Rationalizing California’s Residential Electricity Rates

“While evidence that IBP [increasing-block pricing] incents energy efficiency is absent, the evidence is clear that IBP is a key driver behind the distributed solar PV movement in California.

In fact, solar PV installers “work with” customers to optimally design systems so they just shave off the high-tier usage without touching the low-tier usage where the price is way too low for PV to save customers money. With federal subsidies that pay nearly half the cost of PV — and net metering that pays the residential customer for electricity supplied to the grid at the retail rate rather than the wholesale rate that other renewable generation sources receive – solar PV can beat the high-tier prices of IBP. That’s why solar PV installers are the most vocal opponents of rational rate reform that would call a kilowatt-hour a kilowatt-hour regardless of how many other kilowatt-hours you consume during the month.”

California is finally talking seriously about changing the way utilities price electricity for residential customers.  In particular, as a result of recent legislative actions, the CPUC now has some flexibility to modify the extreme increasing-block pricing (IBP) schedules that were adopted after California’s 2000-01 electricity crisis.  IBP means charging more for additional kilowatt-hours as a household consumes more over the billing period.  Pacific Gas & Electric’s current residential rate schedule, shown in the figure below, illustrates how IBP can charge drastically different prices for an additional kilowatt-hour (kWh) depending on how much the customer is consuming. (The rates of Southern California Edison and San Diego Gas & Electric look pretty similar.)


 PGE’s current increasing-block residential electricity rate structure

This extreme form of IBP violates one of the basic tenets of utility price setting: cost causation. Prices should reflect the cost of serving a customer.  The cost of providing electricity…

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Reevely: Ontario’s deficit is $1.3B lower than forecast (sort of)

A big part of explaining why economic growth, and sales tax revenue, were lower than expected?
“Having successfully not spent the money he didn’t plan to spend, he’s now treating that $1 billion as a sign of the Liberal government’s gift for fiscal restraint.

It’s an old trick. When the federal Liberals were enjoying budget surpluses in the early 2000s, they’d build in multibillion-dollar contingency funds to make the surpluses seem smaller. At the end of the year, they could overspend on some new goodies and still come in with better numbers than had been “predicted” when the contingency funds weren’t all spent.

Of course, put the $1 billion aside and the government is still $300 million better off than its projections said it would be.”
…The province did pull in $858 million more than anticipated from its Crown corporations. That’s a significant amount of money. Unfortunately, most of that came from Ontario Power Generation and Hydro One.”

Ottawa Citizen

The provincial government’s budget deficit in the last fiscal year was $10.5 billion, Finance Minister Charles Sousa announced Monday morning, $1.3 billion less than it was “projected” to be.

That’s a carefully engineered result. It conceals a report full of pretty glum news about Ontario’s economy, with just the tiniest tidbits of positivity.

On the face of it, being $1.3 billion to the good as the government delivered its final accounts for the 2013-14 fiscal year is a solid performance. “(This) marks the fifth year in a row that Ontario has beaten its deficit target — making the province one of the only governments in Canada to achieve this level of success,” Sousa’s announcement said. Hooray!

Well, no. The figure includes $1 billion in what Sousa’s last budget called a “reserve,” money, included as a contingency fund that he didn’t expect to spend. Having successfully not spent the money he didn’t plan…

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Ontario’s amateur engineers, phony economists and sorry sailors: unprofessionals on electricity

Writing my Cold Air blog, I try to remind myself of the premise that “nobody cares that you’re mad. What’s your point?”

One reason I have this alternative blog is the possibility that premise is wrong.

A sometimes very annoying part of writing is it causes more reading. Two of the dullest things I’ve recently read were bad legal rulings regarding wind at Ostrander Point and the Darlington nuclear new built environmental assessment.

I was motivated to read the Darlington decision due to a lawyer’s implication (twitter) the judge considered the impacts of nuclear units within a context of options. This was not so.

Lawyers and judges are, in general, annoying. Generalizations being a little cowardly, let me be specific: Diane Saxe is annoying.

Diane Saxe co-writes a pedestrian summary of a legal ruling with:

We hear from folks on the ground that, once projects start running, many neighbours have privately expressed pleasant surprise that the turbines cause them no difficulty and are easy to get used to. Nocebo effects only happen if people believe in them.

Figure 4: Exposure-response relationship for annoyance indoors

This statement is offensive, although there’s some reason in the sentiment.  I ran a blog for Wind Concerns Ontario for 18 months or so, and tried to avoid making reports of negative health impacts as fear mongering.Read More »

Harry Reid and Tesla

I don’t much like Harry Reid, or energy illiteracy, so this tweet doubly irked me:

Here’s the problem with the statement. Electricity wasn’t installed; the capacity to generate electricity was.

That equipment to generate electricity from renewable sources is probably not made with renewable sources (think steel – and the sources to produce energy in China).

To illustrate, think Tesla and Nevada.

Tesla has been shopping for a site to build an enormous battery factory, primarily for its electric cars which it often links to solar power in marketing. We won’t know until tomorrow, at the earliest, what price will be paid to lure Tesla to Nevada or, given Harry Reid’s influence in Congress, how the subsidies will split between Nevada and the federal government.

We do know Tesla didn’t choose Nevada because of an early mover “renewables” advantage the state had previously paid for. Nevada gets over 80% of its electricity generation from fossil fuels.

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The green Tesla gigafactory will be built with the same energy that builds casinos.

That may not end up being the only similarity.