Utility Watchdog in San Diego
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Does your SDG&E bill date fall on an inconvenient time? A few days before pay day when it would be so much easier if it was a few days after pay day? Here's a quick tip: you can actually change your SDG&E billing date without incurring any late fees.

Under SDG&E Electric Rule 9 (electric rules are the rules that govern SDG&E activities related to brining your electricity, everything from billing to having your dog in a fence), you can choose a specific day of the month for SDG&E to bill you. And no, you can't pick "no day," as great as that would be. Here's the text of Electric Rule 9(A)(4):  

Optional Billing Schedule.  The Utility, at its discretion, may provide customers with the option to choose a specific day of the month on which their bill is due, regardless of the meter reading date.  A customer choosing this option will be billed a one time fee of $15.00 plus an annual fee of $15.00 plus 1% of the total annual bill for the previous 12-month period.  This service is subject to resource availability.

The good news is that you can use this section to pick a billing day that fits your cash flow needs. For example, if you are a business who gets paid at the end of the month but your SDG&E bill is due at the beginning of the month, you could use this section to help alleviate some of the financial pinch. As a residential customer, you could also use this section to shift your billing date to a time when other bills aren't due.

The bad news is that, like everything, there is a cost for this. A $15 up front fee, plus an annual fee made up of $15 plus 1% of your total annual bill. For a residential customer who uses $100 a month, the annual fee will come out to about $27 a year. While this isn't a large sum of money, it also isn't an insignificant sum either. We can understand a fee to have your billing date changed, but with the new smart meters and wireless reads, picking your own billing date sounds like a customer service feature that should be included for free.

 

UCAN , the Utility Consumers’ Action Network, has filed not one, but two opening briefs in protest  of SDG&E’s 2012 Revenue Request (General Rate Case).

UCAN is urging the California Public Utilities Commission (CPUC), to reject SDG&E’s request for a record-breaking $1.2 billion rate hike, and to instead  lower the utility’s rates, which are now the highest in California for any investor owned utility.   The two briefs are summaries of the 16 months of discovery, expert analysis and evidentiary hearings on SDG&E's massive rate request.

UCAN's brief gives documented examples of  “extreme gaming strategies by SDG&E” to manipulate the ratemaking process and trick regulators into giving larger rate increases than are warranted.   According to UCAN’s Executive Director, Michael Shames, “SDG&E deserves the Rate Case Chutzpah Prize for seeking the largest revenue increase in its history during the worst recession in living memory. This rate request flaunts a “let them eat cake” attitude that would nauseate Marie Antionette.”

The report argues that SDG&E’s justifications for its rate increase are so unjust that they should be called “unjustifications,” and cites nine slippery budgeting gambits that SDG&E has deployed to make the proposal intentionally difficult to review by CPUC regulators.  According to Shames, “SDG&E's filing represents a sophisticated strategy of exploiting the current rate case system." 

UCAN's brief is calling for a complete reform of CPUC’s ratemaking process to prevent similar abuses in the future


Overview of SDG&E's budgeting gambits:  (get the full report here)

GAMBIT #1: SDG&E has artificially inflated its costs by implementing a 5-year average to conceal true costs and profits.   Even though the utility has successfully reduced costs and reaped enormous profits in 2010, it has deployed a five-year averaging scheme to conceal its real  cost of doing business from CPUC regulators.

GAMBIT #2:  No meaningful analysis of major initiatives. SDG&E has avoided scrutiny of budgets for major projects.  The utility has resisted any kind of cost-effectiveness analyses for major initiatives.

GAMBIT #3: Across-the-board budget increases. SDG&E is asking for increases across-the-board rather than in selected accounts, making it difficult for regulators to  focus on any one aspect of its operations.

GAMBIT #4: Cloaking massive rate hikes in a hard-to-audit format.  SDG&E has intentionally concealed the full scope of its massive increases by offering cursory justifications. The lack of documentation has forced UCAN’s investigators to conduct  time-consuming investigations for every account. (UCAN had to pose 72 sets of data requests containing over 5000 questions and, in many cases, never secured complete answers).

