Amid 'stay-at-home' orders, what kind of financial break can SDG&E customers get?
- Apr 13, 2020 9:55 am GMT
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The California Public Utilities Commission, the agency that regulates the state's major investor-owned power companies such as San Diego Gas & Electric, has agreed to shift the timing of a credit SDG&E customers receive each year to help give some financial relief in the wake of the COVID-19 outbreak.
The commission, known as the CPUC for short, is also looking at extending less expensive winter rates by a few months into the summer, although making such a move would not result in customers really saving money over the long-term.
This all comes as the state's "stay at home" orders aimed at blunting the spread of the coronavirus has sequestered California residents inside their residences, which will likely lead to higher power bills.
The CPUC has estimated that in SDG&E's service territory, electricity usage has increased anywhere from 8 percent to 16 percent compared to the same weeks as last year. Natural gas usage, the commission estimated, is up 30 percent to 50 percent, although part of the increase may be due to the weather, which has been cooler and wetter than usual in the San Diego area so far this year.
"Going forward, as the shelter at home (restriction) stays in place in future months, and then even after it's lifted, we would anticipate a lot of people would continue to work from home or stay at home, their energy usage will continue to go up," said Edward Randolph, director of the CPUC's Energy Division. "We're looking at doing several things to help reduce the impact" of higher bills.
Loretta Lynch, a former president of the commission who has also been one of its most vocal critics said the CPUC should take a top-down review of how it oversees utilities.
"Rate relief has to happen and the way it happens, legally, is for (the commission) to take a very sharp pencil to every single utility budget, just like Californians and California small businesses are having to take a sharp pencil to their budgets at this time," she said.
What's available now
Through California's cap and trade program that taxes polluters in the state, utility customers already receive a "climate credit" that reduces their bills in given months.
For SDG&E customers who use natural gas, one of those credits will give them some financial relief right away. A credit of $21.11 will be applied on statements sent out this month.
In addition, there's a climate credit dispensed to all electricity customers across the state. This year, in SDG&E's service territory, the electricity credit will be disbursed in two monthly credits of $32.28 each.
Originally, the first $32.28 credit was going to be applied to bills in April (for energy used in March) and the second credit would be taken off the top of bills sent out in October (for energy customers consumed in September).
But SDG&E officials lobbied the CPUC to move the timing of the credits to August and September because that's when customers' bills are usually the highest because during the hot summer months people crank up their air conditioners.
The commission agreed. "Those are particularly high usage months in the San Diego area," Randolph said.
SDG&E and the CPUC are also emphasizing to people who have lost their jobs due to the pandemic that they might now qualify for a state program that can reduce their utility bills.
The California Alternate Rates for Energy, or CARE, program offers a roughly 30 percent discount on monthly bills. Qualification is based on customers participating in certain public assistance programs or their household income. No additional documents are required to apply.
"They'll ask you a few questions about your income and based on those answers, they can immediately enroll you in CARE and you will start seeing that 30 percent discount from the moment you're enrolled in the program," Randolph said.
If customers don't quality for CARE, they might be eligible for Family Electric Rate Assistance, or FERA, that offers an 18 percent monthly bill discount. FERA is open only to households with three or more people and qualification is based on income guidelines.
Customers can apply through SDG&E's automated phone system at 1-877-646-5525 or by going online.
Extending winter rates?
Randolph said the commission has been brainstorming with utilities and ratepayer advocates to come up with ideas to give customers financial relief during the outbreak.
One idea being considered is extending winter rates, which are less expensive, into the summer months when bills go up as the temperatures rise.
For example, the default SDG&E winter rate that runs from Nov. 1 to May 31 ranges from 25 cents per kilowatt-hour to 27 cents, provided customers stay within 130 percent of their allotted baseline each month.
But summertime rates — in effect from June 1 to Oct. 31 — are much higher. SDG&E's most common plan this year for residential customers ranges from 20 cents per kilowatt-hour to 46 cents, depending on whether consumption comes during off-peak or on-peak hours. Prices go much higher when customers exceeded 130 percent of their baseline.
