Tag Archives: Tou Rates

SDG&E looks to raise minimum bill 400%, citing solar-driven cost shift

By Robert Walton, Utility Dive

Dive Brief:

  • San Diego Gas & Electric earlier this summer said it wants to raise its minimum bills by almost 400%, along with a $10 fixed charge, a move the utility says is necessary to combat the $420 million annual cost shift between residential customers with and without solar panels.
  • By next spring, the utility wants to raise the minimum bill to $1.26/day, or $38.19 per bill based on a 30-day billing cycle, effective March 1, 2020. Some vulnerable groups of customers would be eligible for a 50% discount on the minimum bill, according to SDG&E.
  • Several groups want to keep the minimum bill where it is, around $10, with no fixed charge. According to The Utility Reform Network (TURN), a minimum bill charge should be crafted so that customers with lower usage don’t wind up paying higher bills.

Dive Insight:

As California adds more renewable and ​distributed energy, SDG&E told the state’s Public Utilities Commission (CPUC) that its proposal for a “modest” fixed charge for all residential customers “is a critical first step toward an evolving rate design.”

“For the California utilities to continue to evolve to provide the services that the commission and customers want, then all customers who use and benefit from the grid will need to start to share in the cost of building, maintaining and operating it,” SDG&E said in its June testimony.

That means rates that allow for a fixed charge to recover fixed costs from all customers, according to the utility. “The antiquated rate design model of recovering fixed costs in volumetric rates is no longer a viable option that can promote fairness to all customers.”

SDG&E says its work to overhaul rates is consistent with 2013 legislation that required utilities to reduce the number of energy pricing tiers, incorporate time-of-use pricing, allow for a fixed charge of up to $10/month and “provide solutions to the increasing cost burden on customers who do not have private rooftop solar.”

Read full article from Utility Dive

Related Article: San Diego Gas and Electric looks to quadruple customers’ minimum monthly bill (PV Magazine) – Sept. 3, 2019

 

A Trifecta for Solar Energy and Distributed Generation

We all have good weeks and bad weeks. For proponents of Solar Energy (and all other inhabitants of our planet) this has been an historic week, with major achievements at the International, National and California-state levels. Setbacks will be inevitable, but the events of this week will have memorable and lasting impact.

The first and International achievement was the December 12 Agreement of 188 countries at the United Nations Conference on Climate Change in Paris to take measureable actions with the eventual goal of keeping global temperature rise to less than 2ᵒ Celsius (3.6ᵒ Fahrenheit) by 2050 compared with pre-industrial levels. As we have repeatedly been informed, this is the level estimated by numerous scientists to avoid the worst affects of atmospheric warming and ocean rise.

Though yet to be ratified (a process that starts in April 2016), the agreement commits those countries that do ratify the agreement to establish national emission targets and report on progress every 5 years. While the agreement calls for zero net anthropogenic greenhouse gas emissions to be reached during the second half of the 21st century, lowering the target would (according to some scientists) move this goal forward to the 2030 – 2050 timeframe. Either way, implementation of this agreement puts pressure on countries to support low- and non-carbon energy sources, solar very much included, accelerating their deployment and continued improvements.

The second and national achievement has not been enacted as this is written, but is the tentative agreement by Republican and Democratic House party leaders incorporated into the Appropriations bill that would extend tax credits for solar and wind projects from the current end-2016 expiration date through 2021. The agreement was the result of a compromise where-in Democratic Representatives would support eliminating the ban on US oil exports in exchange for Republican support for the Tax Credit extension.

While the vote can still go awry, a senior analyst at GTM Research (who closely follows the Solar market and industry) commented “the extension to the federal ITC is without question a game-changer for U.S. solar’s growth trajectory. Between now and 2020, the U.S. solar market is poised to see a number of new geographies open up with a 30% ITC, within both distributed and utility-scale solar.”

Finally, the third and California state achievement was the December 15 proposed ruling by the California Public Utilities Commission (CPUC) to leave in place most of the charges and fees now in place between the state’s major investor-owned utilities (Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric) and customers who have installed residential and commercial PV systems. Though yet to be finalized (in January 2016), the proposed ruling leaves in place most of the terms that allow customers with PV systems to recoup their investments in a timely manner thereby increasing the desirability of these systems.

Challenges to PV-favorable net metering terms and (lack of) other fees have been raised in many states, and regulator decisions have been mixed. The proposed CPUC ruling is perhaps the strongest pushback by any state regulator to utility claims of the high costs distributed PV systems impose on other (non-PV owning) rate payers. While new costs are proposed, and some uncertainty is introduced by requiring PV-system owners to be placed on Time-of-Use rates (with unknown impact on their bills), the proposed ruling is seen as leaving the business environment favorable for continued expansion of distributed generation.

