MAUREEN CAVANAUGH: Our top story on Midday Edition, San Diego residents are speaking out this week, about proposed changes to energy rates. Regulators are evaluating the impact of San Diego Gas and Electric's proposal to shrink the gap in rates between high-energy and low energy usage. The proposal would also introduce a monthly service the weather energy is used or not. Joining me is a representative from SDG & E to explain the proposal, and representatives from to consumer advocate groups. I would like to welcome Stephanie Donovan, Don Kelly, and Mark Toney. Stephanie, why does SDG & E believe these changes in the rate structure are needed? STEPHANIE DONOVAN: First of all, I would like to explain that not only SDG & E, but the other two electric utilities in California and the commission believe it is the right thing to do. We need rate reform. There was legislation that became effective in January this year that says the current system is broken and needs to be fixed, primarily because of the huge disparity between the lowest paying customer and the highest paying customer in terms of the way rates were designed. It was initially put in place during the energy crisis, at a time when the market was unstable. I think the idea was to try to protect the most vulnerable customers from all of this. If you put rates in, and they were gradually going up as used more, and you freeze the bottom two rates for a decade, that gap continues to grow as upper tier and higher use customers are paying for all of the other improvements to the grid, or anything else. Higher cost of electricity with more renewable energy. MAUREEN CAVANAUGH: So besides the idea of balancing out the rate structure between high use and low use, what are the other changes SDG & E is asking for? STEPHANIE DONOVAN: It is about fairness. The number one thing, as we were discussing, is trying to shrink the current four tiers to two, which will help make things simpler, easier for customers to understand, it is really what it was like before the energy crisis put a freeze on the bottom tiers and made two more. We're not changing much, it is just a change from where we are today. That will be hard for some customers to get used to. The other piece that is also mandated by legislature, we're going to comply to the requirement to reduce the current discount for low income customers to the legislative mandated range of 30 to 35%. Today, customers have effectively a 41% discount. MAUREEN CAVANAUGH: Raising the rates for low users seems like penalizing people for conserving. Why is it not penalizing people for conserving? STEPHANIE DONOVAN: I think the first thing is to get rid of the notion that rates or bills are low because they are doing a lot to conserve. That may be true, but their bills are low primarily because their rates have been artificially low for a long time. The difference between the lowest tier and the upper tier is 136% today. We are suggesting that we should eliminate the two tiers we have. We have a two-tier system now because the difference between the bottom and the other two tiers is about the same, a couple of cents. Let us shrink that down and make it easier and more fair. Besides, the customers who have had rates frozen for so long, they have not had any indication or any incentive to conserve, because they do not see the true cost they would be paying if they did not have rates frozen. MAUREEN CAVANAUGH: What does shrinking four tiers to two tiers due to the kilowatt hour price for the average energy consumer in San Diego? STEPHANIE DONOVAN: Right now I think the bottom two tiers are $.15-$.17 per kilowatt hour. The other two tiers are $.36-$.38. We are looking at getting rid of the middle. This is for illustrative purposes only, the regulators are going to decide ultimately what this will look like down the road. It would be more like something similar to what we had, little higher than what we had in 2000 say nineteen cents for the lower tier, baseline rates, and maybe twenty-four cents, 23 1/2 cents for the upper tier. It is much different than the absolutely high rates that high tier customers are paying today. MAUREEN CAVANAUGH: And higher than a lot of California? STEPHANIE DONOVAN: Yes. MAUREEN CAVANAUGH: Don Kelly, what is UCAN's reaction to the overall rate reform proposal? DON KELLY: The rate reform proposal that Stephanie did not mention, is the default time of use proposal put forth by SDG & E. SDG & E asked the Commission to allow them to put all customers on time of use pricing, all the residential customers. MAUREEN CAVANAUGH: What is time of use pricing? DON KELLY: The theory behind it is that if you can shift the use of customers that you no longer need to buy a new gas powered power plant to provide energy and capacity for peak time periods. For example, if everyone is using the grid at the same time, and everyone has air-conditioners running at 5 PM because it is hot outside, SDG & E has to have enough capacity in the system to power all of the air-conditioners. They could shift some of that use. Let's say everyone washes clothes at 10 PM at night, and 3M in the morning, they do not need