Many Silicon Valley residents could see their electricity bills rise by more than $100 a year under a new PG&E proposal that would cut rates for customers who use the most energy, such as those in scorching areas like the Central Valley.
PG&E says the change is needed because people in many parts of the state — particularly areas where boiling summer temperatures result in heavy use of air conditioners — have been hit with excessively high rate increases in recent years. But over the same period, said company spokesman Jonathan Marshall, rates have failed to keep pace with inflation for other customers, including many in the Bay Area.
"The increase in costs we've seen have fallen almost entirely on higher-use customers, and while that has the benefit of promoting energy conservation, it's gotten to the point where it is no longer equitable," he said.
But advocates for some consumer and environmental groups said the proposal, which must be approved by the California Public Utilities Commission, would discourage PG&E customers from cutting back on electricity use.
"People who are low energy users will be penalized," while rewarding "people who by their own admission are the very highest end users," said Mark Toney, executive director of The Utility Reform Network, which closely monitors energy rates. "We just don't see how that makes sense."
Under its proposal, PG&E says customers who consume the statewide average of 550 kilowatts of electricity a month — typical in Silicon Valley and much of the Bay Area — would see their monthly electricity bill rise $10.73 to $88.13.
By contrast, the monthly bill for consumers using 1,500 kilowatts would decline an average of $108.62 to $371.46. Some people in the Bay Area use that much energy, although it is more common for residents in areas subject to higher extremes in temperature.
The proposed change is expected to be debated by the commission through the rest of this year. If it's approved, PG&E hopes to put it into effect in May 2011.
It would essentially flatten rates within the utility's service area by changing the current five-tier rate system, where high-electricity using customers at the top tier pay nearly 50 cents per kilowatt hour and low-electricity users in the bottom tier pay about 12 cents per kilowatt hour.
That would change to a three-tier system, with those in the top category paying slightly less than 30 cents per kilowatt hour. 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 and, as a result, pay a higher electricity rate.
PG&E also is proposing a flat monthly service fee to cover some of its costs. The fee, which PG&E says is similar to what other utilities charge, would be $3 for most customers and $2.40 for low-income residents who qualify for the California Alternative Rates for Energy program.
Although some PG&E customers in the highest rate tier live in cold areas, most tend to be in hot parts of the state where sweltering temperatures send air conditioner use soaring. Utility charges have aroused such concern in Kern County that the board of supervisors is seeking voter approval in November to obtain electricity from a supplier other than PG&E.
PG&E spokesman Marshall said the utility proposed the change because many top-tier residents think the current system is unfair "and we agree with them." He stressed that PG&E would not make more money by reshuffling the rates and imposing the service fee.
Severin Borenstein, who co-directs UC Berkeley's Energy Institute, said he believes PG&E's proposal is warranted.
He said tiered rates can be beneficial to some poor people because they tend to use electricity more sparingly than others. But people in higher tiers aren't always persuaded to keep their lights low because "it's probably too complex a system" for them to understand, he said, adding that high-tier customers "are being charged inequitably."
However, Jim Metropulos, a senior advocate for the Sierra Club, said he feared the PG&E plan "would discourage conservation." He favored having PG&E set rates based on the microclimates of specific areas and use more renewable energy sources "rather than just stick people in this simplistic, non-climate-sensitive rate structure."