Application No: R.

22-07-005

Exhibit No.: NRDC-TURN-01

Witnesses: Mohit Chhabra, Sylvie Ashford

OPENING TESTIMONY OF MOHIT CHHABRA AND SYLVIE ASHFORD,

SPONSORED BY THE NATURAL RESOURCES DEFENSE COUNCIL AND
THE UTILITY REFORM NETWORK
ADDRESSING OPTIONS FOR AN INCOME-GRADUATED FIXED CHARGE

Natural Resources Defense Council

111 Sutter St., 21st Floor
San Francisco, CA 94104
(415) 875-6100

The Utility Reform Network

785 Market Street, 14th floor
San Francisco, CA 94103
(415) 929-8876

April 7, 2023
 TABLE OF CONTENTS

I. INTRODUCTION (SA & MC) ..................................................................................................... 1

A. Three Separate Problems: Utility Revenue Requirement, Social Policy Costs, and Rate
Design 2
B. The Context for NRDC and TURN Support for Fixed Charges ............................................ 3
C. Summary of the Joint Proposal .............................................................................................. 3
D. Organization of the Testimony .............................................................................................. 5
II. OVERARCHING THEORY OF RATE REFORM: ECONOMIC JUSTIFICATION AND POLICY
CONSIDERATIONS (MC)............................................................................................................ 6
A. Short Run Marginal, Long Run Marginal, and Average Costs.............................................. 6
B. Current Average Cost Based Volumetric Rates Have Economically Inefficient, Inequitable,
and Environmentally Deleterious Outcomes ......................................................................... 9
C. Residual fixed cost Recovery Via Income Graduated Fixed Charges and The Case Against
Demand Charges .................................................................................................................. 13
The Problem with Demand Charges ................................................................................ 14
Compliance with Public Utilities Code Section 739.9(d) ................................................ 16
D. Real World Barriers to An Economically Efficient and Ideally Progressive Rate Design
Require Pragmatic Solutions................................................................................................ 16
E. The Joint Proposal Balances Economic Efficiency, Environmental Goals, and Prioritizes
Equitable Outcomes ............................................................................................................. 17
III. DETAILS OF THE JOINT PROPOSED RATE STRUCTURE (SA & MC) .................................. 19
A. Determinants of Average Levels of Fixed Charge .............................................................. 19
B. Income Based Graduation of Fixed Charges ....................................................................... 22
C. CARE Discount Methodology ............................................................................................. 24
D. Impact on Volumetric Charges to Achieve Revenue Neutrality ......................................... 25
E. Average Bill Impacts for Low-Income and Non-Low-Income Ratepayers......................... 26
F. Proposed Rate Design Improves the Economics of Electrification ..................................... 28
IV. IMPLEMENTATION AND INCOME VERIFICATION PROCESS (SA & MC)............................... 32
A. Priorities Guiding Equitable Implementation ...................................................................... 33
B. Implementation Proposal ..................................................................................................... 34
C. Evaluating the Implementation Method............................................................................... 38
D. Cost of the Implementation Method .................................................................................... 39
E. Post-Implementation Assessment of Income-Graduated Fixed Charges............................. 40
 1 I. INTRODUCTION (SA & MC)
2 NRDC is a non-profit membership organization with more than 95,000 California
3 members who have an interest in receiving affordable energy services while reducing the
4 ion
5 environmental goals cost-effectively and equitably. The Utility Reform Network (TURN) is a
6 non-profit ratepayer advocacy organization representing the interests of the residential customers
7 served by California utilities. This testimony is jointly sponsored by Sylvie Ashford (SA) and
8 Mohit Chhabra (MC) of the Natural Resources Defense Council (NRDC) on behalf of both
9 NRDC and TURN.

10 Assembly Bill 205 (2022) provides a unique opportunity to implement a progressive

11 fixed charge that can help align residential rate design with the state goals of prioritizing
12 affordability, equity, and beneficial electrification. This testimony recommends a pragmatic and
13 implementable fixed charge amount that is well below what economic theory would justify.
14 Income graduation of this fixed charge will result in progressive outcomes while limiting adverse
15 impacts to any residential subgroup. The underlying rationales and economic bases for our
16 proposal are discussed in the ensuing sections. Further background is provided via a white paper
17 by Synapse Energy Economics in Appendix C.

