MICHAEL TURNIPSEED: Working class shouldering much of the load on electricity rates
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This month, the California Public Utilities Commission is considering two draft decisions affecting residential electric rates in PG&E's current general rate case. Amagda Perez and Stephanie Chen, in the May 23 Forum article "PG&E rate increase would hurt valley's most vulnerable," made several debatable statements on elements of the proposed decisions which the Kern County Taxpayers Association would like to place in context, expand and correct.
KernTax became involved in the ratemaking process in 2010; the average PG&E rate was in excess of 18 cents per kilowatt-hour and Tier 5 electric rates were a shocking 49.8 cents per kWh! Compare this to the national average residential rate of 11 cents per kWh. Those shocking rate increases were the poor product of legislative and regulatory fiat.
How could this happen to us? Starting with the failure of electrical restructuring in 2000, advocacy groups protecting selected ratepayers and interests purposely traded larger ratemaking issues while promoting their selected constituents' interests such as freezing CARE rates for as long as possible.
* CARE rates have been frozen at about 9 cents per kWh since 1991.
* Additionally, for the last five years, the punitive upper-tier rates were increased to motivate high users, non-CARE valley residents in particular, to conserve and purchase expensive residential rooftop solar panels. Kern County CARE customers use almost as much energy as non-CARE customers!
* In support of higher-tier rates, revenue requirements have been increased by stakeholders adding greater cost burdens to upper-tier non-CARE ratepayers.
Over the past 15 months, PG&E and the CPUC have prudently acted:
* On Feb. 26, 2010, PG&E filed for an emergency rate reduction for the top tier. In a revenue-neutral action, the top-tier rates were modified to lower the top tier and raise Tier 3 rates to cover the reduction.
* In the current rate case, PG&E is trying to create a small customer charge because non-CARE Tier 1 and 2 rates have been effectively frozen since 1996, receiving two 3 percent increases since 1996.
* PG&E is trying to raise its CARE rates to be more in line with Southern California Edison. Currently, PG&E's CARE rates are 25 percent below SCE's rates.
* In non-CARE rates, PG&E tried to adopt a three-tier system to match the legislated CARE rate structure.
In their article, Perez and Chen are correct on one thing. The energy guzzling customers in the Central Valley received the emergency rate adjustments of 10 cent per kWh for Tier 5. That effectively brought us to the rate structure that was in place in 2008; however, the revenue requirement remained the same. (A case of shuffling deck chairs on the Titanic.)
The current rate case will affect some customers. CARE customers (22 percent of PG&E residential sales) have had rates frozen since 1991; Tier 1 and 2 users (60 percent) have had rates virtually frozen since 1996. There will be some increases.
The 18 percent of upper-tier users, who have been unfairly carrying the rapidly increasing burden for 11 years, will see a revenue-requirement-neutral rate reorganization.
KernTax is concerned for all valley residents, including the hardworking family of four that earns $44,401, paying three to four times the amount to cool their family as their CARE neighbors.
In spite of skewed rhetoric and "fict" (half fact and half fiction), the 29 percent of Kern County's population not protected by legislation is neither rich nor poor. But the working folks that make up the 29 percent (owning all of the energy guzzlers) seem to be thrust into this debate between parties subsidizing the CARE customers, Tier 1 and 2 sales and the residential rooftop solar industry. The California electric system is an essential California asset that must be cared for by all involved parties, the reasonable cost of which must be prudently shared. The CPUC should continue on its path to protect the integrity of the regulatory process and adopt either of the proposed decisions on their financial, technical and legal merits.
Michael Turnipseed of Bakersfield is the executive director of KernTax, the Kern County Taxpayers Association.
