Published on March 25th, 2010 | by Susan Kraemer19
PG&E's New Flatter Rate Proposal Could Slow Rooftop Solar Development in California
March 25th, 2010 by Susan Kraemer
People in California’s hinterlands pay a very high price for electricity. They use three times more power than the average; trying to stay cool, and they now pay more than four times the base rate for it. They think that’s not fair, and PG&E agrees with them. PG&E is applying for a rate change to reduce the top tier rate, and spread the cost of that higher energy use amongst the rest of their ratepayers.
But it’s no secret in solar circles that one reason for the boom in California solar has been those high rates paid by the most profligate energy consumers in the state. A “front-of-the-bay” Bay Area counterpart who (by not needing air conditioning or a swimming pool) pays about $100 for an average of just 550 kilowatt hours a month.
But someone with a swimming pool and air conditioning, in back of the Berkeley Hills, in the stifling cities of Concord, Walnut Creek, Pleasanton and Livermore – that see summer temperatures routinely over 95 degrees Fahrenheit – can easily spend up to $400 a month for 1,500 kilowatt hours a month of electricity.
They want to reduce that amount to only three times the base rate of 11 cents a kilowatt hour – to 30 cents a kilowatt hour, dropping almost 20 cents. Instead of the current five tiers, based on usage, PG&E proposes a switch to three tiers.
The rate for the bottom two tiers would remain the same, but many customers who are now in those two tiers would be placed in a higher tier (with the reduction from five to two tiers) and, as a result, pay a higher rate. Overall, PG&E would not make more money on the change. The high energy users would drop about $100 off their monthly bills, and the rest of us would pay $10 more a month to make up the difference.
But, if PG&E lowers the steepest rates of the inland residents, that will lower the pricing incentive that they have to switch to cleaner solar power.
Currently solar is cheaper than PG&E right away for those who have those high bills. So it has been easy for many local solar companies to compete with PG&E – part of the reason that California’s green jobs have grown three times as fast as jobs in the moribund regular economy.
Non-utility solar now supplies more than 2.5% of state utility’s peak demand for power on the grid and that cap has been lifted to allow up to 5%. But without that high bill incentive, less solar power would be put on the rooftops of inland residents.
Removing the incentive from homeowners would just return the pressure to PG&E to add more dirty gas powered electricity, with the danger that more natural gas electricity brings to California’s water supply, our health, and future climate.
In the long run, keeping that rate inequity is better for all Californians.
Drive an electric car? Complete one of our short surveys for our next electric car report.
Keep up to date with all the hottest cleantech news by subscribing to our (free) cleantech newsletter, or keep an eye on sector-specific news by getting our (also free) solar energy newsletter, electric vehicle newsletter, or wind energy newsletter.