PG&E's Rate Reduction Request

In March, 2010, PG&E filed its General Rate Case with the California Public Utility Commission (CPUC). In it, it asked for significant reductions in its top residential rates on June 1. PG&E requested permission to merge Tiers 3, 4 and 5 into a single tier and charge $.298/kWh. The graph shows 4 years of history, including the proposed reduction (which the CPUC has not yet ruled on.

Update

The CPUC allowed PG&E to merge Tiers 4 and 5 and price them both at $.40/kWh. Tier 3 is priced at $.29/kWh.

There are many ways to look at this proposal, and I take a relatively optimistic view of the effect it would have on the solar industry if it were adopted. It's certainly true that the proposed rates would take a lot of financial pressure off homeowners with very large electric bills. The amount they could save by adding a PV system would fall dramatically. But, in my experience, it's not actually people with a $800/month electric bill who are driving the residential solar market. It's people with bills in the $200-$350 range, and the proposed rates would create a lot more ratepayers like this.

If you look back at 2001 when the 5 tier scheme was first adopted, the ratio between the highest priced kWh and the lowest was 3:1. Today it is 4.5:1. Under PG&E's proposal it would go 2.6:1. This is still a steeply tiered rate structure. I can't easily imagine people wasting electricity because it costs only $.30/kWh instead of $.50.

My top reason for feeling OK about the proposal is that the proposed rates are very similar to what is charged by San Diego Gas and Electric, and that part of the state has adopted solar at an even faster rate than PG&E customers over the last year.

The CPUC will probably rule on PG&E's request in very late May. When they do, I'll update this posting.

PG&E Asks for 8.6% Rate Increase in 2011

My January PG&E Bill included an insert summarizing rate increases requested in the company's "2011 General Rate Case Application Filing A.09-12.020"

These inserts often go straight to the recycling bin unread, but I took the time to scan this one. PG&E is proposing an 8.6% rate increase on Jan. 1, 2011 for residential service. The increase will be smaller for low-usage customers and larger high-usage customers. As they put it:

"A typical ... residential customer using 550 kWh per month would increase $2.37 or 3.2%, from $74.13 to $76.50. The bill for a typical residential customer using 850 kWh per month would increase by $17.44, or 10.6%, from $164.15 to $181.59"

Proposed increases for commercial customers range from 5.8-7.6%.

Time to go solar!

Pacific Gas and Electric's Jan. 1 Rate Increase

PG&E raised its residential electric rates again on Jan. 1, 2010 by 3% for the most frugal users and 7% for heavy consumers. This was the 6th rate increase in the last 3 years. There have also been 4 rate decreases, but the increases tend to be large and the decreases are usually quite small.

Because rate increases have been tilted toward the ratepayers who use the most electricity, the compound average annual growth in rates over the last 3 years depends greatly on which of the 5 "tiers" you are in. Here are the average annual price increases by Tier from Jan. 1, 2007 to Jan. 1, 2010:

Tier 1 1.4%
Tier 2 1.3%
Tier 3 6.4%
Tier 4 8.1%
Tier 5 8.6%

Tier 5 energy now costs $.474 per kilowatt hour, significantly higher than the UNSUBSIDIZED cost of residential solar energy about double the cost after taking tax credits and the state rebate into account

3-year Graph of PG&E Residential Rates

The graph below shows how electricity rates have changed for each of the 5 tiers in PG&E's normal residential rate plan, which is called the E-1 rate. After holding fairly constant throughout 2007 and early 2008, the top 3 tiers rose rather dramatically starting on October 1, 2008. On 9/30/08, the day before the rates jumped, you could have bought a kWh of "Tier 5" electricity for $.359. Today, less than six months later, the price is $.441. That's 23% higher, and during most of that period the cost of oil and natural gas have been trending strongly downwards! I wish this kind of information was being more widely reported.

Local Electricity Prices Rise Again

PG&E raised its rates substantially on March 1, 2009.

For the standard E-1 residential rate plan, the new rates are:
Tier 5... $.44/kwh (up 7.4%)
Tier 4... $.38/kwh (up 6.9%)
Tier 3... $.26/kwh (up 5.1%)
Tier 2... $.13/kwh (unchanged)
Tier 1... $.12/kwh (unchanged)

Tiny changes were made to the E-6 and E-7 time of use rate plans usedby most solar homeowners.

For small businesses on the A-1 rate plan, rates increased 7.2% to $.179/kwh. For larger businesses on the A-10 non-FTA rate plan, the rate went up a whopping 13.5% to $.158/kwh.

PG&E's complete rate history for the last 10+ years can be found online at http://www.pge.com/mybusiness/myaccount/rates/ (By the way, few utilities make historical rate information as easy to find as PG&E does.)