The California Public Utilities Commission (CPUC) voted on July 3rd, 2015 to adopt a new residential rate structure. Current rate structures were established during the energy crisis in 2001, when energy was in limited supply, electricity prices were at record highs and issues with electric reliability were frequent occurrences.
The new structure began to take effect in 2015 and will continue to roll out until 2019. It is intended to be simpler, to be more closely aligned with the actual costs of providing electric service and to provide customers with a clearer understanding of how their energy use impacts their monthly bill.
Tier Price Adjustment:
Most customers today are on a 4 tiered rate plan (E1). On this plan customers save money by using less energy and staying out of the higher priced tiers. Since the energy crisis in 2001, price increases were only allowed to be made to tiers 3 and 4, and the prices for tiers 1 and 2 remained stable. Over many years, this created a significant difference in the prices between the tiers. Our goal is to gradually reduce the differences in prices among the tiers over the next four years. The end result will be a pricing structure that is more closely aligned with the cost of providing electric service for all customers.
Minimum Delivery Charge:
In September 2015, the monthly minimum delivery charge increased to $5 for customers enrolled in the California Alternative Rates for Energy (CARE) program and to $10 for all other residential customers whose monthly delivery charge total is less than $10. Renewable energy customers are currently assessed the Minimum Delivery Charge every month of the year.
Simplifying Existing Rates:
Reducing the number of tiers in the standard rate plan from 4 to 2 (reducing to three tiers in 2016 and to two tiers in 2017. A Super User Electric surcharge will be applied in 2017 for residential customers on the standard rate structure who use more than twice the average amount of electricity (more than 400% of baseline allowance).
Providing Choice Moving Forward:
In 2016, PG&E will offer two new rate options to help customers manage their energy. With Time of Use rates, you pay lower rates for electricity used during periods of low demand such as late night, early morning, and mid-day. Unlike the standard tiered rate plan, Time of Use rate plans offer different pricing during different times of day, week, and seasons.
In 2019, all residential electric customers will be transitioned to a Time of Use rate plan where the price of electricity will depend on the time of day. With Time of Use rates, customers pay lower rates for electricity used during periods of low demand such as late night, early morning, and mid-day. During this transition, customers will have the ability to select a rate plan that may better meet their energy needs.
These changes are intended to be simpler, and more closely aligned with the actual costs of providing electric service and to provide customers with a clearer understanding of how their energy use impacts their monthly bill.