By a vote of three to one, the California Public Utilities Commission granted PG&E's request for a rate increase, to cover losses the company took because it had to tear out the existing analog electric meters and replace them with the new digital SmartMeters.
At first, the commission could not agree on a rate of return, then later in the meeting approved a compromise rate. An administrative law judge suggested 5.73 percent but Commission President Michael Peevey proposed a higher rate of 7.42 percent. After the Commission deadlocked, Peevey came back with a return rate of 6.3 percent and it passed with a vote of 3-1.
The Utility Reform Network characterizes this as PG&E earning profits from its "garbage." The commission is concerned that unless the utility is allowed to recover some monies invested in the old meters, other utilities will be dissuaded from investing in new technologies like the SmartMeters.
"This commission has spoiled PG&E again and again allowing them to reap huge profits off customers, not holding them accountable, and now we have them basically saying, 'Sure, we'll let you profit off your garbage,'" said Mindy Spatt from TURN.
Commission president Michael Peevey voted for the increase, saying it is not profit.
"It's their capital investment in these meters which are now being replaced," said Peevey. When asked if they were just recouping what they invested, he replied, "Yes, but at a much reduced rate over what they would if it was still used and useful."
PG&E says on the average monthly residential bill of $90, the increase will be 9 cents. The electric rate increase goes into effect in January; gas rates will increase 2.4-percent, effective June 1.
The commission still has to decide on PG&E's request to change the sliding scale that now gives lower rates to those who conserve; so the more you use, the more you pay. Peevey said the existing tier system hurts residential customers in hot areas.
"We had this problem in Kern County, for example, two summers ago where the fifth tier was so high, and when the temperatures stayed over 100 degrees for more than 30 days, rates shot up so much more than what any of us thought reasonable. So we're trying to deal with that," said Peevey.
The proposal calls for a $25 surcharge on all customers.
"Instead of providing high energy users with better, more effective energy efficiency services, the commission wants to basically lower rates for these energy hogs by raising them for the poor," said Spatt.
It's unclear when that vote will be taken.