Last month, the California Public Utilities Commission (CPUC) approved and finalized the latest round of residential rate changes for all three investor-owned utilities. The rate changes are scheduled to become effective within the next month.
Southern California Edison residential customer base will see an average rate increase of 10 percent from $0.17 per kilowatt-hour to $0.18 per kilowatt-hour. Tiers one and two will see large increases, while tiers three and four will see decreases, versus current rates.
“These rate changes are being driven by higher fuel costs that utilities are passing on to customers,” says Adam Gerza, Director of Government Affairs at Sullivan Solar Power, “The value proposition for solar gets better as electric rates go higher.”
When rates increase, the economics of going solar become more attractive. This applies to both existing solar customers and potential customers considering going solar. Given that tiers one and two are increasing the most on a percentage basis, low usage customers considering solar stand to benefit the most. Whereas the economics of going solar may not have made sense previously for low usage customers, solar may now provide a cheaper option that staying with the utility. As for existing solar customers, when rates increase, their savings grow because the cost difference for what they pay for solar electricity and what they would have paid for utility electricity widens further.
These summer 2014 changes are the first round of rate reform changes as a result of Assembly Bill 327, which was signed into law by Governor Brown last October. The landmark rate reform bill removed the rate caps on tiers one and two, and directed the CPUC to redesign residential rates to more equitably distribute and recover costs among customers. Assembly Bill 327 rate reform changes will continue to be phased in through 2018.
Residents who go solar can hedge themselves against these future rate increases and lock in the cost of electricity for the next 20 years. Sullivan Solar Power is hosting a Santa Ana Solar Workshop on July 12th from 11 a.m. – 12 p.m. at the Southwest Senior Center. The solar workshop will cover solar technology, federal tax credits and the Orange County Solar Program. Call 1-800-SULLIVAN or visit www.OCSolarProgram.com to rsvp.