Under new pricing structure, electricity costs will increase for most Californians. Or stay the same. Or maybe increase for efficient homes.

The California Public Utilities Commission approved a plan to dramatically change the pricing of electricity for residential users in the state.

Since we’re talking regulators who like regulation and complexity you have to be an accountant, engineer, or economist in order to understand this jumble. I think I get the basic picture.

Currently there are four different pricing ‘tiers’ based on how much electricity you use. The price for each level of usage is different. For example, our statements last summer gave an interpretive chart listing the various prices as motivator to conserve electricity:

  • $0.14 – tier 1 price per kilowatt-hour
  • $0.16 – tier 2
  • $0.32 – tier 3
  • $0.35 – tier 4

Those tiers are based on your total electricity usage for a billing cycle. A friend who has rooftop solar explained to me the goal when sizing an installation is to put in enough panels to get into tier 2.

If you have a large house, or are in the home all day, or have a pool, I’m guessing your electricity usage would put you well into tier 4. Cutting your electricity from somewhere in 3 or 4 to tier 2 would save a lot on the monthly electricity bill.

Well, those calculations just got tossed out the window.

The PUC changed the four tier structure into two tiers. Instead of the top-level being twice the price of the bottom level, there will be a 25% difference between the two tiers. (On our bill, the top tier is 2.5 times higher than the bottom tier.)  There will be some sort of surcharge for people who are using more electricity than the PUC thinks one family should use, but I haven’t seen what that amount is or where it kicks in.

Reporting says the PUC claims this will have neutral impact on utility revenue. Net effect is people using less electricity will see their bill increase, people who have hugely expensive solar installed on the roof and thus use less electricity will probably see an increase, and people who have large houses and no solar will likely see a decrease.

Perhaps I don’t understand the situation, but that doesn’t seem to be a smart way to encourage energy conservation. Not a particularly smart plan to encourage people to install rooftop solar.

Other changes

Starting in 2019 electricity bills will be based on time-of-day pricing. That means running your air conditioner in the afternoon, when it is hottest, will cost you more per kilowatt-hour than any other time of day.

I think that blows up the calculations for the Tesla in-home battery storage. Does a 25% instead of 250% spread help or hurt the calculations for rooftop solar?  Or does time-of-day pricing make those batteries really valuable since you could charge batteries at night and use them in the afternoon? Any economists or electrical engineers able to help out this floundering accountant? Or would a 25% spread instead of 0% spread still make it uneconomical for a $7K battery to move 4 or 5 kWh from night to afternoon?  I’m so confused.

The PUC also approved a $10 minimum monthly charge. This will increase costs for people who have installed enough solar that they don’t otherwise make any payment for the electricity they draw from the grid.

I think that further undercuts the calculations for rooftop solar.

Here are the two most helpful articles of the ones I read:

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