California Center for Sustainable Energy

San Diego Gas & Electric ( SDG&E) has filed their 2012 General Rate Case, which upon approval by the California Public Utilities Commission ( CPUC), will determine its rates and tariffs for 2012-2015. This is a regular and regulated process that all investor-owned utilities in California must do every three to four years to, as the San Diego Union Tribune states,"make their case for how much money they need to operate safely and reliably, while still earning a profit for shareholders." The rate case is divided into phases and is currently in hearings for phase one, which addresses proposed increases in pricing. You can find out more about the proposed increases from the Division of Ratepayer Advocates at the CPUC and from local news sources, including the U-T article quoted above.

Phase two of the rate case addresses allocation of charges (as opposed to increases addressed in phase one) and was filed October 2, 2011 with responses due November 2, 2011.You can find related documents here.

Though they're not defined as rate increases, the changes SDG&E propose could have significant impacts for their solar customers, and could set a precedent for solar customers in other locales if they are approved. The most notable of these is a "network use charge" SDG&E is proposing for all customers.

What is the network use charge?

Utility electricity bill charges are derived from two rate categories: energy consumption and distribution.

Currently, people who generate solar power are billed on the cost of energy they draw from SDG&E and credited the value of the solar energy they put back into the grid. Generally, solar customers meet their electricity demand first with the power they generate through their solar systems. When they make more electricity than they need, they put it into the grid and receive credit on their bill. When they need more electricity than their system generates or the sun is down, they draw it from the grid like everyone else. With the proposed network use charge, solar customers would not only be charged for the energy they use from the grid, they would additionally be charged for the energy they put on the grid for others to use.

What is the potential impact of the network use charge?

• Solar homeowners who generate enough energy to cover the majority of their household consumption could see their SDG&E bills increase by between $10 and $40 per month.

• The proposed residential increase may not seem like much, but it could be enough to significantly reduce the value proposition for future solar buyers and could stifle San Diego's burgeoning solar marketplace, harming small businesses and the local jobs they have created.

• When residents install solar, it means more clean energy available close to where people are using it, reducing the need for utilities to source energy elsewhere and to carry it long distances. Charging customers to put solar into the grid undervalues the clean energy investments made by San Diego's innovative homeowners, business leaders and civic institutions who have responded to calls for state leadership to embrace solar.

• Although SDG&E has made some adjustments to the charge for schools, our initial analysis indicates the greatest impact will likely be on municipalities, public agencies and local businesses that have invested in solar. For example, a water district that is offsetting over 90 percent of its utility bill with solar energy production will see their current annual costs increase by over $85,000, or over 250 percent.

What else in this new rate case concerns CCSE?

Although SDG&E has allowed schools an exemption to the network use charge, their proposed rates would still hurt the 109 San Diego County schools that have already invested in solar projects, raising total annual energy costs at those facilities by an additional $1 million to $3 million.

What is CCSE doing to assess the proposed new charges?

1. CCSE has asked SDG&E to share with us and other local solar stakeholders the data they have on solar generation, use patterns and utility cost impacts.
2. CCSE is collaborating with the local solar industry, municipalities and others to continue to analyze potential impacts of the new rate structure on existing solar users, the future of the solar industry and the state's ability to achieve stated goals for renewable energy generation and energy efficiency.
3. CCSE will work with local stakeholders to share our concern over these proposed rate hikes with the CPUC and continue to support policies that help the state meet its goals for reduced fossil fuel dependence, fewer greenhouse gas emissions and cleaner air quality ( CCSE letter to the PUC).

Rate cases take months to move through the public process. A decision on this phase is not expected until August and would not be in effect until January 2013. We will continue to monitor the discussion and update our website as we learn more. In the meantime, we seek your comments on this proposed network use charge, and encourage you to share your ideas for how SDG&E might rethink their approach to solar in this and future rate planning.

UPDATES

• January  18, 2012
  On 1/18/2012 CCSE added the Assigned Commissioner’s Scoping Memo and Ruling (Commissioner Mark J. Ferron) to our website that sets forth the scope and schedule of SDG&E’s general rate case proceeding and deals with several important policy issues.
  Most notably, the ruling granted in part UCAN’s motion relative to the Network Use Charge (NUC). Essentially SDG&E has been ordered to re-file their rate design proposal without the NUC, as Ferron believes the NUC should not be included in the scope of the proceeding and “may be inconsistent with current law, regardless of whether it is justified by cost causation principles or an analysis of the cross subsidies inherent in current policies.”
  SDG&E must file the revised rate design proposal by February 17, 2012. Ferron Ruling on SDGE GRC Phase II (download) the ruling.

• January  17, 2012
  On 1/17/2012,  CCSE added the letter to the PUC sent on November 2011
• December 30, 2011
  On 12/30/2011, with the permission of Alpine USD we added a chart depicting SDG&E’s bill analysis of two of their solar schools before and after the impacts of the proposed GRC2 filing.
• December 1, 2011
  On 12/01/11, additional revisions with SDG&E, CCSE received final validation of our calculations from SDG&E and our rate analysis tool to reflect a more complete understanding of the proposed rate case impact on commercial solar customers. As a result, projected bill increase for the water district customer shown increased from $83,400 to $85,000.  The projected bill increase for the elementary school shown increased from $7,800 to $8,000.
• November 28, 2011
  On 11/28/11, following meetings with SDG&E, CCSE updated our rate analysis tool to reflect a more complete understanding of the proposed rate case impact on commercial solar customers.  As a result, projected bill increase for the water district customer shown decreased from $122,400 to $83,400.  The projected bill increase for the elementary school shown decreased from $8,100 to $7,800.