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California postpones time-of-use rates for 2 biggest utilities until late 2020

California utility regulators decided to delay full roll-out of time-of-use rates for millions of residential customers until the fall of 2020.

However, the state Public Utilities Commission on May 10 also decided San Diego Gas & Electric Co. will be ready to move all of its customers to time-of-use, or TOU, rates in the spring of 2019, which was when the commission previously planned for all three of the state's biggest investor-owned utilities to put all their customers on those rates.

Commission President Michael Picker said Southern California Edison Co. needs more time because it is developing a new billing system and does not want to make both major changes in 2019.

Pacific Gas and Electric Co. wants more time to coordinate with the new electric service providers being established through community choice aggregation efforts, where municipalities are organizing large numbers of customers to choose new nonutility energy suppliers, in its service territory so they too can participate in TOU rates, Picker said.

TOU rates will be set so that customers pay more for electricity in late afternoons and evenings and less at other times. The high rates are to discourage customers from using large amounts of electricity during peak utility load periods that occur when California's abundant solar generation drops and people return home from work and school. In those hours air conditioning, lights and appliance use increases even as the availability of the state's solar resources diminishes.

Picker said California faces a choice of building more "dirty gas peaker plants" or reducing energy use during peak load hours and shifting their heavy electricity use to other times when rates will be cheaper.

He continued that the delay in implementing TOU rates for all customers does not change the commission's resolve to move to TOU pricing, but rather it is to make sure the major rate change will be successful when the utilities are ready.

"Much of the needed study and preparation has been completed," Picker said. "The investor-owned utilities have completed their pilots and have begun their large-scale default pilots. The pieces and the plans are all in place. We just need to execute and do it well."

Actually, while smaller pilots have been completed, SoCalEd and PG&E recently launched pilots involving 400,000 residential customers and 150,000 customers, respectively.

Picker congratulated Sempra Energy subsidiary SDG&E for being ready to launch its full-scale TOU rates first. PG&E maintains there are likely to be benefits for both its and SoCalEd's rollouts based on SDG&E's experiences.

The start dates are still subject to the PUC's approval of the utilities' specific rate design proposals and details for the transition to full TOU rates.

Further, the commission wants a statewide marketing consultant to provide a customer education and outreach campaign to familiarize customers on why the change is being made and how they can keep their bills from increasing.

The TOU rates are supposed to be revenue-neutral so utilities will not get windfalls but will get the same authorized revenues because off-peak rates will be decreased to counter the increased peak rates. However, individual customers will pay more if they do not change their electricity consumption habits, while those who limit their peak use will pay less.

SoCalEd is a subsidiary of Edison International, and PG&E Corp. is PG&E's parent.