SACRAMENTO – State residents can anticipate an increase in their monthly utility bills now that the California Public Utilities Commission (CPUC) has approved rate hikes, along with a cut to rooftop solar incentives for sites such as multifamily and multi-tenant properties.
At its Nov. 16 meeting, the CPUC made some significant decisions that could hit Californians in their pockets. First off, they approved Pacific Gas and Electric Company’s (PG&E) request for a rate hike, effective Jan. 1, 2024; with this move, residential customers can expect an increase to their monthly gas and electric bill by $32.62, or roughly 12.8%.
That’s not the only decision to come down from the CPUC that day. The commission also rolled out some changes regarding renters in apartment complexes with solar panels and tenants in commercial buildings that generate electricity through rooftop panels.
PGE RATE INCREASE
Initially, PG&E proposed a rate hike that would have caused monthly bills to increase by nearly $39 or roughly 18%. However, according to a Nov. 16 press release, the CPUC put the brakes on that plan, rejecting the company’s initial revenue requirement proposal of 26%.
The proposal was part of PG&E’s General Rate Case (GRC), which covers its operational and revenue requirements for 2023 through 2026. The company initially requested $15.4 billion for its revenue requirement for 2023, but the CPUC trimmed this request down to $13.5 billion.
“I am proud of today’s decision because it represents the CPUC’s commitment to finding a reasonable balance in the face of incredibly challenging circumstances and competing objectives,” CPUC Commissioner John Reynolds said.
Reynolds added, “This decision ultimately represents both an historic investment in PG&E’s electric and natural gas systems as well as an expectation that PG&E must continue to be safer and more efficient.”
Echoing Reynolds, CPUC President Alice Reynolds said, “It (the rate hike) gives PG&E the opportunity to prove it can underground electric lines at scale. This will allow PG&E to achieve economies of scale, drive down costs and reduce wildfire risk.”
UNDERGROUNDING POWER LINES
One of the key areas where the rate hike’s funds will be directed is modernizing PG&E’s extensive network of power lines to mitigate the risk of wildfires by undergrounding them.
On the PG&E website, CEO Patti Poppe said, “Undergrounding is the best tool in the highest fire-risk areas to protect our customers and hometowns and improve reliability year-round at the lowest cost to our customers.”
The company asserts that undergrounding is one of multiple safety layers that has reduced the risk of wildfires by 94%. Since 2017, PG&E has been blamed for more than 30 wildfires started as a result of decrepit equipment due to an aging power grid. The fires destroyed more than 23,000 homes and businesses and caused the deaths of over 100 people.
Following 2018’s Camp Fire in Paradise that killed 85 people and destroyed over 10,000 homes, PG&E filed for bankruptcy protection. In 2021, the Dixie Fire in Butte County – the second largest wildfire in the state’s history – consumed over 963,000 acres. The fire started after a tree contacted the company’s power lines.
To remedy circumstances such as these, the company intends to bury over 2,000 miles of equipment, including 1,230 miles of power lines and 778 miles of covered conductor. The rate hike will also pay for $1.3 billion in vegetation management and $2.5 billion in upgrades spread out over multiple years. According to the CPUC release, the upgrades will include interconnections for electric vehicle charging stations and provide funding for new housing and businesses.
Despite the fires and the ensuing lawsuits, PG&E’s financials have seen an upswing. The company’s gross profit for the twelve months ending June 30 was over $17 billion, an increase over 2022. In 2022, the company posted a gross profit of $16.8 billion – a 3.4% increase over 2021.
SOLAR POWER TARIFFS
A second press release issued Nov. 16 said that the CPUC also made updates to onsite solar and storage tariffs. These changes affect multifamily residential buildings, multi-tenant commercial buildings and customers with adjacent properties.
This decision is geared toward creating economic incentives for solar systems, particularly those with batteries that can charge during low-cost daytime hours and discharge during higher-priced nighttime periods, according to Christopher Chow, CPUC public information officer.
“The time-based values are based on the same tool used to calculate bill credits for single-family home systems,” Chow said in an email to the Times. “The decision allows for ‘unit level netting’ for apartments and other residential customers. This allows for a significant share of solar generation to be compensated at retail rates.”
Chow added that the actual savings depend on various factors, including the presence of batteries, how landlords distribute credits and when apartments consume electricity.
According to the press release, the Nov. 16 decision also provides enhanced protection for solar customers by improving the commission’s Public List of Non-Compliant Solar Providers. This database serves as a watchdog for solar energy companies that fail to meet consumer protection requirements.
Lastly, the CPUC decision also implements Assembly Bill 2143, which requires fair wage requirements for construction workers on certain solar projects and solar energy storage projects.
In a nutshell, these decisions have far-reaching implications for California’s energy landscape, touching everything from monthly bills to wildfire risk reduction and solar incentives. California residents should stay tuned as these changes take effect in the coming years.