SDG&E rates set to increase in September

SDG&E rates set to increase in September
Business owners and residents at the MainStreet Morning Meeting hear that utility rates will increase in September. Increases will greatly impact SDG&E tier III and IV residential customers. Photo by Promise Yee

OCEANSIDE — SDG&E representatives told business owners and residents at the August MainStreet Morning Meeting that utility rates will increase for all San Diego County business customers and a quarter of its residential customers come September. 

The approved increase in SDG&E operations costs will impact all customers who use more than 500 kilowatt hours of electricity a month, and hit tier III and IV residential customers the hardest.

The current rate structure charges residential customers who use more electricity a higher fee per kilowatt hour once they exceed base level usage.

This rate structure was adopted in 2001 during the energy crisis as a way to nudge customers to use less electricity.

It did serve its purpose.

“San Diego is the most responsive to the call for conservation in the state,” Stephanie Donovan, SDG&E senior communications manager, said.

Today, the rate structure is outdated. It does not take into account the wide range of kilowatt hours needed by customers.

“There’s a need for an overhaul of the rate structure,” Donovan said.

Donovan said residential customers who live in areas that require air conditioning or who do not work outside of the home will use more than the current base level even if they are conserving energy.

“Most people do what they can do towards energy efficiency,” Donovan said. “People who live in older homes with inefficient appliances don’t always have the income to purchase new appliances, or seniors may have to have the air-conditioning on.”

Usage above the base level quickly drives up monthly bills because customers are charged higher rates for additional killowatt hours.

Residential tier I users, who use the lowest amount of electricity, are charged 15 cents per kilowatt hour, tier II users are charged 17 cents, tier III users pay 27 cents, and tier IV users, who use the most electricity, pay 29 cents.

Donovan said it is still the same electricity and should not cost more.

“The rate cap protected low-income people,” Donovan said. “It outlived its usefulness. There is a huge disparity in rates. It’s not connected to household incomes anymore.

“It gets up to a certain point and skyrockets in costs.

“We expect some significant changes in how rates are structured in the next few years.”

Businesses are charged differently than residential customers. They are charged more when they use electricity at peak demand times.

Both businesses and a quarter of residential customers will see a marked increase because the California Public Utilities Commission just recently OK’d the operations rate increase for 2012-15. This means catch-up costs since 2012 needs to be amortized into bills through 2015.

This increase only accounts for general operations charges.

SDG&E billing is divided into three categories — general operations, distribution and commodity costs. Approvals for rate changes for these three different parts of the bill presently come at different times.

“We understand customers are confused and frustrated,” Donovan said. “We’re pushing to have one time a year that rates will change. We know people want stability and certainty.”

Donovan said SDG&E is working with regulatory agencies to bring the timing of billing changes together so that customers can better plan their budgets.


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