GAMBIT #5: Excessive compensation for substandard work.  SDG&E has sought incentive ratemaking treatment for performance that is marginally competent. In addition, it has created employee incentive programs that disproportionately award suboptimal performance by utility executives, paying out $35 million more in compensation bonuses than it forecasted in the last rate increase.

GAMBIT #6: Numbers fiddling. SDG&E has manipulated forecast data developed by others in order to achieve outcomes that justify increased rates.

GAMBIT #7: Failure to meet regulatory obligations. SDG&E disregarded commitments made (and directives given) in the previous General Rate Case, by funding projects that it had reason to believe the Commission would not have approved

GAMBIT #8: Intentionally hobbling Smart Grid functionality.  SDG&E minimized the capabilities of its new $571 million Smart Grid/Smart Meter system in order to justify another $218 million in additional Smart Grid investments;

GAMBIT #9:  Fiscal “Fossilization.”  SDG&E has based costs going forward on the premise that all past expenditures are perpetually engraved is stone and cannot be improved.

       UCAN's experts found a number of problems in SDG&E's rate application that warrant not a rate increase, but an actual rate decrease.  They include: 

  • inflated costs in almost every operating account, even after having reduced costs and reaped excessive profits in 2010, and relied upon the five-year averaging process to recoup the cost cuts;
  • SDG&E resisted any cost-effectiveness analyses for major initiatives;
  • It asked for increases across-the-board rather than in a select number of accounts, so as to guard against regulators’ focus on any one aspect of its operations;
  • It offered cursory justifications for most of the larger increases, thus requiring an extensive and time-consuming discovery process for every account.  (UCAN had to pose 72 sets of data requests containing over 5000 questions and, in many cases, never secured complete answers);
  • SDG&E seeks extra profit incentives for performance that is marginally competent;
  • SDG&E created employee incentive programs that disproportionately award suboptimal performance and utility executives;
  • Its experts manipulated forecast data developed by others in order to achieve more favorable outcomes;
  • The utility disregarded commitments made (and directives given) in the previous GRC and used its discretion to fund projects that it had reason to believe the Commission would not have approved;

The brief also identifies a number of important facts that came out in the analysis process that SDG&E did not or could not rebut: 

  • This case is the first fully litigated SDG&E general rate case since 1984.   SDG&E’s operations have not been fully scrutinized by the appointed Commissioners for almost 30 years.
  • In the last rate case (settled but contested by UCAN), SDG&E was granted what amounted to an initial 13% increase with very generous attrition increases.
  • The result of that last rate case was devastating to San Diego.  SDG&E's electric rates jumped well ahead of the other two major utilities in the state:  SCE and PG&E.  As of 2011, the state indicates SDG&E's residential average rates are 18.4 cents per kWhr with the bulk of the increase has occurring since 2007.   During those five years, SDG&E's residential rates increased from 15.6 cents per kWhr to 18.4 cents per kWhr.
  • During almost the identical time frame, SDG&E net income/earnings increased by 54%.
  • Since 2006, SDG&E has consistently earned returns well above what the Commission has authorized, receiving an above-authorized return in every year, with 2009 reaping an 11.11% return.
  • In 2006, SDG&E’s own customer survey data about customer perception of rate fairness indicated that over 50% of customers considered SDG&E’s rates unreasonable.   SDG&E ceased collecting customer data about attitude towards rates, credibility or reliability since the beginning of 2008 when rates began their upward trajectory.
  • As of SDG&E’s last rate case in 2008, the residential rates for all three utilities were just about the same (15.6 for SDG&E, 15.0 for both SCE and PG&E).  The CPUC's own numbers show how SDG&E's system average rates were lower than SCE's in 2002 and 2006 and within one cent (7%) of SCE's system average rates  for the period of 2003-2008.  Similarly, SDG&E's rates were lower than those of PG&E in 2002, 2003 and 2006 and within one cent (7%) through 2008.  Only after the 2008 SDG&E GRC decision did SDG&E's rates jump well above California's other two energy utilities while SDG&E reaped record profits and management bonuses.
  • During this same time frame, SDG&E's customers were hit with the most serious economic recession since 1929, the effects of which will be plaguing SDG&E customers for the foreseeable future.
  • The utility reorganized yet again (the third time in the last three rate cases), so as to impede analysts’ efforts to track costs effectively.  SDG&E has not had a rate case in over 16 years in which its operational budgets were not affected by a reorganization of one kind or another, thus making the tracking of its expenditures exceedingly difficult.
  • In 2008 the Peevey-led Commission approved a contested settlement that established the inflated base upon which SDG&E builds its current request.  It is a base that has provided almost guaranteed sizeable bonuses for executives.  In 2012, SDG&E's projected average bonus paid to its executives will be $140,952, while non-executive employees can expect an average payout of $12,155. 
  • In addition to this Rate Case revenue increase, SDG&E currently has another $551 million in capital and O&M increases in five other proceedings currently before the Commission.   Their rate impacts will compound the increases sought in the current application.

