CHANGE IS HERE – SDGE’S TWO TIER STRUCTURE
As of August 1, 2016, SDGE has enacted another significant change as part of their continuing transition to an all new way of billing customers. We are now officially down to 2 tiers for customers on the DR Schedule (residential tiered rate structure). This latest adjustment is part of a larger scheme to “flatten” pricing, allegedly with the goal of reducing the top tier pricing for electricity. SDGE customers received their bills this month and many are shocked at the additional cost of electricity (without significant change in usage).
Let’s take a look at the current energy costs with SDGE and the future of the utility’s pricing strategy.
CHANGES EFFECTIVE AUGUST 1, 2016
Tier 1 & Tier 2 combined. New Tier 1 includes 130% of Baseline Allowance, which is calculated based on your Climate Zone (Coastal, Inland, Mountain, and Desert) and whether you have electric/gas service or all-electric. This new “baseline” of 130% ranges from about 380-650 kWh/mo for electric/gas households during the Summer (depending on your climate zone).
All electricity users who were consistently consuming only Tier 1 & 2 energy will see an increase in their bill based on the price increase of $0.02/kWh. Higher usage customers may see a slight reduction in their bill as the costs of Tier 3 electricity have decreased slightly.
THE FUTURE IS FULL OF CHANGE
While the adjustments that went into effect this month have come as a shock to some SDGE customers, this is just the beginning. SDGE’s rate structure transition plan has several HUGE milestones coming in the next few years. This transition to two tiers is only temporary, as SDGE will be adding a “Super User Surcharge” in 2017. Once enacted, this will apply to residential customers using more than 400% of the baseline amount (or about 1,200/kWh per month). Pricing for Super Users will be “more than double” Tier 1 pricing, according to SDGE. As Tier 1 pricing creeps up and Tier 3 pricing trickles downward (with the goal of a 25% differential between the two tiers), this Super User Surcharge is expected to cost $0.40-$0.50/kWh, again creating a significant gap in cost between baseline and top tier energy. Although this strategy seems to fly in the face of the tier “flattening” SDGE and other major California utilities have pushed for, these changes have been approved by the California Public Utilities Commission.
CARE rates, a low-income subsidy program that allows for discounted electricity rates, will be changing as well. Discounts will be phased in, reducing from 41% to 35% by 2020.
Time-Of-Use Rates will be implemented for all residential customers. This type of rate structure may be more familiar for commercial customers and some solar households already, but at some point in 2019, all residential customers will pay significantly higher prices for electricity consumed from the grid during peak demand periods. On-Peak pricing is currently about double the cost of Off-Peak pricing (depending on your rate structure and the season). This On-Peak period is currently set at 11am-6pm Monday-Friday during the months of May through October. This is actually an advantage for solar customers on the DR-SES rate structure, which allows solar over-production sent to the grid to be credited at retail rates (currently about $0.47/kWh). This On-Peak window is expected to be changed, as soon as 2017, to 2pm-9pm. Solar households that elect to switch to the DR-SES rate structure before this change will get to keep the 11am-6pm window for 5 years from the date their solar PV system was activated.
FOR MORE INFORMATION ABOUT FUTURE CHANGES TO SDGE’S RATE STRUCTURES & PRICING, CLICK HERE:
CONFUSED ABOUT YOUR SDGE BILL OR PERSONALIZED VIDEO?
If you’ve recently received a personalized video bill from SDGE, you may be confused about what all this information really means (especially if you already have solar). Many SDGE customers are expressing their confusion and frustration with SDGE’s new attempt to explain your monthly electricity usage through these automated bill videos. In an attempt to simplify and explain the information already presented on the bill, SDGE seems to have caused even more confusion for many customers. Keep in mind, this is an attempt by SDGE to roll out an automated system and provide information tailored to your account. While the idea is fantastic, it seems that the execution is lacking. You can always get a better answer by looking directly at your bill.