Can we solve the massive price hike for customers of California's largest utilities?  Diving benefit

Can we solve the massive price hike for customers of California’s largest utilities? Diving benefit

As we enter the third year of a global pandemic, the world is feeling little relief from ever-increasing prices. Exacerbating the situation, supply chain disruptions intensified by the war in Ukraine have caused inflation to rise to high levels Levels not seen since 1982. The agriculture, energy and commodity markets were hit, with repercussions for other areas of the economy.

From an energy perspective, in California, these global hardships are exacerbated by regional climate issues that are now at their peak. PG&E and Southern California Edison, two of the largest US electric utility companies, serve more than 10.5 million customers in California — who are seeing significant price increases. This situation does not bode well for the future: many commercial and industrial customers rely on their ability to obtain affordable electricity to maintain business operations. Sudden rate increases put companies in dire financial straits, leaving many wondering how they can sustain their operations with electricity prices that have not yet peaked?

Southern California Edison (SCE)

To implement an effective solution, we first need to contextualize these rate increases. In addition to the above global events, many of SCE’s price hikes can be attributed to increased efforts to provide clean, renewable and resilient energy – particularly in the face of power outages caused by extreme weather and adverse weather events. The California Public Utilities Commission has Approved $3.29 billion in spending on SCE’s Wildfire mitigation programs alone—which remains a growing threat across the state. As climate change continues its course, taxpayers will continue to bear the burden.

Figure 1: Example of the annual average electricity bill of SCE C&I customers since 2019

SCE’s commercial and industrial clients are typically categorized into three price categories: TOU-8-Option D, TOU-8-Option D-CPP, or TOU-8-Option E. Until 2019, C&I rates were consistent and predictable. But over the past three years, significant rate increases have affected all three categories: from 2019 to 2022, option D-CPP increased 72% overall, while options E and D increased by 23% and 30%, respectively.

Pacific Gas and Electricity (PGE)

PG&E clients have been similarly affected in recent years. Much of the increases can also be attributed to the need for clean, flexible energy and increased protection from wildfires. Many commercial and industrial customers pay PG&E prices for the B20; From 2019 to 2022, B20 rates increased a total of 37%.

Figure 2: Combined average aggregate rate PG&E B20P $/kWh from 2019-2022

Can C&I clients keep up with this huge rise? We expect prices to continue rising due to inflation trends.

DERs provide a viable energy solution

Although it may seem like a doomed scenario to many companies in California (not to mention the US and the rest of the world), in reality we are now presented with a vital opportunity to manage these cost increases – and support utilities in areas of grid constraint. Forward-thinking companies are looking to distributed energy resources (DERs) as a solution to obtaining clean, resilient energy. DERs often become the distinctly cheaper option compared to utility-provided power and provide resilience against climate-induced outages at customer sites. The definitions were written to enable DERs to take advantage of demand response programs, a win-win situation for all involved.

With no end to the pandemic, the effects of climate change, or indeed the war in Ukraine in sight, the decentralization of the network and Associated micro-legislation It is the best and most viable solution to the energy crisis. It would be wise to pay attention and work on a solution now – California could be at the forefront of what has in store for all of us if current trends develop unimpeded.

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