Energy-saving PG&E customers will pay more, starting this week

A PG&E overhead power line tower is seen in the the middle of Evangelho Vineyard in Antioch. Starting Wednesday, PG&E will change its rate structure in a way that means that people in places like San Francisco, where electricity usage is modest because air-conditioning is not needed, will pay more for electricity, whereas large users of electricity will see their bills drop. less A PG&E overhead power line tower is seen in the the middle of Evangelho Vineyard in Antioch. Starting Wednesday, PG&E will change its rate structure in a way that means that people in places like San Francisco, ... more Photo: Michael Short, Special To The Chronicle Buy photo Photo: Michael Short, Special To The Chronicle Image 1 of / 1 Caption Close Energy-saving PG&E customers will pay more, starting this week 1 / 1 Back to Gallery

Pacific Gas and Electric Co.’s electricity rates are about to undergo a fundamental change, and many Bay Area residents may not like the result.

Starting Wednesday, PG&E will base the amount it charges for electricity on two tiers of usage, instead of the current system of three. At the same time, the price for electricity in the least-expensive tier will rise.

This means that households using large amounts of electricity, many in California’s hot inland valleys, will see their monthly bills drop. PG&E customers with low electricity usage, often clustered on the temperate coast where air-conditioni ng is not needed , will see their bills go up.

California has long pushed its citizens to use less energy, as part of the fight against climate change. Electricity rates have been based on the premise that people who use more should pay higher prices, forcing them to conserve. The tier changes that take effect this week would seem to contradict that notion.

But the California Public Utilities Commission approved the changes anyway as part of a slow-motion overhaul of rates designed to make them more fair to different groups of customers. Residents of the Central Valley have long complained that their high electricity bills in the summer were subsidizing PG&E customers on the coast.

“We are pleased to see meaningful progress towards a more fair and equitable electric rate system,” said Michael Turnipseed, executive director of the Kern County Taxpayers Association, in a statement Monday.

The change will not affect customers who use a different rate structure, called time of use. Most electric car owners and solar homeowners, for example, already pay time-of-use rates, which charge more for electricity when daily demand hits its peak. In 2019, most customers of PG&E and other large investor-owned utilities in California will switch to time-of-use rates, though people will be able to opt out.

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The changes this week come at a time when many Northern California PG&E customers are reeling from a spike in their natural gas bills, triggered by a combination of cold, stormy weather and a substantial gas rate hike.

Now, residential customers who use relatively little power may see their monthly electricity bills rise as much as 11 percent. Those who use more could see a 4 percent decrease, said PG&E spokesman Donald Cutler. (Those changes also take into account a 2.1 percent increase in electricity transmission costs that will hit all PG&E customers on Wednesday.)

The price for electricity tier 1 (the lowest level of usage) will rise 9 percent, from 18.28 cents per kilowatt-hour to 19.98 cents per kilowatt-hour. The tier 2 price, currently 24.18 cents per kilowatt-hour, will rise 14 percent to hit 27.61 cents per kilowatt hour.

But the old tier 3, which charged 40.14 cents per kilowatt hour, will disappear. Households that often fell into tier 3 will instead pay the lower tier 2 price.

“These changes are a continuation of the effort to more closely align the cost that our customers are paying to the cost of service and to simplify the rate structure,” Cutler said.

The new tier system, however, does still include a penalty for high-use households. Customers who use four times the average “baseline” amount of electricity must pay a surcharge equal to the old tier 3 rate, 40.14 cents per kilowatt-hour. PG&E estimates that less than 10 percent of its residential customers will face the surcharge.

The new changes represent an echo of California’s electricity crisis of 2000 and 2001.

In the aftermath of the crisis, state law froze electricity rates in the bottom two tiers of what was then a five-tiered system. As a result, any annual rate increases — to pay for upgrades to the electricity grid, for example — hit only those customers in the higher tiers. In 2013, the state Legislature finally ordered the commission to revisit and reform rates.

David R. Baker is a San Francisco Chronicle staff writer. Email: dbaker@sfchronicle.com Twitter: @DavidBakerSF