In the US, utility regulators in California are inching closer to approving time-of-use tariffs (ToU) after a three-year review of rate reforms for the state’s largest utilities Pacific Gas & Electric, San Diego Gas & Electric and Southern California Edison.
Two administrative law judges at the California Public Utilities Commission (CPUC) last week issued a Proposed Decision that supports a two-tier rate structure.
This represents a 50% reduction in the number of tiers with a 20% price differential.
The three California utilities now employ a four-tier rate structure in which customers using the most electricity pay an average of US$0.34/kWh, more than double the US$0.14/kWh average rate for residential consumers that consume the least electricity.
The judges said this would keep an incentive to conserve power but be more equitable to customers, as high-use customers are now essentially subsidizing low-use customers, reports local news source Argus Media.
The proposal also favours keeping monthly fixed charges and delaying the introduction of a new flat-fee charge of US$10 a month, which is deemed to be the most controversial aspect of the rate reforms.
On the subject of time-of-use rates, the CPUC stated that utilities must file Rate Design Window applications with the regulator by January 1, 2018 to roll-out default TOU rates in 2019 with the utilities able to propose fixed charges at that time.
CPUC commissioners said it could vote on the Proposed Decision as early as May 21, 2015.
Savings from time-of-use tariffs
Making time-of-use rates the default option for residential customers could produce long-term savings by creating an incentive to shift electricity use away from times of high demand, the judges said in their proposed decision on 21 April.
State utilities regulators already use time-of-use rates as the default for industrial and commercial customers, but it has been less of an option for residential customers until the widespread adoption of smart meters that track real-time usage, said the newspaper report.
California ratepayer advocates estimates that time-of-use rates would result in 2,400MW of peak load reduction.