Print shop co-owner Hilda Sanchez got a jolt last month when she opened a letter from Southern California Edison explaining that a change is coming in the way electricity bills are tallied for businesses.
Sanchez read that she could save money by shifting much of her business’s power use to off-peak times—early mornings, evenings and weekends—especially during summer months.
She noticed something different between the lines: Her electricity bills will probably go up.
“I can’t really change when I have to run my printing equipment,” said Sanchez, a co-owner of Minuteman Press in Long Beach. “The orders come in midmorning, and I’ve got to fill them before the day is out. So I’m concerned that I’m going to be stuck with higher power bills.”
Sanchez’ business is one of more than 400,000 Edison customers spread across Orange County and other markets in Southern California that will be moved to a “time of use” rate structure starting Jan. 1 as part of a statewide mandate. The idea is to use financial inducements—and punishments—to prompt businesses to shift their power use out of the period of highest demand: hot summer afternoons. The state’s utilities won’t have to build as many costly power plants if enough businesses make such shifts.
On Jan. 1 80% of Edison’s small- and midsize-business customers—about 400,000 accounts, including Sanchez’—start getting billed on the plan. The remaining 20% will be phased in by early 2015.
Currently, only the 12,000 largest Edison customers—including major manufacturers, refineries and regional hospitals—are on the program. For now, residential customers will not be forced into time-of-use programs, though they can voluntarily sign up.
Edison is following PG&E in San Francisco, which last year shifted customers in Northern and Central California onto time-of-use plans.
Executives at Southern California Edison, a unit of Edison International of Rosemead, say up to 97% of business customers will see changes of less than 5% on their power bills. That’s because such businesses as restaurants and retail stores will see their power rates lowered from current levels during evenings, overnight hours and weekends. That should offset the relatively brief period during summer months when power rates will be at their highest.
Most Edison small- and midsize-business customers currently pay a flat rate for electricity, averaging about 17 cents a kilowatt-hour. Under time-of-use, peak-use energy in summer months will cost 21 cents a kilowatt-hour; midpeak energy will hold at the current 17 cents; off-peak will be billed at 14 cents (see chart).
“There will almost always be some off-peak consumption that will be lower than the current average, which should balance out some of the higher rates,” said Russ Garwacki, SCE’s director of pricing design.
Garwacki said that of the 3% to 4% of businesses that see rate fluctuations of more than 5%, two-thirds will experience drops, while one-third will see increases. Overall, SCE expects that only about 1 percent of its business customers—perhaps 5,000 or so—will see their power bills jump more than 5%.
Utilities have spent the last several years and hundreds of millions of dollars installing new “smart meters” that allow utilities to track how much power customers use at any time throughout the day. Customers also can track their power use by the hour or even in 15-minute intervals.
Some rate-payers advocates don’t think using smart meters for time-of-use charges is a smart idea.
“The big concern with time of use is that one size doesn’t fit all,” said Mindy Splatt, spokeswoman for the Utility Reform Network in San Francisco. “Some people will be able to shift their power use and save money; others won’t.”
Splatt said it’s much better to set overall power consumption thresholds and have time-of-use as an option.
“That way, you don’t get penalized if your business is one of those that really can’t shift the time of day you use your power,” she said.
SCE’s Garwacki said that regardless of time-of-use billing, companies can save money by reducing overall power usage by installing occupancy sensors that turn off lights when no one’s around, raising air-conditioning thermostat settings, replacing lights with lower-wattage versions and installing the latest energy-efficient equipment.
He also noted that customers should check about getting incentives from SCE for taking certain energy-conservation measures.
Fine is a reporter for the Los Angeles Business Journal, a sister publication of the Orange County Business Journal.
