Utility wins rate increase as costs of climate policies rise

A San Diego utility yesterday won the right to hike power bills an average 12.2 percent, funding that in part will go toward costs connected with California's climate and energy policies.

The California Public Utilities Commission authorized San Diego Gas & Electric Co. (SDG&E) to collect $1.73 billion for three years. The average customer will pay an additional $9.95 per month.

Sister company Southern California Gas Co. (SoCalGas) will take in $1.95 billion, which will trigger a rate increase of about 9.6 percent, or $3.55 per month.

"Safety and reliability do not come free," CPUC Commissioner Mark Ferron said. "While we must do our best to contain costs, we do have to spend some more on safety and reliability."

The CPUC said additional cash would, among other things, allow SDG&E "to install smart grid technologies to better monitor the electric grid, to improve reliability as a result of the growth in renewable power in SDG&E's service territory, and to respond more quickly to outages."


The money also is intended to provide "the necessary monies to maintain and replace aging electric and gas delivery infrastructure so as to ensure the safe and reliable delivery of electricity and natural gas to customers."

It's part of the CPUC's focus on safety, spokesman Christopher Chow said, in light of a 2010 deadly natural gas pipeline explosion in San Bruno, Calif. That blast was connected to utility Pacific Gas & Electric Co., but regulators were criticized for poor oversight.

The funding also will cover the costs of complying with state and federal environmental regulations, the CPUC said.

SDG&E in a statement said the decision "will allow us to continue to operate our natural gas and electricity systems safely and reliably and to increase system efficiencies and customer benefits through technology enhancements."

Residents who consume the most electricity will bear the brunt of the costs, SDG&E said. Most utilities in California use tiered rates, which charge more per kilowatt-hour as usage climbs. That's intended to drive conservation and help lower-income people. Under current state law, rates for customers in the lower two tiers can rise only 3 to 5 percent per year, SDG&E said.

Ferron said the increase appears larger than it actually is because the case was delayed 20 months. The funding covers the period of 2012 through 2015, so ratepayers must make up the difference of money that was not collected.

Energy storage

Of the total for SDG&E, the commission allowed $26 million for research, development and demonstration costs associated with energy storage projects. The utility had sought $55 million for efforts it said in part would "assist in addressing the intermittency issues created by variable renewable generation."

California has a mandate that its large utilities by 2020 make one-third of their power from renewable sources. Currently, SDG&E, Southern California Edison Co. and Pacific Gas & Electric Co. all are at about 20 percent.

"Due to the growing use of photovoltaic generation in SDG&E's service territory, and the impact of this on SDG&E's electric operations, it is reasonable to authorize some funding for the energy storage projects that are already underway," CPUC said in its decision.

The agency said, however, that because it is separately looking at energy storage policies and targets statewide, "it would be unreasonable and premature to authorize full funding of SDG&E's energy storage request."

Consumer group the Utility Consumers' Action Network, or UCAN, has opposed the utility's request on energy storage. It had recommended allowing only $12 million for a pilot project "rather than just going out and buying something if we're not quite sure how it's going to work," said Executive Director Donald Kelly.

"I am actually happy that the CPUC granted a reduction in the funding of the energy storage program," Kelly said. "I'm happy that it's not the $55 million SDG&E had requested."

Kelly added, however, that the approved amount is "being prematurely spent and potentially wastefully spent."

Electric vehicle costs

SDG&E can collect $26,990 for some costs related to the number of plug-in electric vehicles (PEVs) tied to the utility's network.

"There is no dispute that electric vehicle chargers will add additional load, which is likely to result in SDG&E having to make improvements to its distribution system in order to meet this load," the CPUC said in its decision. "For those reasons, the funding request of $26,990 is reasonable."

The CPUC's consumer arm, the Division of Ratepayer Advocates, had recommended against approving any of the $26,990 "until there are more electric vehicles in SDG&E's service territory."

The San Diego region has one of the higher numbers of electric cars in the state, as it was one of the cities selected by Nissan for its launch of the all-electric Leaf (Greenwire, July 18, 2011). In late 2011, there were at least 820 Leafs in SDG&E's service territory, 549 installed residential chargers and 23 installed public chargers, the utility said in its filing.

The number of PEVs is expected to continue growing. California mandates that most automakers selling in the state produce increasing amounts of emission-free cars. The percentage required climbs each year until hitting 15.4 percent of the fleet in 2025.

SDG&E also had sought $5.2 million to add public access charging facilities for PEVs in "locations that are not necessarily commercially or economically desirable, but needed to serve the broader and growing PEV charging needs of the public," it said in its CPUC filing.

UCAN opposed SDG&E's getting any money for the PEV chargers, saying the utility did not provide any evidence that the demand exists or will develop. The consumer group also said that most charging can be done at home, as the "average daily mileage driven by San Diego residents is 23.7 miles."

CPUC rejected approving any funding for the chargers. SDG&E, it said, failed to provide "convincing evidence that if it is not allowed to deploy public access charging facilities that this will result in an underserved market or a market failure."

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