Electricity Tariff California: What Made California Tariffs Different?

KuyaManzano By KuyaManzano, 1st Feb 2015 | Follow this author | RSS Feed
Posted in Wikinut>News>Technology

For consumers today, some terms like “tariff” occasionally come up when it comes to imports or exports, consumer items and, as of late, electrical usage. Tariffs then get imposed on electricity based on consumption as shown on their baselines.

The steepest increasing-block price in the US is in California

Increasing-block price, IBP for short, is commonly advocated by several energy consultants in the state. They argue that to reduce consumption of electricity, marginal rates should increase. Consumers in California don’t get to use it throughout the year though, just part of the year. In a nutshell, they expect the market to consume less because of rate hikes. Just like how you consume less to stretch the shelf life of something expensive that you paid for.

Unfortunately this did not happen in California. Confusion occurred between the advised marginal rates and the social marginal cost of supplying power. What are they really paying for? It may have already included the “miscellaneous”. Almost everyone knew how vague that term can get. It is confusing. No wonder the lawmakers have suggested changing the residential tariffs to same rates as that all over the country.

Residential customers pay almost no fixed monthly fee

To quote a report released by Energy at Haas, “Southern California Edison’s hottest inland climate regions have much higher baselines in the summer months than the coastal regions, but in each region the baseline quantity is intended to be approximately 55% of the average residential consumption. As a result, while consumers in different climate regions face the same prices on each tier, they face different price schedules”.

In short, different consumers face different rates. The residential consumers would have been happy over this development if only it was consistent. And we only mentioned one company here - Southern California Edison. If there are instances where the major companies consume 55% more of what everyone else consumes, what really is the barometer used for the final draft printed on your bill?

Substantial differences within a service territory

Quoting the same report “...while the same IBP prices apply throughout the service territory, the baseline quantities that determine the amount of consumption available on each step of the IBP tariff differ regionally.”

Forecasts regarding consumption on varying areas are fine. But comparing it with the actual data gathered after the time frame is up shows a difference that affects tariffs imposed on the electricity in California. How can you impose tariffs on the electricity used when consistency is not very common?

It would be interesting to see how the California Public Utilities Commission (CPUC) would handle such concerns. When at first you think it’s just a matter on knowing when to impose the tariff, you then realize that the CPUC’s jurisdiction is basically in privately owned public utilities. Where does the private ownership end in order to cater to public interests like imposing tariffs? We are all on wait-and-see mode as to how tariffs can be imposed if ownership is already an issue to be resolved. That’s when we get to see where does the government’s priority lay.


Electricity, Electricity Bill, Electricity Tariff California

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