Pacific Gas & Electric (PG&E) implements new rates and increases existing ones (May 2020)

Pacific Gas & Electric (PG&E), one of California’s big three investor-owned utilities (IOUs), increased its existing electric rates and implemented additional ones, effective May 1, 2020. With this increase, PG&E forecasts a $770 million increase to its electric revenue. According to the Advice Letter 5661-E-A, this resulted in an average of a 3.4 percent increase in PG&E’s bundled electric rates and a 9.0 percent increase in PG&E’s average rate for Direct Access (DA) and Community Choice Aggregation (CCA) customers. In addition to these rate increases, PG&E  implemented a few new rates, including the residential rate E-TOU-D and commercial electric vehicle (EV) rates BEV-1 and BEV-2, which are available on a voluntary basis.

In October of 2019, PG&E submitted AL 5661-E, its Tier 2 preliminary Annual Electric True-Up (AET). This Advice Letter consists of changes in revenue and the establishment of the 7-12% rate increase, with a target implementation date of January 1, 2020. However, by the end of December, certain aspects of the rate change were still pending before the California Public Utilities Commission (CPUC). This prompted PG&E to submit an advice letter stating that rate changes in conjunction with its AET will not be implemented until a later date, being May 1, 2020.

Below we summarized the key provisions of the increase to the existing rates and unpack the newly implemented rates: 

Medium General Service Rate B-19:

Residential Rate E-TOU-C:

The all-in bundled rates listed above comprise several different line-item charge components. When digging into the underlying components we discovered the line item charge most responsible for the rate increase was the New System Generation Charge (NSGC). This is the same rate component, which caused Southern California Edison’s (SCE) rate increase that took place on April 13, which we summarized in an earlier blog: Southern California Edison (SCE) increases rates 7% across the board (April 2020). This NSGC is categorized as a Delivery charge and recovers costs associated with new generation assets. Additional charges increasing PG&E's bundled rates include the Public Purpose Programs Charge (PPPC) and the Competition Transition Charge (CTC), both of which are considered non-bypassable charges (NBC's). Overall, the rate increases are primarily found within the Distribution component of the rates.

New Residential Rate

E-TOU-D is now voluntarily available to residential customers on May 1, 2020. In a sense, this rate will be replacing the current E-TOU-B rate which will be closed to new customers. Customers electing service under E-TOU-B by April 30, 2020, will be grandfathered under this rate until it’s eliminated in October 2025. E-TOU-B contains a weekday peak period of 4-9 pm.

E-TOU-D has been in the works for quite some time. In July 2019, the CPUC issued Decision D. 19-07-004 which approved Phase IIB of PG&E’s 2018 Rate Design Window (RDW). Included was the proposal to shorten the 5-hour on-peak period of E-TOU-B to a 3-hour on-peak ranging from 5-8 pm. To avoid confusion PG&E decided to name this new rate E-TOU-D.

As of now, new residential customers are not required to be serviced under a time-of-use (TOU) rate, they are available on an opt-in basis. This does not apply to NEM-2 solar customers who are required to take service on a TOU rate. It is projected that starting October 2020, PG&E will begin migrating existing customers to one of the available TOU rate options. The California Solar and Storage Association (CALSSA) is expecting E-TOU-C to become the new default rate at that time.

New Commercial Rate

In November of 2018, PG&E filed an application seeking approval for the creation of a Business Electric Vehicle (BEV) rate, which was approved in 2019. Since then PG&E has created rate “BEV” which is divided into two sub-rates, BEV-1 and BEV-2, which was implemented on May 1. Below are the differences between the two BEV options:

BEV-1 is applicable to low use customers (less than 100 kW) at Secondary Voltage. BEV-2 is applicable to high use customers (at or above 100 kW) and is offered at both Primary and Secondary Voltage with Transmission Voltage customers being eligible under the Primary rate. Below are some key points and definitions regarding the BEV rate structure:

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• No seasonal or weekday/weekend variation
• 4 - 9 pm Peak period (highest energy charge)
• 9 am - 2 pm Super Off-Peak period (lowest energy charge) with Off-Peak being all other hours
• Non-EV commercial usage must be metered separately
• Subscription Charge: replaces a customer charge and a per kW demand charge to instead use a monthly subscription for customer’s demand (blocks of 10 kW for BEV-1 and blocks of 50 kW for BEV-2, costing roughly $1 to $2 per kW)
• A customer uses their estimated max kW to determine the subscription level
• Overage Fee: per kW charge when the load exceeds the kW allotment established in the subscription level. This charge is based on the max kW in a given billing period and will range between $2 to $4
• Grace Period: Period of 3 billing cycles in which a customer is not subject to overage fees. Triggered by initial enrollment or the addition of Electric Vehicle Service Equipment (EVSE)
• Beginning October 1, 2020, Net Energy Metering (NEM) customers will be eligible to receive service under this rate
• Energy Charges (average per kWh): Peak = $0.33-$0.35 Off-Peak = $0.13-$0.14 Super Off-Peak = $0.11

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Advice Letter 5793-E explains that this rate will be implemented in two phases. Phase 1 started on May 1, which includes fundamental components such as enrollment via call center and standard billing. Phase 2 is set to deploy in October 2020 which will includes functionality such as online enrollment, grace period and overage notifications, subscription level change notifications, and eligibility for NEM customers. It is important to note that overage fees and grace periods will not be introduced until October. Customers that enroll in a BEV rate prior will not incur overage fees until three billing cycles after October 1, 2020.

Updates made in Energy Toolbase

The Energy Toolbase in-house Utility Rates Team has already begun updating existing rates in our database. We currently maintain over 200 different utility rate options in the PG&E territory. If there are any rate options you’re looking to use that are not currently listed within our rates database, please reach out to our rates team at utilityraterequest@energytoolbase.com.