Dan Walters

Opinion: Overhaul of power rates due

As residents of California’s Central Valley baked in triple-digit heat this week, those along the coast enjoyed springlike weather – 72 in Monterey and 106 in Fresno, 125 miles due east, at the same moment.

It’s the meteorological facet of California’s stark east-west division that’s also economic, cultural and political. And, like those other aspects, it makes crafting sweeping public policy decrees inherently difficult.

California’s weather differential is the central – if largely unspoken – issue in a highly complex electric power rate case, mostly affecting customers of three huge, privately owned utilities, before the Public Utilities Commission today.

The commission is poised to adopt a plan to compress five tiers of residential electric rates, based on the amount of monthly consumption, that were created 15 years ago during the state’s infamous energy crisis.

Those who use relatively small amounts of power each month pay much, much lower rates than those in the upper tiers of consumption. Lower-tier rates have been frozen to protect their users from price spikes ever since the state’s big utilities experienced a wrenching financial meltdown 15 years ago, while upper-tier rates have increased sharply.

The freeze embraced the assumption that small users deserve their low rates because they tend to have lower incomes, while those who use much more are the affluent.

That may often be true, but it’s also true, data indicate, that many relatively high-use consumers are also residents of inland areas where summer temperatures are high, requiring heavy air conditioning use, and incomes are low – Fresno, for instance.

Last year, the Legislature and Gov. Jerry Brown called for a rate overhaul, implicitly recognizing the weather differential and preparing for big price increases that will accompany the state’s shift to green power.

In response to the mandate, a plan to replace the five tiers with two, reducing the pricing differentials, had made its way through the PUC’s elaborate hearing process and was nearing final approval.

Environmental groups and some newspapers criticized the plan, supported by PUC President Michael Picker and the utilities, as being a giveaway to affluent energy hogs, and supported an alternative by PUC member Mike Florio that would have created three tiers that didn’t flatten the rate differential as much.

It was impossible for a layman to say whether the Picker or Florio plans were the better response. But it became a moot point when, at the last moment, they reached a compromise that will shrink rates back down to two tiers with a surcharge on the highest energy users.

It’s high time for an overhaul. The existing tiers that Pacific Gas and Electric, Southern California Edison and San Diego Gas and Electric use are outmoded and unfair – especially in assuming that big users of power are necessarily the wealthy.

Indeed, affluent Californians in enclaves along the cool Pacific coast have often received subsidies from inland California’s poorer residents.

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