Why running the AC in California's scorching valleys may get a bit cheaper
Responding to consumer complaints of an unfair rate system, California lawmakers are close to passing a bill that would bring electricity rates in hot inland areas closer to those at the cool coast.
People who live in the hot desert pay a higher rate for electricity than those who live by the cool ocean. Is that fair?Skip to next paragraph
In Pictures Weather extremes 2013
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Dealing with an issue that has plagued utilities all over the country since the 1990s, California may be first out of the gate with a way to deal with rate fairness. The solution may also set a model that others will follow.
With the State Legislature’s bill AB 327 – which appears headed for passage and the signature of Gov. Jerry Brown – energy rates for those in hotter locales, who consume more power to run air conditioning, will be lowered to where they are more even with rates by the breezy seacoast, where the need for fans and air conditioners is less.
Ever since the electricity crisis of 10 years ago, marked by repeated blackouts and brownouts, utilities have designed rate structures to encourage conservation by raising the price per kilowatt hour for those in the highest consumption brackets. What’s more, rates in the lowest brackets have been frozen, even as utilities have had to raise their overall rates to compensate for their higher costs.
The result is a dramatic discrepancy in rates that homeowners pay in the two regions, where it is a normal occurrence that inland and desert valley homes, where more elderly and lower income Californians live, get socked with monthly electric bills of more than $500, while those in cooler coastal climes have bills under $100.
“This is a very big issue nationally and not just in California, so what you are seeing here now is likely to be exported and seen elsewhere,” says Barbara O’Connor, director emeritus of the Institute for the Study of Politics and Media at California State University, Sacramento. “There has been a big hue and cry in lots of states about regional disparities in winter and summer, and consumer pushback has resulted in this answer.”
The bill, which would hand back decisions on adjusting rates of privately-owned utilities to the California Public Utilities Commission (CPUC), has support from advocates for utility reform, consumers, the elderly, and low-income groups, as well as from utilities themselves.
“This takes the rate-making authority out of the Legislature and puts it back in the CPUC where it belongs,” says Mark Toney, executive director of the Utility Reform Network (TURN). “The CPUC is better because all parties get to present evidence and everyone can ask for data to back up claims that are heard, which puts the utilities and consumers on a level playing field. That’s not the case in the Legislature where the process is much more political, and frankly, they don’t have the expertise.”