Friday, February 10, 2012

Electricity Rates to Increase 13% Nationwide

Preparing for the Smart Grid, renewable technologies

Electricity rate increases nationwide will range from 3 to 33% with the average at 12.64%. The statistics appear in the AEE 2012 Electricity Outlook prepared by Southern California Edison (

SCE reported the final decision on its 7.55% across-the-board rate increase request is due in March and would take effect in May. With approval, the increase will amount to $6.285 billion in added income. In the same report rates for PG&E were expected to rise 6.4%.

The report went on to detailed why SCE needs the funds. They included infrastructure replacement; operations and maintenance expense for capital-related projects, regulatory mandates, wildfire insureance and employee benefits; and Smart Grid enhancements. These include replacing poles, wires and transformers; increasing grid security; adding smart grid components need to integrate more renewable energy; getting the SCE region ready for plug-in electric vehicles; and maintaining a skilled work force.

Residential tiers at SCE would change as follows: Baseline (T1) from 12.5 to 13.1 cents per kilowatt-hour (kWh) or 5%; Tier 2 from 14.8 to 15.5 (5%); Tier 3 from 22.9 to 29.1 (27%); Tier 4 from 26.4 to 32.6 (23%) and Tier 5 from 29.9 to 36.1 (21%). CARE (discounted) customers will see a 14% increase in Tiers 3-5.

Steep as they are, these increases could be a lot worse. SCE serves some 13 million residential and commercial customers so the burden is spread around. SCE is not only the largest utility in California but it comprises 80% of the gross revenues of its parent, Edison International in New Jersey.

With most states adopting renewable energy standards, ratepayers will see increases related both to the increasing costs of fossil fuels but also in upgrading infrastructure for the Smart Grid and renewable energy technologies. As always, the best way to mitigate the rising costs or power to home and work is solar power. A PV system provides both clean energy for 30 years or more but hedges against future rate hikes during its lifecycle. 



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