The Commission is expected to issue a decision in the Fall of 2012.    There will be opportunities for the public to comment before a final decision is reached.   Stay tuned to the UCAN website to learn more about how and when to comment on the final decision    

Get the 418-page report in pdf format  here  See also UCAN's JOINT FILING with TURN which discusses some overarching policy issues and issues common to both SDG&E and SoCal Gas customers  (they are owned by the same utility holding company). 

 

AttachmentSize
A1012005-UCAN Opening Brief.pdf 2.94 MB
A1012005_006 TURN-UCAN Joint Opening Brief_041212.pdf 1.07 MB

Posted July 20th, 2011

UCAN’s teams of investigative analysts have been digging deep into SDG&E’s latest demand for a rate hike from the California Public Utilities Commission (CPUC). 

At stake is more than $250 million a year in rate increases.

So far, UCAN has hired five different consultancy companies to investigate SDG&E’s costs.

If SDG&E’s rate hike is approved, it will increase electric rates, on average, by 7% and natural gas rates by 6.9%.   The impact on a typical monthly bill would be about 10%  – about 3% for electric customers – and 7% for gas service.

SDG&E has crafted the proposed rate hike so that the brunt of the increase will be borne by residents and small businesses.

The details of SDG&E’s spending spree are disturbing.  The increased costs for its basic operating expenses (not the production of energy) add up to $123 million a year.  The utility also wants to increase its capital cost spending by $2.2 billion dollars.  This is why UCAN has hired five teams of investigators to begin a piece-by-piece review of the 25,000 pages of documents that SDG&E has submitted to justify the increase in your rates.

We will hire more outside experts as the investigation proceeds. Right now, UCAN’s hired guns are investigating eight highly questionable issues. Specifically:

  1. Why during a recession none of SDG&E’s costs appear to have gone down … only up.
  2. Why SDG&E’s managers aren’t provided with economic incentives to reduce costs.
  3. How SDG&E’s contract management  policies have resulted in dramatic overspending for services and goods.
  4. Was the money that SDG&E received from previous rate increases spent the way SDG&E claimed it was spent?
  5. Why SDG&E says its payroll and employee counts must increase even though new innovations such as Smart Meters (which don’t require meter readers) and other efficiency improvements will be lowering the utility’s labor costs.
  6. Why SDG&E is increasing its call center staff at a time when more customers than ever are conducting their business on the Internet.
  7. If forbidden lobbying expenses are being secretly buried in SDG&E’s customer service costs.
  8. The truth behind SDG&E’s highly questionable claim that electric vehicles and photo voltaic solar energy will somehow cause SDG&E’s costs to increase.


By fall of 2011, UCAN should have a full report and summary of what our investigators have found.

Then, in December, the real battle begins:  UCAN will represent you, the ratepayer, in evidentiary hearings.   In the meantime, last November’s election may have turned the regulatory tide at CPUC in favor of consumers (see story about CPUC's “Changing of the guard”).

