Victory: California PUC Says Utility Can’t Hike Minimum Bills for Residential Customers

Update, 5/20/20: In March 2020, the California Public Utilities Commission rejected SDG&E’s request to dramatically increase the minimum bills it charges residential customers, which would have discouraged rooftop solar and conservation. The Commission agreed with our argument that the proposal contravened Commission precedent. In addition, the Commission ordered SDG&E and PG&E to develop new optional rates that reward residential customers for switching to clean electric appliances and using electricity at the times of day when renewable energy is cheap and abundant. Read the Commission’s decision here.

The utility San Diego Gas & Energy has an aggressive proposal pending before the California Public Utilities Commission: It wants to charge most residential customers a minimum bill of $38.40 each month, regardless of how much energy they use. The costs of this policy would hit low-income customers and those who generate their own energy with rooftop solar. We’re urging the Commission to oppose this flawed plan—and we need your help.

SDG&E’s proposal is bad news for sustainable energy. About half of the customers whose bills would go up under this proposal have rooftop solar. The policy would deter other customers from investing in rooftop solar by making these investments less economical. Ultimately, lost opportunities for solar would mean burning more gas in polluting power plants.  

The proposal is also bad news for people who already have to scrimp on energy costs. Most customers with big homes and billowing air conditioners won’t notice if this policy goes into effect, because they use at least $38 worth of electricity a month anyway. But for households that don’t buy much electricity from the company, including those in small apartments without air conditioning, this proposal would raise the bills. Even for customers on special low-income rates, SDG&E wants a minimum bill of $19.20.

Penalizing customers who don’t use much electricity would disproportionately hurt lower-income customers, who tend to use less energy than their wealthier neighbors. In the region SDG&E serves, the average family in an apartment uses half as much electricity as a single-family residence. Statewide, low-income households are more than four times as likely to be low-usage electricity customers than high-income households. When it gets hot, residential electricity patterns are often driven by air conditioning. The vast majority of SDG&E’s customers live in the coastal climate zone, where access to air conditioning is strongly linked to income: Households with incomes over $150,000 are more than twice as likely to have air conditioning than families making less than $35,000, with significant racial disparities in who has AC.

In its attempt to rationalize its request, SDG&E argues that it should charge everyone for infrastructure costs that do not depend on how much energy they use. But the cost of the grid is driven by how much energy SDG&E delivers on hot summer afternoons, when some customers blast their AC and demand for electricity peaks. If more customers relied on their own solar power or conserved energy, the utility would spend less on its grid.

In the long term, reducing incentives to go solar and conserve energy will strain the grid and drive up costs for everyone.  SDG&E’s arguments are part of a standard utility playbook for trying to hike fixed charges, and consumer advocates have repeatedly shut them down.  As far as we know, no regulators in the country have allowed a utility to charge customers over $38 for the “privilege” of accessing electric service.  

Earthjustice and Sierra Club have teamed up to fight this unprecedented proposal at the Commission. Residential customers already pay a monthly minimum bill of about $10 and that’s enough. To have your say, email a comment about proceeding number A.17-12-013 to public.advisor@cpuc.ca.gov.

This blog was originally published in November 2019. It has been updated to reflect the Commission’s decision.