California Reaches Compromise on Residential Utility Rates

The new plan also keeps the pressure on the state’s big three investor owned utilities to create time-of-use (TOU) rates to charge more when electricity demand is at its peak. That could provide new incentives for technologies that can manage hour-by-hour energy consumption.

It also denies utility requests for broad permission to impose fixed monthly charges that could make rooftop solar less cost competitive, opting for a minimum bill approach instead, at least as a default for future rate plans.

In a unanimous vote, the California Public Utilities Commission on Friday approved a proposed decision that will flatten out the state’s existing four-tier rate structure to two tiers, with a 25-percent difference in cost between the two.

That move, has been opposed by solar companies and environmental groups, since it will reduce financial incentives for the state’s highest electricity using households to invest in rooftop solar and energy efficiency. The existing four-tier structure was set in place after the state’s 2001 energy crisis, and has gradually grown to a difference of about 13 cents per kilowatt-hour for the lowest tier to as high as 42 cents per kilowatt-hour for the highest tier.

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