This story originally appeared the June, 2011 UCAN Watchdog which is distributed to UCAN Members by mail in advance of being published on our Web site.

sample sdg&e billThe two tariffs applicable to reading your Residential SDG&E bill are the Domestic Residential Tariff and Electric Energy Commodity Charge.
*Line item components updated 9/21/2011.

The first part of the bill is composed of the Residential Tariff noted above.

Total Usage: This amount, listed in kilowatt hours (kWh), shows how much electricity your meter registered for the billing cycle. A rough average of a single family San Diego home is about 624 kWh per month, according to information from the California Energy Commission.

Baseline Allowance: This allowance is the threshold amount of energy that is billed at a lower rate than the non-baseline amount. Oftentimes, a residential user will have 249 kWh as a baseline allowance. Any electricity consumption above this threshold will be billed at a higher, non-baseline rate per kWh. The Baseline Allowance is supposed to meet 50 to 60% of your home's electricity consumption. The Baseline Allowance is determined by four things: The climate zone in which the account is located, whether the home is all-electric or uses both Natural Gas and electricity (see page two), number of days in the billing cycle, and whether it is summer or winter.

You may be eligible for an increased baseline allowance if you or someone in your home uses a medical device that runs on electricity. For m information about the Medical Baseline Allowance.

Baseline Usage: If your total usage is greater than the baseline allowance, your baseline usage will be the baseline allowance; any remainder will be your non-baseline usage. If your total usage is less than the baseline allowance, your baseline usage will be your total usage and you will have no residual usage billed at the higher, non-baseline rate.

If total usage > baseline usage, then baseline usage = baseline allowance
If total usage < baseline allowance, then baseline usage = total usage
In this example, the baseline usage is 249 kWh and the non-baseline usage is 500 - 249 or 251 kWh

The overall rate that you pay for the baseline usage is listed on your bill. For instance, your bill may look like this:

Baseline Usage 249 kWh @ $.06326

This indicates how much you were paying per kilowatt hour (about 6.3¢) for your baseline allowance. This rate is determined from the line items below the Total Electric Charges, such as Transmission, Distribution, etc. to determine the Baseline Usage Rate per kWh. In this instance, the total charges for Baseline Usage are $15.75.

Non-Baseline Usage: If your total usage is greater than the baseline allowance, any additional amount is considered to be your Non-Baseline Usage. This is billed at a higher rate than the Baseline Usage. Your bill may look something like this:

Non-Baseline Usage 251 kWh @ $.08781

This indicates how much you were paying per kilowatt hour (about 8.8¢) for your non-baseline usage. This rate is also determined from the line items below the Total Electric Charges, such as Transmission, Distribution, etc. The slight difference between the Baseline and Non-Baseline charges is due to an increase in the Distribution and Transmission charges for Non-Baseline kilowatt-hours. In this instance, the total charges for Non-Baseline Usage are $22.04.

So, the total bill is calculated as $15.75 + $22.04, or $37.79, plus the actual cost of electricity, which is listed as the Electric Energy Charge minus the Electric Energy Rate Adjustment. If you take the Energy Charge, subtract the Rate Adjustment and then divide this by your total kWh, you should find that you are being charged $.065 (6.5¢) for the market price, which is the current capped rate for SDG&E customers. This price is an average of the market value of electricity that the State's Dept. of Water Resources is currently purchasing on behalf of consumers for your billing cycle. Yes, this is a big chunk of change. In fact, if you meet certain low-income guidelines, you can qualify for the California Alternate Rates for Electricity, or CARE Program.

Line Item Components

Electric Energy: This is the actual price you are charged for electricity. In California, the price of electricity used to be wholly determined by supply and demand, but given the upheaval in the electricity market that has been experienced for the last year, the State's Dept. of Water Resources has locked in long term contracts. The average rate of those contracts has been hovering just above our capped rate for the last month and is shown on your bill. The price for electricity fluctuates on a day-by-day and hour-by-hour market structure. The price you are charged on your bill is the average price for which electricity was selling over the duration of your billing cycle.

