Many of us have felt the pinch of high electricity bills over the winter, and our bills only seem to go up. Well, it’s not your imagination. Electricity rates at the big three investor-owned utilities have risen relentlessly over the past few years. (1)
Electricity rates at the big investor-owned utilities have risen far faster than inflation (CPI) recently. Source: Jennifer Dowdell of TURN (The Utility Reform Network) at the California Public Utilities Commission (CPUC), 2022
The rate increases combined with economic difficulties during the pandemic have resulted in nearly $2B in arrearages (bills not being paid). Power-intensive businesses (e.g., cold storage) say they are having difficulty competing since California’s rates far exceed those of neighboring states.
California electricity rates are very high compared to neighboring states. Source: Catherine Yap of CLECA (California Large Energy Consumers Association) at the CPUC, 2022
Help is on its way with bills, but that is a temporary band-aid; we have to do something about our ever-increasing rates. As Executive Director Mark Toney of consumer advocate TURN proclaimed in an impassioned speech at a recent meeting on affordability at the CPUC, “We need a time out!” (2)
Executive Director Mark Toney of TURN calls for a time out on rate increases at a recent meeting of the CPUC. Source: CPUC meeting video around timestamp -4:16, 2022
As we’ve explained before in this blog, high electricity rates hit low-income households harder because electricity use is relatively flat across households of different incomes. Furthermore, high rates can dissuade customers from switching away from fossil fuels, making it difficult for California to hit its emissions targets. You can see some of those break-even operating prices for fuel switching in the table below, assuming gasoline is $4.64/gallon and natural gas is $2.20/therm. (3)
Our high electric rates can make it hard for fuel switching, especially space heating, to pencil out. This chart reflects fuel costs only and assumes gasoline is $4.64/gallon and natural gas is $2.20/therm. Source: Merrian Borgeson of NRDC (Natural Resources Defense Council) at the CPUC, 2022
The situation has become so pressing that the CPUC recently held a two-day meeting to generate ideas for ways to lower energy bills, and especially electric bills, so the state can accelerate the energy transition and meet its climate goals in a way that is affordable and equitable.
Suggestions for reducing electricity bills fell into three broad categories: reducing the cost of providing electricity, shifting some of the remaining costs away from ratepayers, and changing the rate design to allocate costs more fairly.
Reducing the Costs to Provide Electricity
Many suggestions were offered to lower the …….
Source: https://www.paloaltoonline.com/blogs/p/2022/03/06/when-will-our-electricity-rates-go-down