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Electric Rate Reform: What Happens Next?
The California Public Utilities Commission (CPUC) voted to approve a new electric rate structure leaving many people asking, “What’s next?” The unanimous decision is a step in the right direction and a dramatic improvement over our current rate structure.
The decision implements a series of changes to electric rates over a period of several years. Here is a breakdown of what SDG&E customers can expect for their power bills and when the changes will occur.
Consolidation of tiers
Over the next few years electric rates will consolidate from four tiers to two tiers, ultimately with a 25 percent differential between the two tiers. In addition, SDG&E will add a “Super User” electric (SUE) surcharge. Here is what the transition will look like:
- September 2015: Reduce from 4 tiers to 3 tiers
- March 2016: Reduce from 3 tiers to 2 tiers
- 2017: Introduce a SUE surcharge to be set at 400 percent of baseline or usage over approximately 1,200 kWh per month (see more below)
- 2019: Shrinks the differential between Tier 1 and Tier 2 to 25 percent and increase the differential between Tier 1 and SUE to 119 percent
By November of 2015: SDG&E will implement a minimum monthly bill of:
- $10 per month minimum bill for non-CARE customers (up from $5 per month)
- $5 per month for customers enrolled in the CARE program
By November of 2015: SDG&E will begin to transition the effective CARE discount from today’s 40 percent to 35 percent by 2020. CARE customers will see this discount as a line-item on their bill.
“Super User” electric surcharge
2017: The final decision established a “super user” electric surcharge (SUE) intended to penalize excessive energy use. This surcharge will be phased in starting in 2017 and only apply to customers whose usage is above 400 percent of baseline – meaning double the average customer’s usage in their climate zone. As detailed in the timeline above, the SUE will increase over time, ultimately reaching a rate at more than double Tier 1. Approximately 2 percent of SDG&E’s customers will fall into this category.
2019: Residential customers will be automatically defaulted to “time-of-use” (TOU) rates. This means the price of electricity will depend on the time of day people use energy. The intent is to ease the strain on the grid and to encourage more meaningful conservation. Customers will be able to opt out of TOU to the tiered rate structure. Each IOU, including SDG&E, will file an application with the CPUC in 2018 to implement this TOU rate structure.