18 The NRDC-TURN fixed charge proposal can be summarized as follows:

19 An average customer fixed charge of approximately $36 for all investor-owned

20 utilities (IOU) customers on default rates.
21 Fixed charges progressively recovered from customers via three income tiers. This
22 includes the following default rate fixed charges:
23 o Low tier: CARE & FERA customers pay a fixed charge of $5 per month.
24 o Middle tier: non-CARE and non-FERA customers with annual household
25 income up to $150,000 pay approximately $40 per month.
26 o High tier: non-CARE and non-FERA customers with annual household
27 income greater than $150,000 pay approximately $62 per month.
28 Volumetric charges on default rates commensurately decrease by approximately 25%
29 for non-CARE customers and 20% for CARE customers.
30 Separate, optional electrification rates include a fixed charge $10 higher than default
1
 1 rates for all tiers described above.

2 A. Three Separate Problems: Utility Revenue Requirement, Social Policy Costs,

3 and Rate Design

4 California residential electricity rates are among the highest in the country. Although
5 coastal weather, energy efficiency leadership, and low-income rate
6 discount programs have kept some residential bills in check, rising rates threaten
7 affordability, equity, and electrification goals. Because residential electric rates are so much
8 higher than the costs to both the utility and society at large of incremental electricity
9 consumption, they create problematic incentives and large affordability challenges. While
10 aggressive electrification of buildings and
11 transportation, rapidly rising electric rates discourage electrification investments and exacerbate
12 the affordability crisis for lower and middle-income Californians.

13 Th
14 through the incorporation of income-based fixed charges, dynamic pricing, and other methods of
15 using rates to promote demand flexibility. Although reforming rate design is part of the strategy
16 for addressing affordability and encouraging electrification, no set of outcomes in this
17 proceeding will solve the core problem of excessive revenue requirements collected through
18 rates. Rates can provide the right marginal signals to customers but preserving the affordability
19 of customer bills requires a primary focus on revenue requirements and making sure all
20 connected customers fairly pay for the fixed costs of the grid and policy-related obligations. The
21 Commission should continue to be vigilant about total revenue requirement authorizations by
22 making sure utilities engage in efficient and necessary spending and funding societal policy
23 goals and societal wildfire risk mitigation through sources other than utility revenue
24 requirements.

25 This testimony describes why the current residential electric rate design leads to
26 uneconomic, inequitable, and un-environmental outcomes; we propose a new rate structure that
27 partly overcomes each of these issues and provide recommendations for the Commission to
28 continue to improve residential rate design.

2
 1 B. The Context for NRDC and TURN Support for Fixed Charges

2 ectricity prices to better reflect

3 marginal costs of generation from an increasingly renewable grid to provide appropriate signals
4 for beneficial electrification and efficiency. Equitable outcomes require that customer electric
5 bills be affordable and as progressive as possible.

6 Historically, TURN and NRDC have opposed residential fixed charges due to concerns
7 over regressive economic impacts and adverse impacts on efficiency, which is at the top of the
8 CPUC's "loading order" of resources.1 Several things have changed. (1) An income-based fixed
9 charge allows for progressive implementation and mitigates disadvantages for low-income
10 customers; (2) the California generation mix is increasingly composed of renewable resources,
11 with surplus generation occurring primarily during the middle of the day, and the emissions
12 intensity of the portfolio will continue to improve as California moves towards the target of
13 100% zero carbon resources by 2045 as required by law2; (3) significant increases in average
14 rates over the past decade mean that usage-based rates, even with new fixed charges, are still
15 sufficient to promote conservation and efficiency; (4) there is a relatively new imperative for
16 beneficial electrification (buildings and transportation), which was not present in the past, to
17 achieve carbon neutrality by 2045 per California law.3

18 The hypothesis underlying this policy proposal is broadly applicable. However, this
19 policy proposal is germane solely to the specific circumstances currently present in California:
20 extremely high electric rates; aggressive decarbonization goals; specific legislative direction to
21 implement a progressive fixed charge; and an increasingly clean electricity generation mix.

22 C. Summary of the Joint Proposal

23 Residential rate design in California needs to balance the policy aims of economic
24 efficiency, reducing greenhouse gases and local pollution, equitable outcomes, predictability,

1
CPUC Energy Action Plan II: The loading order identifies energy efficiency and demand response as the State's
preferred means of meeting growing energy needs. After cost-effective efficiency and demand response, we rely on
renewable sources of power and distributed generation, such as combined heat and power applications. Available
at: https://docs.cpuc.ca.gov/PUBLISHED/REPORT/51604.htm
2
See Senate Bill 100: https://www.energy.ca.gov/sb100
3
See Assembly Bill 1279, The California Climate Crisis Act:
https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220AB1279

3
 1 customer acceptance/understanding, and stability.

2 Economic efficiency requires pricing informed by short run social marginal costs
3 (SRSMC), as explained in Section II. Rates informed by SRSMC also provide the right
4 environmental signal as they encourage customers to use more electricity when clean resources
5 are at the margin, or conserve when polluting and expensive resources are at the margin.
6 Equitable electric rate structures provide understandable and constructive price signals that
7 enable easy customer response and are as progressive as possible.