to cover all use at 5 PM in the afternoon. If you can shift use, you do not need to buy new power plants to cover the maximum capacity you need. A good example, and our position is, we actually believe in the purpose of shifting to time of use pricing. Here is a good example. If a typical customer uses 500 kWh, and the highest uses usually in the afternoon. And the neighbor uses 500 kWh per month, and they use it at 3 PM to 6 AM, they receive the same bill. Right now, pricing is based on use, not when you use it, but how much you use. It is better for the system if we can equalize and spread out use so it is not all at the same time. It will save customers in the long run. We are in favor of that, but we are not in favor of SDG & E's specific proposal. There are so many questions they are unable to answer. It is not ready for rollout in 2015. We are looking for a default pilot study. MAUREEN CAVANAUGH: Mark, it's my understanding that TURN has another view about time of use. MARK TONEY: There is bad news and good news. I will start with the bad news, because I like to and positively. The bad news is that the proposals by SDG & E to add a new ten dollar a month customer charge, and to flatten the tiers will result in 70 to 80% of all customers having a higher bill at the end of the month, and 10 to 20% of customers are going to get a noticeable reduction. That is going to be the impact of these changes. When it gets to time of use, we call that punishment pricing. The idea is that you punish people for turning on air-conditioners in the late afternoon. We think that is going to slam people when it is hot like this. You get home and have to turn on the air conditioner to survive, and we are also concerned about low income and elderly customers. The good news is, the legislation that SDG & E representatives referred to, gives the CPUC the authority to make changes, but that does not mandate or require them to make changes. It is still possible for a public outcry to stop this from happening. STEPHANIE DONOVAN: I don't think public outcry is necessary at this point. SDG & E appreciates the idea of customer choice. Mark was mentioning he is more in favor of opt-in for time of use, where are you totally opposed? Opt-in is okay right? MARK TONEY: Yes. STEPHANIE DONOVAN: We want to make sure our customers, especially low income and those who have medical issues of are not forced into a situation they cannot handle because of health, or whatever. MAUREEN CAVANAUGH: Not everyone listening to this program is as up on this as everyone at the table. Let me explain, what we are talking about our different ideas and proposals that are being looked at by the CPUC, and open to public hearing this week. It is the shrinkage of the four rate tier to two tiers, it is a flat monthly fee that SDG & E wants to put on the bill, and it is also the proposal to have a time of use rates the the default rate starting in 2018, which would determine how much you pay for energy, depending on the time of day you use it. These are all things that the CPUC is listening to right now. We have a caller on the phone who wants to talk about the flat fee, the monthly rate. His name is Walter, he is calling from Delmar. Hello Walter. NEW SPEAKER: Hello. MAUREEN CAVANAUGH: Can we get your question? NEW SPEAKER: It is more of a statement. I get a kick out of SDG & E and their management style. If something goes wrong, the plant up the road is a good example, they pass the cost to the customers. Anybody would do that. It's called monopoly. Which was is there? A lot of people have taken the choice, and now have solar power. They will be penalized as well. From this standpoint, it is amusing in a wicked and humorous way. MAUREEN CAVANAUGH: Thank you for your comments. Is that flat monthly service fee of five dollars becoming ten dollars and a couple of years, is that geared towards solar users? I know everyone would pay it, but is it one of the major reasons in the upkeep of the grid for people on solar? STEPHANIE DONOVAN: It's absolutely important in terms of the maintenance of the grid. That is not directed at solar, by any stretch of imagination is a fee that would apply to everyone. It would apply to top solar customers, care customers, all residential customers. We are trying to, rather than collect all revenue we have been approved to collect, we're trying to do that through a volumetric rate. If you are using more, we do not make more money if you are using a lot of electricity. Why would we push energy efficiency so much? There's really no other way to collect fixed charges. When I'm talking about fixed charges, I am talking primarily about 85% of our fixed charges are related directly to the grid. What it means to you as a customer and to Walter, as a solar customer, everyone is connected to the grid, and as much as solar customers would like to tell you they are not, they are still connected to the grid. MAUREEN CAVANAUGH: Didn't SDG & E try to have a flat fee for solar uses in 2011, and CPUC rejected the request? STEPHANIE DONOVAN: They reject it the network use charge, which was specifically related to solar. This is really