California regulators adopted a controversial plan Friday that will increase electricity bills for those who use the least power — heeding the requests of utility companies but angering consumer advocates and residents who say the poor can’t afford the plan.
The new system, approved in a 5-0 vote by the Public Utilities Commission, has more modest impacts than earlier versions of the overhaul: It will raise rates for about one-third of ratepayers by about $5 a month, the PUC says, a smaller proportion and less money than was initially expected. It also potentially reduces rates for the biggest electricity customers of Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric, though that is less certain.
Utility companies can submit rate proposals to the PUC based on the new system in September, and consumers could see changes in their bills as early as November.
The overhaul was prompted by a stated desire on the part of utility companies and regulators for charges to more accurately reflect the actual cost of providing power. Low-usage customers have essentially been subsidized by high-usage ratepayers under the current system, which has been in place since the electricity crisis 15 years ago, when there was a push to encourage conservation.
“Electricity rates have been effectively frozen for people in the lowest tiers,” PUC Commissioner Liane Randolph said. “The costs have been disproportionately borne by people in the high tiers.”
Opponents of the PUC plan believe that people on low or fixed incomes and others who tend to use less power, including those who use alternative sources such as solar, will be unfairly hit by higher charges.
“I know quite a few people from marginalized communities who cannot handle higher rates; I know seniors and low-income people who cannot handle rate increases,” said Lawrence VanHook, an Oakland resident, East Bay pastor and a college professor. “My mother is 83. She cannot handle higher bills.”
The plan approved Friday was a compromise and will include some incentives for consumers to use power in off-peak hours, when it is less expensive, and some extra charges for those who are very high users. The changes will not raise the utilities’ overall revenues or profits.
It’s expected that 35 percent of customers in California might see an increase of $5 a month in their bills, half the original estimate, and everyone will have to pay a minimum bill of $5, PUC Commissioner Michael Florio said during an interview with this newspaper after the meeting.
“The bill impact will be less than what was originally proposed,” said Florio, who had floated an alternate but unsuccessful proposal that would have further eased the cost to low-usage consumers. “It will be about the same number of people but a lesser increase.”
The PUC’s vote did not find favor with consumer advocates, who packed a crowded hearing room to protest the plan crafted by Commissioner Michael Picker and two PUC law judges.
“I can barely afford to live here, and higher rates will hurt me,” said Alondra Aragon, a San Francisco resident who lost friends in the fatal explosion of a San Bruno pipeline owned by PG&E. “You need to put our interest first and the public good first, and not put the interests of the big utilities first.”
One of the nation’s leading experts on the power industry, Severin Borenstein, public policy research associate with the Energy Institute at UC Berkeley’s Haas School of Business, estimated that the monthly bill changes could range from nearly $6 increases per month for people in the lowest income levels to reductions of nearly $6 in the highest income levels.
Overall, 79 percent of PG&E customers would pay more on their electricity bills, Borenstein estimated, while 21 percent would pay less.
People with a household income of less than $27,400 should see monthly bills rise $5.84; those with household incomes ranging from $27,400 to $54,800 will see an increase of $4.59; those with incomes of $54,800 to $82,200 will see a $2.40 increase; households in the range of $82,200 to $137,000 will see a 70-cent increase; and people with household incomes over $137,000 will see a reduction of $5.78 a month, according to estimates in a blog post by Borenstein.
The Utility Reform Network, a consumer group, criticized the PUC for holding the meeting at the start of a long holiday weekend, and suggested the state agency is a captive of the big utilities. The PUC has been under fire for its lax oversight of PG&E, a casual approach to regulation that, combined with PG&E’s shoddy maintenance and flawed record keeping, cause the San Bruno disaster, according to federal investigators.
“This is a lose-lose for customers but business as usual for the PUC, which has once again done the bidding of PG&E, Edison and San Diego Gas & Electric,” said Mark Toney, executive director of The Utility Reform Network.
The PUC acknowledged that the new rates could become painful for many California residents but nevertheless found them to be more accurate for more users.
“This will be challenging,” PUC Commissioner Carla Peterman said. “We don’t have everything figured out.”
Contact George Avalos at 408-859-5167. Follow him at Twitter.com/georgeavalos.
Changes to your electricity bill
