California moves to reform electricity rates

LOS ANGELES, Sept 12 Thu Sep 12, 2013 3:58pm EDT

LOS ANGELES, Sept 12 (Reuters) - California lawmakers on Thursday voted to reform the state's electricity rate structure, a move aimed at lowering bills for high energy consumers in the state's sweltering inland regions.

The bill, known as AB 327, was backed by the state's three investor-owned utilities: Southern California Edison, a unit of Edison International, Pacific Gas & Electric, a unit of PG&E Corp, and San Diego Gas & Electric, a division of Sempra Energy. They argued that higher usage customers, many of which are lower to moderate income households, have borne the majority of the state's electricity rate increases since certain restrictions were introduced amid the California energy crisis 12 years ago.

The reform could ultimately mean that lower energy users such as those living on the coast see higher energy bills.

The bill also preserves a key policy that supports the residential solar power industry. Major solar installers including SolarCity Corp and SunRun had lobbied for that provision in the bill.

The policy, known as net metering, allows residential solar customers to sell the excess power their rooftop systems generate back to the utility at full retail rates. The policy is critical to making solar an affordable option for consumers.

The new law directs the California Public Utilities Commission to design a new net metering program that would take effect in 2017 and also gives the regulator the authority to require utilities to source more than 33 percent of their power from renewable sources like wind and solar.

The law, which is expected to be signed by Governor Jerry Brown, primarily does away with rate restrictions enacted during the energy crisis of 2001. The state has limitations on rates in the first two "tiers" of electricity usage. As a result, there is a large gap between low usage rates and those in the upper "tiers" that are reserved for those who consume the most electricity.

The bill authorizes the CPUC to redesign that rate structure, preserving at least two tiers of usage.

It also authorizes, but does not mandate, the utilities regulator to implement a controversial fixed charge of up to $10 a month for residential customers. Several prominent groups, including the Sierra Club and the California Environmental Justice Alliance, have opposed the bill because of the fixed charge provision, saying it is unfair because it cannot be offset by conserving energy or going solar, and would be an added burden on low income ratepayers.