For now the sun shines on distributed generation and the growth of solar-sourced clean energy. Let us hope that all three events help realize solar’s potential contribution to our future energy mix for the sake of maintaining our habitable planet.

From theory to practice: The challenges in moving to ‘Utility 2.0’

By Herman K. Trabish, Utility Dive

For all the theorizing about what the utility of the future will look like, real world examples of how to adapt current power sector business models to the new world of renewables and distributed resources can seem few and far between.

While utilities often trumpet their new smart grid technologies, microgrid projects and storage pilots, actually working out how to make those solutions scalable and profitable can be a lot harder than it looks from the outside.

But utilities across the nation can learn from each other’s experiences, with the aim that the questionable technologies of the day can become the ubiquitous tools of tomorrow.

That was the goal of the emerging technologies panel at the recently-concluded Energy Storage North America 2015 conference in San Diego. There, representatives from four major utilities—PG&E, the Sacramento Municipal Utility District (SMUD), Southern California Edison, and Consolidated Edison—highlighted the challenges and successes of a diverse set of DER pilots, hoping their struggles could translate into easier adoption of distributed resources and demand side resources at other companies…

Read full article from Utility Dive

How Solar, Batteries and Time-of-Use Pricing Can Add Up to Value

By Jeff St. John, Greentech Media

There’s definitely a value to storing solar energy in batteries, and then discharging that energy to meet grid and customer needs. Measuring that value — and finding a way to share it between battery-equipped solar customers and their utilities — is a trickier matter.

Out in Sacramento, Calif., a long-running solar-storage pilot project has been testing out this interplay. The city’s utility, Sacramento Municipal Utility District (SMUD), has been working with startup Sunverge to align the operation of 34 battery-backed, PV-equipped homes with its needs to shave peak demand in late summer afternoons, when air-conditioning loads put stress on the grid.

SMUD is using critical peak pricing as its lever. Since 2012, the utility has been running an experiment with residential rate plans that charge extra-high prices during “critical peak period” days, in exchange for extra-low prices at other times. Some customers were offered the option of signing up for the plan — and others were automatically enrolled.

Read full article from Greentech Media

Renewable Energy’s Potential May Be Understated

By Gabriel Kahn, The Wall Street Journal

In February 2013, California energy officials sat down with power-industry executives to figure out how to avert an approaching calamity: The rapid rollout of wind and solar electricity was stressing the state’s grid. The more renewable energy California added, the more its power supply could be whipsawed by a cloudy day or a windy storm. Some at the meeting warned that problems, such as rolling brownouts, could start to show up later that year.

Those same worries were being echoed across the county as state authorities struggled to load aging electricity grids with ever-greater amounts of renewable power. At the time, renewable energy accounted for about 14% of California’s electricity output. Today, California often gets as much as 30% of its power from renewables; there are periods of the day when production can soar to 40%. California legislators just approved a plan that would require half of all power to come from renewables by 2030. Still, the tipping point the power industry feared hasn’t materialized.

The experience of California and other states with high concentrations of solar and wind is challenging long-held assumptions about the limits of renewable energy. As the boundary of what is considered possible expands, so does the momentum around investment in new technology and resources. Plenty of risks still remain. But the fact that the grid has been able to handle more renewables than previously thought is driving massive changes through the industry. One of the places it is being felt most acutely is among utilities.

Read full article in the Wall Street Journal

Timing is Everything: How California is Getting Electricity Pricing Right and Bringing Clean Power to the People

By Jamie Fine (Senior Economist, Environmental Defense Fund), EDF’s Energy Exchange blog

Anybody managing a household budget knows it pays to plan ahead. With advanced thinking we can buy favorite items with coupons, when they’re on sale, in bulk, or at the cheapest store in the area. Using the same smart shopper skills, new changes to the way utilities charge for electricity are going to give Californians another way to save money on energy bills.

In the current system, most California households’ electricity prices don’t change throughout the day. There is no option for lower prices when system demands are lower and electricity is cheap in wholesale markets. But that’s about to change, thanks to a recent 5-0 decision by the California Public Utilities Commission (CPUC).  Starting January 1, 2019, after a period of study, public outreach, and education, California’s large investor-owned utilities (Pacific Gas and Electric, San Diego Gas and Electric, Southern California Edison) will switch households to time-of-use (TOU) electricity pricing. This simplified rate structure rewards customers who shift some of their electricity use to times of the day when clean energy is plentiful. This shift to a TOU pricing regime – one of the first in the nation – is a huge win for Californians and the environment.