SDG&E and all other private California utilities must buy the electricity for all of their customers from the Dept. of Water Resources. If you are a typical residential customer, this price for electricity is then averaged over the number of days in your billing cycle. SDG&E makes these average rates available. For which ever week you want to view, the current residential rate is listed near the bottom of all the different kinds of accounts and is listed as "Residential--Secondary--Total" for 29 to 35 days (5 weeks) in the billing cycle. Or you can count the eighth line up from the bottom.

Electric Energy Rate Adjustment: This credit comes about because of the legislated rate cap implemented in September, 2000. Now that the commodity price of electricity is capped at 6.5¢, the rate adjustment credits back the difference between the market price listed under the Electric Energy Charge and the capped rate for the total amount of kWh on your bill. For those customers who are with alternative providers (ESPs), you will not see this rate adjustment on your billl.

How do you make sure the adjustment was properly calculated? Take the market price from your bill and subtract $.065. Take this difference and multiply if by your kWh. This rate adjustment is what is being incurred in the balancing account that will be have to be repaid in the not-too-distant future.

Transmission: This is the cost to bring high-voltage electricity from power plants to distribution points near to you and includes the cost of high-voltage power lines and towers, as well as monitoring equipment.

SDG&E is the company that paid for the construction of the transmission grid back when it was the local, regulated utility. No other companies were allowed to generate their own electricity and build their own grid, since that would be redundant. Now that SDG&E is no longer in the business of generating power, it receives revenue by charging for transmitting electric energy from the power plant to consumers over its grid.

Transmission charge = Total Usage X $.02072 / kWh

Distribution: This charge is the cost to deliver electricity through power lines strung on utility poles, across transformers, to where you use it. This charge also includes repair crews and emergency services. Basically, this charge reflects any extensions from the transmission grid to your home and the maintenance of keeping you connected to the grid.

Distribution charge = (Baseline usage x $.08202 / kWh) + (Nonbaseline usage x $.09130 / kWh)

Public Purpose Programs: This cost provides for state-mandated assistance programs for low-income customers and energy-efficiency efforts.

Public Purpose Programs = Total usage x $.00622 / kWh

Nuclear Decommissioning: Nuclear power was once the wave of the future for power generation. In hindsight, however, the risks and costs associated with producing electricity in this fashion far outweigh the benefits of this form of "cheap" energy. SDG&E previously invested in nuclear power and subsequently bills this charge to recover the additional costs and stranded assets associated with nuclear power.

Nuclear Decommissioning = Total usage x $.00040

Trust Transfer Amount (TTA): This is a bond repayment charge, the same bond that was recently paid off 2.5 years early by SDG&E and from which customers will be receiving a refund. At the time, SDG&E purchased $650 million in bonds, of which they only subsequently needed $260 million. Therefore, the additional $390 million is being returned to the people who paid for it, averaging $260 for most customers. However, all SDG&E customers will be paying off the interest from this bond.

Trust Transfer Amt. = Total usage x $.01077 / kWh

Competition Transition Charge (CTC): When California had only regulated, monopolies as utility providers, utilities made investments in what was then new forms of power production and long-term power contracts. Those costs have always been recovered in the electric rates charged to consumers and by the revenue created from the contracts. So, in essence, this charge has always been on your bill. Now, however, in California’s deregulated utility industry, private utilities like SDG&E recover their assets that are "stranded" in these investments through the CTC charge, and thus can remain competitive in the new market. This charge will be phased out in four years.

Competition Transition charge = (Baseline usage x $.00194 / kWh)

The amounts of each line item above, when added up, should equal the Total Electric Charge amount shown under your baseline and non-baseline usages. So, you should get the exact same total in two places, which assures consumers that they are being billed appropriately (or confuses the heck out of them). 

 For more information, visit the SDG&E website for information on understanding your electric bill.

About UCAN

UCAN has represented the interests of San Diego County utility customers since 1983. UCAN focuses its efforts on the rates and services of San Diego Gas and Electric Company, telecommunications utilities and the City of San Diego Water Department.

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