CPUC commissioner floats compromise on electric rate structures

Dive Brief:

As the California Public Utilities Commission (CPUC) debates the best way to structure electricity rates, Commissioner Mike Florio floated a compromise proposal that seeks to address the concerns of his fellow regulators, the state's investor-owned utilities, consumer groups, environmental advocates, and solar companies.
Florio's compromise proposal includes a minimum bill — instead of fixed charges, as the state's utilities wanted — and a three-tiered rate structure that reduces the current emphasis on heavy energy users paying more.
Florio held a meeting with key stakeholders where he outlined his idea, according to U-T San Diego, and said he plans to put his proposal to a vote before the commission.

Dive Insight:

Florio's proposal may find consensus as a middle ground between the different demands of key stakeholders in California.

Last month, a CPUC judge recommended that regulators mostly follow the proposals put forth by the state's investor-owned utilities. The proposed decision plans for the simultaneous introduction of fixed charges and default time-of-use rates for residential customers in 2019.

At least one of the three big California is concerned about the proposed decision. "[R]olling out two major rate-related changes at once could create considerable customer confusion," SDG&E spokeswoman Stephanie Donovan told Utility Dive.

The decision includes a $10 monthly minimum bill that will function "as a kind of 'transition' to a monthly fixed charge the utilities could file for at a later date," she said.

San Diego Gas & Electric (SDG&E) has been pushing for fixed charges and a two-tiered rate structure that reduces the higher cost to heavy energy users. SDG&E has been vocal in recent years about the cost shifts that occur between high and low energy users, as well as between solar customers and non-solar customers.

Under the current rate structure, customers "are incented to do the wrong thing," according to Jim Avery, SDG&E's senior vice president of power supply. “The only incentives [customers] have today are to try to manage their way around the utility rates.”

Some commissioners, including Carla Peterman and Catherine Sandoval, seemed unconvinced about various aspects of Florio's proposal, including the tiered structure and the reduced cost emphasis on heavy energy users.

The full commission is expected to make a decision regarding rates either later this month or in June.