The PG&E Rate Increase of 2019: What you Need to Know

On December 13, 2018, California utility giant PG&E submitted its 2020 General Rate Case (GRC) to the California Public Utilities Commission (CPUC).

This far-reaching GRC proposal has several stated goals: to support wildfire prevention, risk monitoring, and response efforts, to add stringent new safety measures (including vegetation management) and to increase resilience to further wildfire risk.

The plan also promises to upgrade utility technology, including electric and gas infrastructure to enhance the utility’s overall ability to offer safe, reliable service.

Beyond those things, though, the PG&E GRC also has some impact on consumers. Here’s what people living in California need to know about the PG&E rate increase of 2019, and what they can expect their bills to look like in the coming months.

When PG&E Submits GRCs

PG&E submits a new GRC every three years. Each time the utility giant submits a new GRC, CPUC conducts a thorough review of the proposal.

In many cases, the CPUC holds public hearings across California service areas, gathers input from taxpayers, and stages evidentiary hearings where PG&E and its partners are encouraged to testify in public proceeding.

After this process, CPUC will issue a final decision about whether or not to adopt PG&E’s proposal.

In the 2020-2022 proposal, PG&E is asking for a $1.1 billion increase over currently adopted revenues for 2019 ($8.506B Adopted for 2019 to $9.6B in 2020).

According to PG&E itself, “More than half of PG&E's proposed increase would be directly related to wildfire prevention, risk reduction, and additional safety enhancements. Among the important wildfire safety investments in the GRC proposal are the following components of PG&E's expanded Community Wildfire Safety Program:

• Installing stronger and more resilient poles and covered power lines across 2,000 miles of high fire-risk areas;

• Increasing ongoing work to keep power lines clear of branches from an estimated 120 million trees with the potential to grow or fall into overhead power lines, including annual vegetation inspection of approximately 81,000 miles of high-voltage electric distribution lines;

• Implementing Smart Meter™ technology to more quickly identify and respond to fallen power lines;

• Expanding the network of weather stations to enhance weather forecasting and modeling by adding 1,300 new weather stations in high fire-risk areas by 2022;

• Installing nearly 600 new high-definition cameras in high fire-threat areas, increasing coverage across these areas to more than 90 percent.

As noted, this rate case calls for $1.1 billion in 2020, $454 million in 2021, and $486 million in 2022, respectively, to capture inflation and other cost escalation.”

A Continuation of Residential Rate Changes

Taken alone, the PG&E proposal may seem like a large ask from customers.

In reality, though, the proposal is just the most recent iteration of an ongoing change to PG&E’s rate structure.

Back on July 3, 2015, the CPUC voted to adopt a sweeping series of changes to the utility’s residential rate structure.

This tipped off ongoing changes for customers throughout California.

Here’s a brief timeline of the changes that have taken place in recent years:

• 2001. PG&E establishes a multi-tier rate structure to deal with the energy crisis. The crisis was limiting energy supply, and electricity prices were at record highs, as a result. PG&E’s multi-tier rate structure was designed to stabilize and equalize energy distribution for customers.

• 2015. PG&E's new rate structure begins to take effect. The plan proposed in the 2015 documents is projected to continue its rollout through 2020. The plan aims to make energy billing structures simpler and to align the amount customers pay with the actual costs of providing utility and electric services. During this year, customers saw a tier price adjustment and a minimum bill increase.

• 2016. PG&E announces new time-of-use rate options, a FERA Monthly Fixed Discount (A monthly discount of 18% on electricity only for households with three or more people), and a consolidation of the tier plan from four to three tiers.

• 2017. PG&E further consolidates tiers from 3 to 2, introduces a high usage surcharge, and completes another tier price adjustment.

• 2018. PG&E rolls out another tier price adjustment, which is covered in a blog post we wrote last year on the topic.

• 2019-2020. This year, PG&E entered the final phase of its five-year plan. Throughout 2019 and 2020, the utility will continue transitioning most residential customers to TOU rate plans, while seeking approval for its new proposal. In a Time-of-Use rate plan, the price of electricity fluctuates depending on the time of day. Within these plans, customers will pay less for electricity they use during periods of low demand, such as the middle of the night, early in the morning, or in the middle of a workday. As PG&E continues to roll out the transition, it will allow customers to choose a different rate plan if it better suits their needs.

What the Proposal Means for Customer Rates

If the CPUC approves PG&E’s 2018 request, customer bills would increase once more.

According to the utility, this proposal would increase the average residential customer bill by 6.4%, which equates to about $10.57 per month ($8.73 for electric service and $1.84 for gas service).

According to some outlets, though, customer rates could increase even further than that, especially if federal judges continue to force the utility to undergo wide-ranging management, inspection, and maintenance plans.

As Californians know, PG&E is facing ongoing legal and financial woes after its involvement in the catastrophic wildfires that scorched Northern California throughout 2017 and 2018, as well as the fatal 2010 gas explosion that killed eight and decimated a San Bruno neighborhood.

It goes without saying that this is a time of financial uncertainty for PG&E customers. As rates continue to increase, many are becoming increasingly unhappy with the utility.

Fortunately, there are other options. Solar power is a rapidly expanding residential power source in California, and going solar now is a great way to decrease spending and make utility costs more sustainable.

Additionally, the 30% federal tax credit pertaining to solar projects is set to expire at the end of this year, so now is a great time to take advantage and install solar panels.

If you’re considering going solar in 2019, contact Sandbar Solar to learn more about our newest service offering: helping commercial facilities become energy independent with microgrids consisting of solar panels, battery backups and natural gas generators.