California Flattening Electricity Rate Tiers

June 11th, 2015 by scottgpeer

California charges higher electricity rates for heavy electricity users in order to encourage conservation. Currently the lowest rates are about 13 cents per kilowatt-hour, and increase to as much as 33 cents for the highest users. This makes sense because the heavy users tend to have the easiest time reducing their electricity use. It recognizes that reducing electricity use is something that needs to be done across the board in order to reduce pollution, and could be considered a work-around in the absence of other approaches such as carbon taxes.
Under pressure from industry groups, the legislature passed a law that calls for reducing the number of pricing tiers, and reduces the differential to less than half its current maximum. An additional change will be implementation of time-of-use pricing, intended to reduce the peak use by charging more at peak times. The details of the new rules are not yet set, but it appears that the changes will not encourage greater energy conservation or efficiency.
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