SDGE Has Implemented Significant Rate Structure Changes
With approval from the California Public Utilities Commission, SDGE and the other major investor-owned utilities in California have enacted the beginning of their “tier-flattening” strategy. This plan will allow them to adjust rates and eliminate tiers, getting to a two-tier structure by 2019. Once finished, the goal is to have two tiers (and a “super-user surcharge” that will essentially create a third tier) with a difference of 20-25% in price between the lower and upper tier. The surcharge will be added to the price of second tier energy once the high-use threshold is reached.
The changes began September 1st, 2015 for SDGE by lowering the price for tier 3 (which has absorbed tier 4), and an increase in prices for tiers 1 and 2. Here’s what the changes look like for the typical homeowner (Schedule DR – RESIDENTIAL SERVICE Effective 9/1/2015):
$10/MONTH MINIMUM FOR ELECTRIC
17.41¢ per kWh
18.08¢ per kWh
20.46¢ per kWh
20.53¢ per kWh
40.36¢ per kWh
39.61¢ per kWh
42.36¢ per kWh
COMBINED WITH TIER 3
39.61¢ per kWh
While this may look like good news at first glance, the overall assessment is that this is the beginning of price increases through 2019 for the majority of SDGE residential customers. As price adjustments continue, the goal is to get to a 20-25% difference between two tiers. The assumption is that the lower tier will continue to climb in price as the upper tier price comes down slowly. Effectively, everyone will be paying significantly higher costs for the lower tier but less for the upper tier… until the super-user surcharge comes into play. At this point, it will be as if there is still a third tier, which will be much more expensive than the baseline price. Once these changes have been completed by 2019, SDGE’s next goal will be switching all customers to a time-of-use rate to allow prices to reflect demand.
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