Low-Tier Electricity Users Face Rate Increase

The electricity rate change would help those who rely on air conditioning in hot, inland areas at the expense of others

New legislation on the verge of passage is expected to provide electricity rate relief to Californians who live in hotter climates and use more power to run air conditioning.

Consumers who use less electricity would expect to pay more per kilowatt-hour than they do now, under the terms of Assembly Bill 327.

During summer months, it is not uncommon for inland homes to run up monthly electricity bills in excess of $500. Conversely, many homes in the cooler coastal zone do not have air conditioning and see monthly bills under $100.

The difference stems not only from higher total electricity usage, but from higher rates per kilowatt-hour.

The bill would affect Southern California Edison and other investor-owned utilities, but not the Department of Water and Power in Los Angeles or other municipal utilities.

No one, not even the bill's author, can provide particulars of AB327's bill's impact on shifting rates, because those actual decisions will be made by California's Public Utilities Commission (CPUC) under authority from the bill.

The rationale for the change is that higher usage consumers have, in effect, been subsidizing the lower rates paid by consumers of less.

"In the current rate scheme, there's a lot of cross-subsidy," said Assemblyman Henry Perea, D-Fresno, the bill's author.

For decades, electricity rates have been designed to encourage conservation by raising the price per kilowatt-hour as consumers use more electricity and move into higher "tiers."

The situation grew more complicated a decade ago during California's energy crisis, when partial deregulation of the wholesale electricity market led to artificial shortages and enormous price fluctuations.

"The bill allows the CPUC to restructure how costs are recovered in rates, and provide relief to higher usage customers who have been bearing almost all cost increases in rates since the energy crisis of 2000-01," reads in part a statement issued by Southern California Edison, urging final approval on the Assembly floor.

The bill has the support of The Utility Reform Network (TURN), a San Francisco-based consumer advocacy organization. The bill would also encourage increased use of renewable energy sources, and include a provision to help insure that some early adopters of solar energy recover their costs.

The prospect of rate relief is welcomed by many who live in Southern California's valleys and deserts.

"Savings are savings, especially for a family of four," said Nicolas Godbout of Alhambra, whose summer electricity bills have been running between $350 to $500 per month.

Some who live along the cooler coast expressed sympathy for those facing rate relief in the hotter inland areas.

"You really need AC to function day to day," said Erica Leavitt, a medical school student who now lives in Santa Monica, but who remembers how much higher her electricity bills were when she lived in Los Feliz.

She supports efforts to reduce rates for high usage consumers, but is less enthusiastic if an increase in her rates will be part of the bargain.

"Obviously, any change that raises rates here would not be my ideal," Leavitt said.

Another aspect of AB327 permits utilities to charge costumers a flat fee of $10 per month, for the stated purpose of insuring that even households relying mainly on solar power will also contribute to the cost of maintaining the power grid.

With amendments made to the bill Monday in the state Senate, it must return to the Assembly for concurrence, and then can be sent to the Governor's desk.

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