22 Jun PG&E’s New Tier Structure – Is it Costing You More Than Ever?
Switching to solar energy has always had many long-term benefits for both the planet and our pocket-books, and with the changes to the rate structure of California utilities, this may be truer than ever before. In 2015, the California Public Utilities Commission (CPUC) announced a 5-year plan to change the structure of residential utility rates. In many cases, this will cost California residents who are using general electric quite a bit more. PG&E claims that this plan will be simpler for consumers to understand, but the media has coined this plan the “Greediest Grab Ever.”
Recent Changes to Rate Structure
Standard Rate Plan Tier Collapse
Beginning in 2015 and adjusting annually until 2019, PG&E fulfilled its word by reducing the number of tiers in the standard rate plan from 4 to 3 in 2016, and then from 3 to 2 in 2017. Although this may indeed be easier to understand and have more transparency in the pricing for consumers, it will certainly cost those who were in the lower tiers (using very little energy and therefore paying less) more and simultaneously reward them less for their conservation efforts.
With each tier change, there will be “tier price adjustments” periodically as well, which usually means that prices will be raised to more accurately reflect the cost of providing electric service to customers. Notice in the table below that “tier price adjustments” is included in almost every year, which is a bit unsettling as prices are unlikely to decrease overall.
Minimum Bill Introduced
The minimum bill will now be $10 per month for every single household. Although this may not seem significant, this means that even if you are out of the country for a month and use little to no energy, you are still contributing to the pot just like everyone else. You could sit in the dark for a month and still be paying for some of your neighbor’s daily usage.
Time-of-Use Rate Plans
Another option offered to California customers, introduced in 2016 were time-of-use rate structures, which became mandatory for all in 2019. This means energy costs less during times of day when energy is in low demand, such as late-night, early-morning and mid-day. But make no mistake, this won’t save people money overall: it will only cause rates to be more expensive during peak hours when most of us NEED to use the most electricity. Can you imagine most Americans turning off the lights and leaving the dishes unwashed in the evenings? Can we do our laundry between midnight and 5 am? It is unlikely that anyone would be able to change their lifestyle enough to benefit from these lower-priced times of the day.
The “Super User Electric” surcharge is perhaps the most worrisome of the proposed changes for resident wallets. This surcharge will apply to consumers who are using 400% above base electric consumption. This may seem like a difficult percentage to reach, but it could very realistically happen to many different households. This pricey surcharge will amount to the tier 1 rate in dollars per kilowatt-hour X 219%, which can definitely add up to a high bill. Take a look at the table below to see how each of the tiers used to compare in rate under the old structure. Although these numbers will be changing slightly, they give us a point of reference when trying to understand the SUE tier.
Some basic math shows us that the base rate of electric consumption used to be (and will probably still be comparable to) 350 Kilowatt-hours per month. 400% of this would be 1400 Kilowatt-hours, which we see on a regular basis from the utility bills our customers give us to complete their proposals. If they reach this level of energy consumption, they will be charged 219% of the tier 1 rate (16 cents kWh under the old rate structure)—meaning they would be paying at least 35 cents kWh, which multiplied by 1400 Kilowatt-hours amounts to a monthly bill of $490. This would be an average monthly bill if the SUE Tier was reached most of the month, but just reaching it some of the time could easily lead to a monthly bill of at least $400.
Although 400% sounds like an impossible energy usage to reach, take a look at the table below. When we create proposals for our customers showing them how much switching to solar can save them on their utility bill, we analyze how often they fall into each tier on average. This customer was in Tier 4 often, as quite a few of our customers are.
Clearly, these changes to the tier rate structure do not spell out big savings for California residents. Although there are simple things that you can do to reduce your energy consumption, there is simply nothing that can prevent the rising costs when sticking with general electric.
Switch to Solar Today!
By switching to solar energy, you can eliminate your electricity bill and lock in your lower rates for years to come. We at Energy Saving Pros can definitely help you to save BIG on your energy bills. Don’t hesitate to request your free no-hassle quote TODAY. Together we can improve your energy efficiency and save you from the upcoming rising costs of general electric.
By Kayla Rabbich