Greed, indeed. Since 2014, SDG&E’s electric rates have been skyrocketing, but the utility’s thirst for more money appears unquenched. In the last few years, SDG&E has been filing multiple applications requesting revenue increases for various purposes. These applications often move forward on separate procedural tracks before state regulators. These rate increases have led to SDG&E’s residential average rates increasing by 24% in only three years – a pace of increase that is more than triple inflation rates. Now, according to a government oversight agency, SDG&E’s recently proposed 2017 rates make SDG&E’s rates the highest in the state of California. SDG&E’s system average rates also are the highest and have the steepest increases among the three largest California investor owned utilities (IOUs) as shown below.
In its protest to SDG&E’s advice letter 3130-E-B, the state Office of Ratepayer Advocates asserts that SDG&E’s attempt to pass through new rate increases already approved by the state regulators needs to be revisited. As part of the residential rate reform tier consolidation and flattening, Tier 1 residential rates have seen a 55% increase over a three-year (2015-2017) period. However, this did not result in lowering the high tier rates. At the beginning of the residential rate reform, SDG&E’s highest tier (Tier 4) rate was 42 cents/kWh. Now the highest tier (HUC) rate is almost 55 cents/kWh.7
The office claims that SDG&E may have misled regulators. On September 8, 2017, SDG&E submitted illustrative rates that were far lower than the rates proposed less than two months later on November 2, 2017. Table 1 below shows SDG&E’s proposed summer Tier 1 rate is 4.3 cents per kWh higher, and the proposed winter Tier 1 rate is 3.7 cents per kWh higher than those shown in the September filing than its previous representation to the Commission:
Making matters worse, ORA has evaluated SDG&E residential electric rates from January 2015 to SDG&E proposed rates for December 1, 2017. The office found that SDG&E’s summer Tier 1 rates have increased 55.4%, and winter Tier 1 rates have increased 31.7%, while residential average rates (RAR) have increased by 23.6%. These lower tier rates punish SDG&E customers who use LESS power. In other words, those who conserve are seeing large rate increases than those customers who squander electricity.
It wasn’t always this bad. Notably, in 2008, the residential rates for all three utilities were just about the same (15.6 for SDG&E, 15.0 for both SCE and PG&E). Only after the 2008 and 2012 SDG&E GRC decisions, did SDG&E’s rates jump well above California’s other two energy utilities while SDG&E reaped record profits and management bonuses. This coming year, SDG&E’s residential customers will be paying 20% more than SCE customers and almost 15% more than PG&E customers.
And the news gets even worse: SDG&E has filed yet two more monster rate hike requests with regulators in the last six months. In Application 17-10-007, SDG&E is asking for an increase of $218 million (11.0%) in 2019. The request also includes a 7.3% increase in 2020, a 5.2% increase in 2021 and a 5.1% increase in 2022, resulting in increases up to $160 million in 2020, $123 million in 2021 and $126 million in 2022. And just three months prior, SDG&E filed another application (A. 17-04-027) seeking $256 million to replace its outdated billing system. Spread out over the expected lifetime of the new billing system, what is called the “total revenue requirement” that would be picked up by customers comes in at a breathtaking $996.6 million. In just six months, SDG&E has unveiled over $1.5 billion dollars of rate hikes in the pipeline, to take effect in 2018.
At the same time, SDG&E’s profits have been increasing steadily. Its profits have almost doubled in the past 10 years:
In all likelihood, the state Public Utilities Commission will permit much of these rate hike requests to go through. So in a time of declining oil and gas prices, it would appear as though San Diegans are facing a grimmer, and more expensive, energy future.