BILL ANALYSIS
AB 5 X2
Page 1
Date of Hearing: June 18, 2001
ASSEMBLY COMMITTEE ON ENERGY COSTS AND AVAILABILITY
Roderick D. Wright, Chair
AB 5 X2 (Kelley) - As Introduced: May 15, 2001
SUBJECT : Rates: baseline quantities.
SUMMARY : This bill requires that the baseline quantity
identified for Climatic Zone 15 in Riverside County be doubled
as of the effective date of the measure.
EXISTING LAW : Establishes five tiers of rates for customers
throughout California for electricity and gas usage, based on
baseline quantities. Higher rates are charged at usage above
130% of baseline and the highest rates occur at levels above
200% of baseline.
Establishes baseline quantities for electricity and gas
consumption for 19 specific zones in California, with the
baseline amounts adjustable annually based on average usage in
the area.
FISCAL EFFECT : Unknown.
COMMENTS :
The author of this measure draws attention to the unique
climatic circumstances applicable to Southern California Edison
(SCE) Zone 15, encompassing the Coachella Valley in Riverside
County. The author requests that the baseline quantity for this
zone be doubled in statute upon the effective date of the
measure.
A survey of the nineteen unique climatic zones identified for
the three investor owned utilities (IOUs) demonstrates a range
of baselines quantities for the summer months from a low for
combined gas/electric service in Pacific Gas and Electric (PG&E)
service zone Z of 192 kilowatt hours (kWh) to a high in SCE Zone
15 for either combined gas/electric or all electric service of
1281 kWh. It is understandable that customers in regions which
suffer from extreme heat are concerned about the allowable
baseline usage levels in their area, especially where the use of
air conditioning is more a health and safety than a comfort
factor.
AB 5 X2
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The baseline quantities reflect an average level of usage for
each specified areas, and as illustrated by the difference
between the low summer baseline in PG&E Zone Z and the high
baseline in SCE Zone 15, climatic differences are taken into
account. Baseline represents 60 to 70 percent of average
residential consumption for all electric customers for each
area, and rates for customers at or below baseline and up to
130% of baseline (90% of average usage) are not subject to the
large rate increases recently imposed by California Public
Utilities Commission (CPUC).
The CPUC is required to review and revise baseline quantities as
average consumption patterns change in order to maintain the
ratios established for baseline quantities. Since rates for
consumption above 130% of baseline are significantly higher than
rates below that level, the signal from this rate structure is
for conservation. The downside to the sort of conservation
this rate structure necessarily imposes on most customers, is
that usage patterns assume a downward trend and baseline gets
adjusted down to an even lower than existing level of
consumption. For customers in Zone 15 1281 kWh up to 1665 kWh
(100 and 130% of baseline) may be reasonable amounts of
consumption with significant conservation, but they may
represent comparative hardship in harsh weather. It is
significant to point out that all consumption at these levels
and below is billed at the lower rates and only that amount of
consumption exceeding 130% of baseline is billed at one of the
higher tiers of rates. Conservation during mild weather can
make all the difference in the rates billed for a summer month.
Staff recommends
Given that the level of baseline usage identified for SCE Zone
15 already far exceeds baseline usage anywhere else in the
state, it may not be advisable to double that baseline amount at
this time. Such an increase does not encourage conservation,
and the larger quantities of electricity that may likely be
consumed in this Zone due to the lower rate structure, may lead
to shortages of electricity elsewhere.
What may be a consideration to encourage without punishing
conservation is a two-year moratorium on downward adjustment of
existing baseline quantities. The current high rates cause
customers to make harsh decisions about consumption due to
AB 5 X2
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affordability. As rates normalize, consumption patterns will
also normalize. Holding off on any downward adjustment to
existing baseline quantities until a full two-year average can
be considered may be prudent in order not to punish current
conservation levels, which may be at the expense of customer
comfort.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
None on file.
Analysis Prepared by : Kelly Boyd / E. C. & A. / (916)
319-2083