Read full blog post from EDF’s Energy Exchange

Inside California’s rate restructuring plan and the battle for fixed charges looming over it

By Herman K. Trabish, Utility Dive

California regulators united behind a new rate framework before the Independence Day holiday, but lurking behind the decision is a bigger one for utilities and renewables advocates alike.

The California Public Utilities Commission (CPUC) voted unanimously on July 3 to flatten the current four-tiered electricity rate system to two tiers, push for time-of-use (TOU) rates by 2019, and make other noteworthy changes to how utilities bill customers. California’s investor owned utilities, San Diego Gas and Electric (SDG&E), Southern California Edison (SCE), and Pacific Gas and Electric (PG&E), hailed it as a step toward making rates fair. The state’s utility watchdog condemned the decision, the ratepayer advocate is concerned about it, and solar advocates are studying it warily. All recognize a decision on fixed monthly charges was deferred.

Reaction from utilities: SDG&E

SDG&E Spokesperson Amber Albrecht:

  • “We were hoping for more immediate relief but we are on the right path. This new rate structure inserts more fairness and transparency into electric utility bills,” and “brings rates more in line with the true cost of service.” The new rate design will not take away customers’ incentive to be more efficient about their electricity consumption.
  • SDG&E tier 3 and 4 customers now pay “136% more than those in the lowest tier” and those in the lowest tier “pay 15% less than the cost of the basic delivery of electricity.” With the new two tier plan, the higher users’ bills will come down while the lower users’ monthly bills will likely edge up to around $2 to $5.
  • In 2017, the SUE will go into effect; it is expected to be levied on about 2% of SDG&E customers. “Each IOU’s rates will be slightly different but the basic pattern will be the same.”
  • “This is the first step in a broader discussion about the modern electricity bill. Now we know what the framework will be. Moving forward, the CPUC will have a number of proceedings and make a number of decisions on things like net energy metering.”

Reaction from utilities: Southern California Edison

SCE Director of Pricing Design Russ Garwacki:

  • “Our estimates find the high usage customers are paying $600 million in subsidies per year to low usage customers. Even when fully implemented in 2019, there will still be significant subsidies left in the rate structure but this does provide relief.” The new plan corrects an overpayment by higher usage customers without asking lower usage customers to subsidize them.
  • Incentives for conservation and solar: The new rate design will not take away customers’ incentive to be more efficient about their electricity consumption. Lower rates for tier 2 customers will reduce their incentive to be more efficient, but higher rates for tier 1 customers provide them with an incentive to conserve. “There is a point-counterpoint. And that extends to the incentive to go solar. Because the tiers are flattened and the rates are more closely tied to cost, more middle usage customers will consider solar. A recent CPUC energy division report found solar adoption is higher under flatter tiers.”
  • Minimum bill/fixed charges: The decision “was a compromise and balancing of a large number of issues,”—the minimum bill is an example. It is not, as characterized, a replacement for a fixed charge. The commission decided to deal with the fixed charge in 2019, but the implication of the minimum bill is that even the lowest usage customers should pay “some fair share” for the distribution system. “They viewed the minimum bill as a first step toward fixed charges. That is not what we asked for but it is a step in the right direction.”
  • TOU rates: Rates follow cost with a TOU structure and it is important to provide that cost signal for residential customers. SCE just completed transitioning all its non-residential customers to TOU rates. Studies are beginning to demonstrate that, over time, usage shifts and the load profile flattens in response to them. SCE wanted an opt-in to TOU rates, but the commission disagreed.

Reaction: Solar Industry

  • Solar Energy Industries Association: “Most importantly, we’re glad to see that the commission has not adopted fixed charges – and recognized that there’s no evidence to justify them. These rates are workable, although we believe a greater tier differential would more appropriately reflect the costs of high energy users.” The flattened tiers “should significantly mitigate any concerns the utilities have about cost shifts among ratepayers.”
  • Solar Electric Power Association: “This decision is an important part of the process to incorporate more distributed resources into the system.” But rate design “needs to be articulated as part of a broader conversation on the utility business models.”
  • SolarCity: “The proposed decision achieves the utilities’ goal of flattening the tiers while also making the entire rate system more equitable for ratepayers. If net metering remains in place, this decision will continue to allow Californians to go solar.”

Read full article from Utility Dive