Rate Design Briefing
Loretta Lynch President, CPUC May 9, 2001
1
Why an Increase?
• Federal regulators failed to follow the law. • Wholesale prices outrageous, unlawful, and out of control. • Prices threaten utility solvency and State General Fund. • PUC forced to raise rates by 3 cents on March 27th to keep the lights on and protect financial viability of utilities and DWR.
2
Goals of Proposal
• • • • Encourage conservation. Pay for the power DWR is buying. Create equitable energy charges. Recognize the true, unreasonable costs being incurred this summer. • Protect the most-vulnerable Californians.
3
Proposal Carefully Crafted to Meet Goals
• Tiered rates for residential customers, with the heaviest users facing bills as much as 47% higher. Average increase for whole residential class is 17%. • 50% of households will see no increase, due to legislative exemption for portion of use. • Aggressively encourages reductions in onpeak usage for customers with time of use meters.
4
Proposal Carefully Crafted to Meet Goals (Cont.)
• Agricultural rate increase capped at from 23 to 30%. • Bill-limiters to prevent extreme bill shocks. • Real-time pricing pilot programs, including one to let federal users experiment with their own market rate policies.
5
Builds on Governor’s Proposal
• Establishes tiered rate structure for residential users. • Protects average consumers. • Signals high peak costs to large industrial users. • Imposes cap on rates for agricultural customers. • Keeps same rate structure for commercial/industrial.
6
Proposal for Commercial and Industrial Rates
• Current policies have large customers paying less for using more, discouraging conservation. • Proposal would begin to correct that inequity. • Proposal encourages use of time-of-use meters to shift load off peak.
7
Proposal for Commercial and Industrial Rates (Cont.)
• Will pay closer to what it costs. • Increases across all hours, but concentrated on peak. • Commercial increases are 35 to 45%, and industrial increases are about 50%, depending on customer group. • Real-time pricing pilot proposed for federal agencies.
8
Proposal for Agricultural Rates
• Governor proposed caps. • Proposal recognizes unique needs of ag customers. • Proposal caps increases at 23 to 30 % • Will work in coming weeks to gather data needed to implement SB 5X by July 1, and to flesh out additional refinements between Ag customer groups.
9
Bill Limiters
• Set at 250% of class average rate for Ag, 300% for all others. • Intended to prevent the worst cases of bill shock as people adjust to new rates. • Won’t discourage conservation -- customers pay for every KWH they use, at prices up to three times average. • Expected to affect few customers.
10
Differences Between ALJ Proposal and Alternate
• Alternate reduces increases to commercial, industrial, agricultural customers by spreading 130% safe harbor shortfall equally among customer classes. • Alternate further caps Ag increases. • Alternate adopts Real-Time Pricing pilot to let federal users experiment with their own market rate policies.
11
Side-by-Side Comparison of Average Rate Increases
Alternate Decision ALJ Proposed Decision Consumer Class Residential: Average Residential (Including 50% who are protected from increase) 17% 16% 15% 11% PG&E SCE PG&E SCE
Commercial:
36%
35%
37%
39%
Industrial
52%
50%
55%
52%
Agricultural
28%
26%
29%
30%
12
Average Rate Increase Alternate Decision --PG&E
Average Rate Increase on Total Bill (cents/kWh) Time-ofUse Rates Average Rate Increase in Total Bill Time-ofUse Rates Consumer Class Residential: Class Average Usage above 130% of baseline Commercial: Small Medium 4.4 4.4 4.4 34% 41% 45% 17% Flat Rate Flat Rate
6.8
48%
Industrial Agricultural 4.1
4.3
3.2 21%
52%
30% 13
Average Rate Increase Alternate Decision -- SCE
Average Rate Increase on Total Bill (cents/kWh) Time-ofUse Rates Average Rate Increase in Total Bill Time-ofUse Rates Consumer Class Residential: Class Average Usage above 130% of baseline 16% Flat Rate Flat Rate
7.0
46%
Small and Medium Commercial
4.0
4.0
35%
36%
Industrial Agricultural
4.3
50%
2.7
2.5
23%
29%
14
Average Rate Increase Proposed Decision -- PG&E
Average Rate Increase on Total Bill (cents/kWh) Time-ofUse Rates Average Rate Increase in Total Bill Time-ofUse Rates Consumer Class Residential: Class Average Usage above 130% of baseline Commercial: Small Medium 4.5 4.5 4.5 35% 42% 46% 5.9 15% 41% Flat Rate Flat Rate
Industrial
Agricultural 4.5
4.5
3.2 23%
55%
30% 15
Average Rate Increase Proposed Decision -- SCE
Average Rate Increase on Total Bill (cents/kWh) Time-ofUse Rates Average Rate Increase in Total Bill Time-ofUse Rates Consumer Class Residential: Class Average Usage above 130% of baseline 11% Flat Rate Flat Rate
4.5
30%
Small and Medium Commercial
4.5
4.5
39%
40%
Industrial Agricultural
4.5
52%
3.5
2.7
30%
30%
16
PG&E Sample Residential Bills Proposed Decision
Usage Level Baseline Monthly Usage (kWh) 378 Current Bill $47 New Bill $47 Percent Change 0%
200% of Baseline
715
$95
$101
7%
300% of Baseline
1,069
$163
$186
14%
400% of Baseline
1,429
$217
$287
32%
17
PG&E Sample Residential Bills Alternate Decision
Usage Level Baseline Monthly Usage (kWh) 378 Current Bill $47 New Bill $47 Percent Change 0%
200% of Baseline
715
$95
$101
7%
300% of Baseline
1,069
$163
$187
15%
400% of Baseline
1,429
$217
$304
40%
18
SCE Sample Residential Bills Proposed Decision
Usage Level Baseline Monthly Usage (kWh) 362 Current Bill $44 New Bill $44 Percent Change 0%
200% of Baseline
683
$88
$93
5%
300% of Baseline
983
$105
$147
41%
400% of Baseline
1,303
$153
$225
47%
19
SCE Sample Residential Bills Alternate Decision
Usage Level Baseline Monthly Usage (kWh) 362 Current Bill $44 New Bill $44 Percent Change 0%
200% of Baseline
683
$88
$96
9%
300% of Baseline
983
$105
$150
43%
400% of Baseline
1,303
$153
$246
61%
20