With summer rates coming in just a matter of weeks, extending the winter rates until the COVID-19 restrictions are lifted would likely lead to lower bills. But there's a catch.
"If the utilities do not collect enough revenue to cover expenses this year," Randolph said, "we will have to allow them to recover those expenses in future years. So we want to make sure that we're doing everything we can to protect people who are having economic hardships in this current crisis, but not moving the problems out in future years."
The CPUC and the California Legislature have directed the state's big investor-owned utilities roll out "time-of-use" plans as a way to send price signals to energy customers to avoid consuming electricity when demand is at its peak each day.
SDG&E started phasing in customers last year and about 70 percent of its 750,000 residential customers have migrated to time-of-use plans.
Instead of the old tiered-rate model where customers paid more as they used more electricity, the incentive under time-of-use is for customers to consume energy when the power grid is teeming with renewable sources, solar energy in particular.
The more customers consume energy at times when the power grid is at peak demand (from 4 p.m. to 9 p.m.), the more expensive it is. Conversely, prices are less expensive during hours when demand is lower.
With more people at home now under COVID-19 restrictions, why not suspend time-of-use rules?
"Time-of-use actually gives a lot of customers more tools to keep their bills low by having them think about when they're using energy," Randolph said.
While it was more difficult under normal circumstances for many customers to run their appliances in the late morning and early afternoon because they were at work or school, Randolph said consumers now at home during the day can more easily shift their energy use away from the high-cost hours between 4 p.m. to 9 p.m.
"For most customers, we don't think moving them off time-of-use rates would save them money," Randolph said, "We think time-of-use actually gives them that ability to save money, as long as they're thinking about when they're using electricity."
Lynch, the former CPUC president who is now a board member of the San Diego-based environmental and consumer group Protect Our Communities Foundation, disagreed.
"The entire (time-of-use) program was created assuming that people weren't at home during the day," she said. "Now that they are, it's not as if they can choose to use their computers after 9 p.m. They cannot if they want to keep what jobs they have left. The time-of-use program has to be completely redone from the ground up or people are going to experience rate shock at the time they can least afford it."
Time-of-use plans also do not include a "high-usage charge" that applies to customers in the old tiered-rate system when they consume a lot of electricity in a given month. The high-usage charge resulted in howls of protests from some San Diego customers who saw their bills skyrocket during the blistering summer of 2018.
SDG&E then filed a request with the CPUC to suspend or eliminate the high-usage charge but last year the commission turned down the petition.
However, Randolph said the CPUC is now considering making adjustments to the charge within the next few weeks as another way to offer customers a financial break during the pandemic. But any reduction would mostly affect customers at PG&E and Southern California Edison rather than SDG&E. Since PG&E and Edison have not yet made a large-scale transition to time-of-use plans, a vast majority of their customers are still on tiered rates.
Suspend the rate increase?
Last September, the five commissioners at the CPUC approved a rate increase for SDG&E over the next three years. The decision called for a 6.74 percent increase in 2020. Why not suspend or trim the rate increase during the coronavirus crisis?
Lynch is all for it, saying the commission "absolutely" has the ability to take another look at the decision.
"As long as the utilities haven't already spent the money, the (CPUC) can always go back and say, 'Hey, wait a minute, we've changed our minds' and you can defer that spending."
Randolph sounded cool to the idea, alluding to the concerns about extending winter rates.
"If you are reducing collection this year, that will put pressure out on rate increases in future years," he said. "So we need to make sure we're providing the protections we can for the folks who most desperately need these protections without creating negative rate impacts in future years."
Since the outbreak, SDG&E has made a number of moves that include:
suspending the practice of turning off power to customers who have not paid their electric billsoffering flexible payment plans for those struggling to pay their bills, and waiving late payment fees for business customers (residential customers do not have to pay late fees).Last month, the company donated $1 million of shareholder funds to help launch the San Diego COVID-19 Community Response Fund, which assists residents affected by the pandemic, with a focus on three critical areas: food security, rental and utility assistance, and income replacement or gap funding.
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