The following post was sent to the Peaceworks' Green Team on Feb. 16, 2023. If you are not receiving these updates and would like to, please send an email to this ADDRESS with the subject "Subscribe Green Team" and we'll be happy to add you.
Columbia Water & Light is preparing to present a proposal to the City Council that would raise rates for all customers. As we all know, costs continue to rise across the economy, including wages, fuels, equipment, etc. So, as much as none of us likes to pay more, we are going to have to live with somewhat higher rates.
That said, the devil is in the details. A question that looms large for us, but seems to be ignored by the powers that be, is: Should our rate design be one that encourages efficiency and conservation, or should we simply be aiming to allocate costs based upon what a consultant thinks is fair?
We, perhaps obviously, favor the former. It seems to us that this not only serves the common good, but is actually fairer if we recognize the importance of including in the calculus those costs that are externalized; that is, costs that society bears, but which are not included in the price we pay. These would include the many costs of climate change as well as the health impacts of the air pollution that comes from burning coal, which currently is where three-quarters of our electricity comes from.
So, Green Team members, we are asking you today to contact the CoMo City Council, before this issue comes before them, and share your thoughts on electric rates, incentives and climate change. Read on for more details.
Customer Charges.
For starters, you need to know a little about electric bills. It’s pretty
simple though. If you have Columbia W&L as your electric supplier you’ll
find that there are two components to the electric part of your utility
bill: a customer charge and an energy
charge.
The customer charge is an amount that you are charged, no matter how much, or
how little, you consume. If you left town for a month and turned everything off
before you left, you would still have to pay this amount. The rationale is that
W&L has to maintain a line to your house or apartment. They need to read
your meter, send you a bill, process your payment, etc. Currently, the
residential customer charge is $16.31 and they propose to raise this to $22.00,
an increase of 34.9%.
If the customer cost is kept where it is, or even lowered, to generate the same
amount of revenue to meet expenses, they would need to increase the per
kilowatt hour (kWh) charge by a bit more instead. This would incentivize
getting more efficient and cutting waste. If they do raise the customer charge,
ratepayers would have to pay this fee regardless of how much electricity they use
and there would be less financial incentive to reduce excessive consumption.
Our Number One Ask: Please ask
the Council not to not raise the customer charge.
Rate Blocks
In general, utilities charge different amounts per kWh, depending on how much
electricity, in aggregate, one uses. Decades ago, in CoMo, the system operated
on a “the more you buy the cheaper it gets” philosophy. This was called
declining-block pricing. But we came to realize this was incentivizing
excessive consumption and burdening the utility with the need to build new
power plants or to purchase power from other suppliers, increasing costs for
everyone. So, this declining-block system was replaced by a flat-rate system,
which in turn was replaced by an inclining-block rate system, where larger
users had to pay a little more per kWh.
The proposed rate increase would flatten the rates and, in doing so, further
disincentivize reducing consumption. Without getting too deep in the weeds, for
residences CW&L has separate rate schedules depending on both how one heats
their home in the winter and what season it is, as rates are raised a bit in
the summer.
Under the proposed system, a very small user, consuming say 200 kWh a month
would see a 23.6% increase in their bills, while an average user, consuming 600
kWh a month would see just a 14.4% increase. And a large user, consuming 1,200
kWh a month in winter would pay just 8.9% more than they currently do. This
really doesn’t reward those who make a conscientious effort to make their homes
energy efficient and to do something as simple as turning things off when not
in use.
Our Number Two Ask: Please ask
the Council to support an inclining-block rate system that’s at least as
progressive as our current system, if not more.
Low Income Users
CW&L maintains that the rate plan they’re currently pursuing will be more
helpful to low income customers, as they maintain that low-income residents use
more electricity than those better off. The flaw in their position is that
there has been no data collected on customers income. Rather, they are basing
this on those customers who’ve requested assistance in paying their utility
bills. The thing is, most low-income folks have not requested assistance and
the subset of those who have made this request is skewed to those who have
larger bills.
It makes no sense to us to have lower rates for those consuming more,
regardless of their income or ability to pay. Rather, we need programs to bring
all housing up to code, in terms of energy efficiency, including rental
properties. This, along with home energy audits and the education that comes
with them, will allow those in difficult financial situations to keep up with
their bills and live more comfortably, with the additional benefit of reducing
their carbon footprints.
Our Ask Number Three: Please ask the Council to provide funding for
programs that upgrade the residences of rental units and owner occupied homes
of low-income residents. This is much better for all concerned than a rate
system that keeps rates lower than they should be for all larger customers.
We are urging Peaceworks’ Green Team members to join in making our voices
heard. This would be an excellent time to let the City Council know your
concerns on this. If you don’t feel like bringing up all three of these points,
please make your views heard on whichever ones you are comfortable with. Contact
info for the Council members is HERE.
