a bid to encourage energy conservation.

The five-tier system has been particularly rough on PG&E customers that resort to running air conditioning for longer periods in areas that experience extensive heat waves such as the Central Valley.

A typical customer in Manteca, Lathrop, and Ripon who uses 650 kilowatts in a particular month now pays $79 for electricity. That will drop to $70 after June 1 if the CPUC concurs with the PG&E proposal. Residential customers that use 1,150 kilowatts in a particular month will see their electricity bill go from $270 to $250.

As things stand now, someone who doubles their monthly power use going from 650 to 1,150 kilowatts would see their actual bill go up 3.4 times. That’s because of the five tiers. Once residential customers reach the fifth tier in usage, they start paying 50 cents a kilowatt after that. The new rate structure would eliminate the top two tiers and drop the highest rate down to just under 30 cents per kilowatt hour.

The tiers are based on a percentage of the baseline use in various sub-regions impacted by different climates that PG&E serves in Northern California. The amount of electricity allowed in a given month under the lowest tier is determined by what the basic electricity needs are of typical customers in a region.

The baseline rate concept was established in 1993. It essentially lowered the power bill for those who could least afford it and also rewarded those who conserved electricity with lower rates. The rates that could be charged to the two lowest tiers was capped by the CPUC in 2001 and remained that way until last November when upward adjustments were allowed under legislation adopted by California lawmakers.

Essentially that meant higher use residential customers have been subsidizing lower residential customers to an increasing degree since 1993. The application for the June 1 rate adjustment is revenue neutral for PG&E.  The five-tier strategy was in response to goals established by California for public utilities to encourage energy conservation and to assist low-income customers.

Lower tiers jumped 3 percent on Jan. 1
Governor Arnold Schwarzenegger in November signed Senate Bill 695 into law. The bill – proposed by PG&E and other investor owned utilities and carried by Sen. Christine Kehoe, D-San Diego - gave PG&E the opportunity to file for an immediate 3 percent increase in the Tier 1 and Tier 2 rates that went into effect Jan. 1, 2010.

The bill authorized the CPUC to increase the rates charged residential customers for electricity usage up to 130 percent of the baseline quantities by the annual percentage change in the Consumer Price Index from the prior year plus 1 percent, but not less than 3 percent and not more than 5 percent per year.

PG&E also secured a $312 million rate hike Jan. 1, 2010 to “true up” expenses incurred in generating and procuring electricity. That’s on top of almost $1 billion in rate hikes previously approved for the next three years.

PG&E has also submitted a $1.101 billion rate increase that would go into effect Jan. 1, 2011 to cover needed improvements in their transmission and delivery infrastructure. PG&E has the lowest reliability of any major utility in the state according to the CPUC.

The change in the baseline rates could also create additional problems this summer as PG&E’s disconnection rate of households who simply can no longer afford power bills is up 69 percent in the past 12 months compared to the previous 12-month period according to a study done by the CPUC Division of Ratepayer Advocates. PG&E;’s low-income disconnect rate even higher approaching 1 percent of all of their low-income customers each month.

According to the CPUC study, “This increase for low-income customers is not only out of line with PG&E’s historical rates, but is now higher than that of other California utilities.”

PG&E’s disconnection rate for all customers is also higher than the national rate.

Based on 2007 information before the economic downturn picked up speed, PG&E’s disconnection rate was 4.19 percent compared to a national average of 3.80 percent.

By contrast both low-income and non-low-income for Southern California Edison customers experienced the lowest disconnect rates in years dropping 14 percent.

The state commission estimates it costs a customer between $270 and $681 to disconnect and reconnect including PG&E fees ($10 to $71 to reconnect), credit deposits (two times the monthly bill), as well as spoiled food, damaged equipment and lost wages. it costs PG&E $133 - $66.60 to disconnect and $66.650 to reconnect – every time it has to cut power off.
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