an opportunity for everyone to pay share for the meter, the line that connects your house to SDG & E power systems, and for people who figure out your bill every month, whether you are a solar customer or not. Those are costs that exist that the utility incurs, the matter if you use any electricity. I think people forget. Look at all of your other utility bills. Water, cellular service, cable, every one of those utilities has a monthly service charge. We are trying to align ourselves with that. MAUREEN CAVANAUGH: This is a huge topic, and I want to get us back to the public hearings. Do the public hearings make a difference? DON KELLY: Absolutely. There will be one today in San Diego and one tomorrow in El Cajon. I urge all of your listeners, if they have not gone to the one in San Diego, though to El Cajon. This rulemaking is deciding how everyone in California pays for electricity. The administrative law judge noted that she was struck by the variety of the views that were there. It is important that the Public Utilities Commission hear from the public as to what their views are, so they understand where the public is on this issue. It is not monolithic. Everyone does not favor SDG & E, and it is not everyone against SDG & E. Everyone has stories. We are encouraging people to tell stories, because it makes a difference for decision-makers to hear from the public. This is the opportunity. MAUREEN CAVANAUGH: Mark, do get the feeling consumers are involved in this rate reform issue? MARK TONEY: I have to say, from going to a lot of public hearings, there were over 250 people there yesterday at the public hearing. That was a very good showing. It does make a difference. These are the biggest rates to sign changes being proposed in a generation. It is a question of how to pay for services. Should it be on a system like right now, where you get rewarded for using less, and unless you use more with you have? Or, is it going to be something where it is more flat? And the people who are paying a little now pay a lot more, and the people who are paying a whole lot right now they last? We like the incentive that if you are trying your best to save energy, some people go to solar and some people just save and get rewarded. MAUREEN CAVANAUGH: Stephanie, I will ask you the last question, it was my understanding that you were saying that these rate changes will not affect SDG & E's bottom-line. Your company is not expecting to make any more money out of this? STEPHANIE DONOVAN: I was addressing the monthly service fee, to clarify a misconception that it is somehow an added fee in addition to everything you are paying. In effect, it is not an added incremental charge. The cost per kilowatt hour of your tier 1 rates would be lower. The point I was trying to make is the commission allows SDG & E to collect a certain amount of revenue every year. This is a different way to collect it, it does that mean we collect more, it is the same amount and just a different way. This way is a way to ensure that everyone pays a fair share of use of the system. MAUREEN CAVANAUGH: Let me let everyone know the public hearings by the El Cajon city council chambers at 2 o'clock and 630, tomorrow, September 18. Thank you all very much.
San Diego residents got a chance to weigh in on proposals that could significantly change the way they pay for electricity.
The California Public Utilities Commission held a couple of public participation hearings Tuesday exploring the reaction to San Diego Gas & Electric's plan to changes its rate structure.
Santee resident Steve Fuselier was one of dozens of people who took a turn at the podium. He clutched his electric bill as he spoke.
"My electric generation was $212. But my total bill was $442," Fuselier said.
The Santee resident gave the panel an item by item rundown of his utility bill. He says he's tired of paying so much more for power and he made a plea for equity.
SDG&E argues that its rate restructuring plan does just that, returning fairness to the system. SDG&E spokeswoman Stephanie Donovan said the proposal for a flat monthly fee would pay for grid maintenance.
"Everybody is connected to the grid," Donovan said. "One way or another. And so everybody should pay their share of the cost of that grid."
Solar-power supporters said the flat fee makes photovoltaic systems less attractive financially. They argued the utility already takes advantage of solar owners by buying their power at low prices and reselling it at significantly higher rates.
In addition to the flat fee, the utility is also looking at having two rate tiers that are only 20 percent apart. They currently have four tiers with the top tier paying more than double the rate of the bottom tier.
The Sierra Club's Pete Hasapopoulos said going to two tiers and leveling the difference creates a serious rate hike for those who use the least. He's looking for a bigger incentive to save power.
The commission will hold another day of hearings at the El Cajon City Council Chambers, 200 Civic Center Way on Thursday. The hearings will be held at 2 p.m. and 6:30 p.m. A decision on the proposals might not come until next summer.
