Edison Informs Consumers About Rate Hikes
If you haven’t opened your electric bill this month, prepare for a surprise. Southern California Edison is passing along a rate increase for summer usage. Not a small one either. Many domestic consumers could see their monthly bill jump by as much as ten dollars a month from now until November.
As if to help consumers brace themselves for the news, Edison is going town to town informing the general public about its rate hikes. One of those meetings with journalists and other media representatives took place on July 1 at the Ventura County Government Center. Russ Worden, one of Edison’s rate group directors, provided some rationale for recent rate hikes. As he explained, “We have an obligation to describe why that is and our customers have a right to know what’s driving those rate increases.”
An important factor in the current cost jump is the price of natural gas, and that price has spiked in part because of the severe weather that blanketed most of the Midwest and the east coast last winter. “Much of the supply for California is driven by natural gas-fired power plants,” said Worden. “In addition, natural gas tends to drive the clearing price for wholesale electricity on the markets.”
Worden also noted why severe winter weather has a significant impact on power prices in California. “California imports about 85% of its natural gas,” he said, “so California is very sensitive to the markets.”
In addition, Edison is updating its infrastructure and investing more money in a smarter grid that, according to Worden, will improve its services. An immediate example of that includes the new smart meters that have recently gone into many local homes in Ventura County.
But something else is happening with rates. Remember when the energy crisis hit California ten years ago? After that energy crisis, the legislature passed a law that established tiered rate structures for customers in California.
Edison believes that, after nearly 15 years of implementation, the cost of these tiered structures seems unfairly slanted toward larger consumers. “Every tier became more expensive,” he said. “Over the succeeding 13-14 years, it became apparent that customers who used less electricity were not paying the true cost of the service.”
Worden noted that Edison, pending California Public Utilities Commission (CPUC) approval, has proposed to even out those rate increases among tier users. For instance, the average increase for larger users for this round of rate hikes will be less (7%) than for smaller users (11%).
For Edison, this summer’s increase in energy prices are the beginning of a long-term plan to make electric rates more equitable. “It’s the first step in the larger effort by the state legislature and the Public Utilities Commission to take a look at rate reform,” said Worden.
The proposal, due to be voted on some time next year, would reduce the current tiered structures from four to two. Added to this would be a flat rate tacked onto a user’s bill that would cover about one-third of Edison’s fixed costs.
Worden believes the overall impact of these changes would make rates more equitable for all customers: “We think a more fair allocation of our cost recovery is to try to equalize rate costs but still preserve some incentive to conserve. So we think that having only two tiers and a longer term plan for a fixed charge is a better way to treat all of our customers.”
For households who may need assistance paying their electric bills, Worden pointed to an energy assistance program called California Alternate Rates for Energy (CARE) that targets rate reductions for low income households. For those who qualify, it could significantly reduce any future rate increases. Worden encouraged all customers to investigate and apply if they qualify.
He also provided information for customers who might be interested in managing their energy usage. Information for CARE and any special energy assistance programs can be found at www.on.sce.com/ratechange.