Energy utility rates in California are increasing faster than inflation as the use of renewable sources for power continues to grow, according to the California Public Utilities Commission (CPUC).
Mandated by state lawmakers, the CPUC released three annual reports to the governor and legislature last week evaluating trends in utility costs and rates during a period of "extensive energy industry transformation," including climate change, wildfire severity and technology shifts that threaten to impact aggressive “clean” energy policies.
Senate Bill (SB) 695 was directed at utility costs and retail rates and it requires regular reports from the state regulators to assess the incremental and cumulative costs of policy mandates and implementation decisions.
According to one report, overall rates since 2013 have trended toward increasing faster than inflation. Sempra Energy's San Diego Gas and Electric Co. (SDG&E) was called out for increasing rates "markedly faster.” Electric utility bills also are exceeding national averages, with fixed costs paid for by fewer customers.
A system for tracking program cost impacts on residential customers is being developed, with past and future wildfires among many things could add to residential bills.
Generally, California has had high power rates on a national basis, but the average monthly bills have stayed below national averages because usage in the state on average is much lower than other parts of the nation. Recent trends have changed that.
In a second report, all of California's major utilities last year either met or exceeded their renewable portfolio standard (RPS) goals with total spending of $5.6 billion, up from $5.3 billion in 2018.
Renewable-sourced generation expenditures increased to 40% of total generation last year from 36% in 2017. Overall, renewable power generated increased to nearly 38%. Natural gas accounted for about 34% of the state’s overall electricity generation in 2017, including all the power imported, while it accounted for more than 43% of in-state generation.
"This shows that RPS expenditures as a percent of total generation costs are about equal to the percent of total generation from renewable resources and that renewables are on par with nonrenewables," the report noted.
The CPUC concluded that last year large investor-owned utilities’ average renewable cost was 10.6 cents/kWh, and the average cost of non-RPS energy was 9 cents/kWh. "However, RPS expenditures are expected to decline over time due to expected decline in the cost of new RPS projects."
In 2018, wind and solar contracts continued to be the primary renewable technologies, and the average price of contracts executed in 2018 was 3.81 cents/kWh compared with 4.70 cents/kWh in 2017.
Under Assembly Bill 67, the CPUC also was required to publish a third annual report on the costs of programs and activities conducted by the four major gas and electric companies. The legislation was enacted in part to determine the effect of various legislative and administrative mandates, and also to provide more transparency into factors driving electric and natural gas rates.
Compared to 2017, the CPUC-authorized annual revenue requirements for Southern California Edison Co. and SDG&E increased by 1.2% and 2.4%, respectively. The annual revenue requirement for Pacific Gas and Electric Co. decreased by 9.5%.
For 2018, total gas utility costs decreased by 2.7% from 2017 compared to a 0.6% decrease for 2016-2017 and a 11.9% increase from 2015 to 2016.