New Year, New Rates - The Evolution of Electricity Rate Pricing

A brand new year means new rates! We’ve been spending the time around the holidays working hard to get all the rate changes into our database in time for the January 1, 2012 effective date. Over 1000 rates have been updated in the past week ensuring that our database is 100% up-to-date.

One of the side effects of updating so many rates across so many utilities in such a short period of time is that we start to see trends in how electricity is priced. Here’s a couple of things we’ve noticed:

Consumption Charges Are Down or Flat, but Time of Use Rate Differences Are More Extreme - In keeping with low inflation rates and dropping natural gas prices, we’re generally not seeing an increase in consumption rates. Where we do, its usually in the context of time of use rates where peak prices are going up and the off-peak prices are going down. Peak power has gone from being 4.4 times more expensive than off-peak to 5.6 times more expensive for this tariff. If you can be flexible as to when you use your power, the electricity pricing trends are working in your favor.

Demand Charges Are Up - Consumption charges may be flat, but demand charges are moving up dramatically. Similar to consumption rates, the difference in demand charges for peak versus off-peak usage are also getting more extreme. For example, the summer peak demand charge for PG&E’s E-19 has gone up 61%!  Time to understand how to limit your usage peaks.

Fixed Charges Are Way Up - Finally, those charges that seem like an afterthought on the bill, are also growing dramatically.  Although it represents less than 10% of the typical utility bill, a 38% increase in fixed charges makes a difference.

The quick takeaway is that electricity pricing looks like it’s increasingly being driven by the associated infrastructure-based charges (Fixed and demand charges) rather than strictly fuel (consumption charges).  Later this week we’ll do a deep-dive on what these changes mean on two of Pacific Gas & Electric’s most complex tariffs, E-19 and E-20.