Residential customers of the city-owned electric utility in Redding, California, will see their monthly access fees rise from $13 to $42 under a plan designed to pay the utility’s fixed costs in an era of increased solar and wind renewable generation.
Energy charges would fall from 15 cents to 12 cents per kilowatt-hour.
Redding Electric Utility Director Barry Tippin said that the new rate structure was designed to be revenue-neutral while guaranteeing the utility would be able to cover fixed costs of the system. “Our attempt here is to have a zero percent increase in utility revenue in total,” he said. “The higher fixed charge is offset by a 20 percent reduction in the energy charge.
“Our thinking was that regardless of who you are, you have a demand on that system. Whether you’re using alternative sources or you’re using just the grid as its historically been done, you have a demand on those wires and those poles, and everybody should be sharing in that cost.”
The city council will be asked next month to schedule a public hearing on the plan; that hearing would probably come in August. In the interim, the utility will be explaining the proposal to its 38,000 residential and 8,000 commercial customers.
Redding is a city of about 90,000 in northern California about 100 miles south of the California-Oregon border.
Utility wants to “get in front of this thing”
Customers with photovoltaic (PV) panels that can generate some or all of their electricity needs now total between 250 and 300, Tippin said. Under a state mandate, they are paid the full retail rate for the excess power they generate, up to what Tippin calls their “native load,” the amount of electricity they use in a year. Once they exceed that, they are paid 5.5 cents per kWh.
The new proposal wouldn’t eliminate net-metering, but it would mean that even those solar customers who net-out their electricity consumption with what they can produce from their PV arrays would pay $42 a month, or $504 a year, for access to the grid.
Shifting more of the revenue to fixed charges and away from declining sales of electricity is a strategy that other utilities have used as the number of solar and wind customers rises. “We’re not at a precipice like Hawaii claims to b,e and what some other utilities claim to be, but we want to get in front of this thing,” Tippin said. “We actually want to become an advocate for energy sources and be a utility that works in the future to develop programs that will help people make alternate energy choices and not have it be a detriment to other customers or the utility as a whole.”
REU’s electricity load hasn’t gone up since 2007, according to an article posted at Record Searchlight.
There is a little sweetener in the deal for customers who can hold down their use of electricity. Record Searchlight reports that the plan includes a two-year “Climate Credit” program in which residential and small commercial customers get $20 a month off their bills in the first year if they use less than 600 kWh per month. That drops to $10 a month in year two, and it’s not clear what happens after that.
New demand charges are also proposed
Another provision in the restructuring would add demand fees to a new class of commercial customer, Tippin said.
Customers who exceeded a fixed amount of electricity per month would pay the demand fee in addition to the access fee and energy charge. The fee is designed to make these customers aware of how much power they’re using and take steps to cut use at times of peak demand.
Tippin said that the proposed demand fee would affect between 1,200 and 1,500 customers.