8 An income graduated fixed charge is one tool the Commission can use to help achieve
9 these objectives. While higher fixed charge levels result in lower and less distortionary
10 volumetric rates, income graduating fixed charges will result in progressive electricity bills, and
11 an appropriately time varying rate structure (that reflects the variation in SRSMC) will continue
12 signaling conservation and load shifting during peak periods.

13 As a starting point, the Commission should raise fixed charges and provide sufficient
14 income graduation to: (1) meaningfully reduce the gap between current inefficient and
15 inequitable average cost based volumetric rates and SRSMC, and (2) realize significant
16 improvements in the regressivity of electric bills. Continued use of optional electrification rates,
17 which have a higher fixed charge than default rates and greater on- and off- peak differential,
18 will also encourage beneficial electrification.

19 Table 1 and Table 2 present a representative snapshot of the NRDC-TURN proposal.

20 Table 1 Proposed Income Graduated Fixed Charges for Tiered and Electrification Rates; Fixed Charges for Other Rates
21 are Similar.

Fixed Charge Amounts

PG&E SCE SDG&E
E-1 E-ELEC D TOU-D-PRIME DR TOU-ELEC
CARE & FERA $ 5 $ 15 $ 5 $ 15 $ 5 $ 15
< $150,000 $ 41 $ 50 $ 41 $ 51 $ 41 $ 51
$150,000+ $ 62 $ 75 $ 62 $ 76 $ 62 $ 76
22 Average per customer $ 36 $ 47 $ 36 $ 47 $ 36 $ 47

23

4
 1

2 Table 2 Existing and New Proposed Volumetric Rates for Tiered Rate Schedules; The Change is Indicative of the
3 Magnitude of Decrease in Volumetric Rates Across All Rate Schedules.

Volumetric Charges
PG&E (E-1) SCE (D) SDG&E (DR)
Existing Rate New Rate Existing Rate New Rate Existing Rate New Rate
CARE $ 0.24 $ 0.19 $ 0.26 $ 0.21 $ 0.38 $ 0.31
Non-CARE $ 0.39 $ 0.30 $ 0.40 $ 0.31 $ 0.59 $ 0.47
Baseline Credits
PG&E (E-1) SCE (D) SDG&E (DR)
Existing Rate New Rate Existing Rate New Rate Existing Rate New Rate
CARE $0.05 $ 0.04 $ 0.06 $0.05 $ 0.08 $ 0.06
Non-CARE $0.07 $ 0.06 $ 0.08 $0.07 $ 0.12 $ 0.10
High Usage Charge
PG&E (E-1) SCE (D) SDG&E (DR)
Existing Rate New Rate Existing Rate New Rate Existing Rate New Rate
CARE $ - $ - $ 0.06 $0.05 $ - $ -
4 Non-CARE $ - $ - $ 0.09 $0.08 $ - $ -

5 As we illustrate throughout our testimony, there are significant economic and policy
6 justifications for an evolving fixed charge that incorporates income graduation and can achieve
7 economic, environmental, and equitable outcomes. The NRDC-TURN joint proposal is the right
8 starting point for this reform. Further changes in the future should carefully consider
9 distributional impacts of such changes on customers of various income levels and located in
10 different climates.

11 D. Organization of the Testimony

12 Section II explains basic economic concepts of rate design and illustrates the
13 environmental, economic, and equity issues
14 describe attributes of an economically efficient and progressive rate structure, explain
15 the implementation issues with such a rate structure, and describe attributes of a
16 pragmatic and implementable rate design.
17 Section III describes the Joint Proposal and identifies the determinants of the fixed
18 charge for default and electrification rates, proposed income graduation schema,
19 expected impacts on customer bills, and improved signals for beneficial
5
 1 electrification.
2 Section IV explains how the income graduated fixed charge proposal can be
3 implemented and evaluated post-implementation.
4 Appendix A: Witness Qualifications.
5 Appendix B: Index of ALJ guiding questions mapped to testimony.
6 Appendix C: Synapse whitepaper on economic theory, policy tradeoffs, and practical
7 considerations for fixed charge reform.
8 Appendix D: Printed results requested by the ALJ. The first set includes the
9 applicable fixed charges for default tiered and TOU rates, with heat maps for two rate
10 types per utility. The second set includes applicable fixed charges for electrification
11 rates, with heat maps for one such rate per utility.

12 II. OVERARCHING THEORY OF RATE REFORM: ECONOMIC JUSTIFICATION

13 AND POLICY CONSIDERATIONS (MC)
14 A. Short Run Marginal, Long Run Marginal, and Average Costs

15 Short run marginal costs (SRMC) are the marginal costs of increasing
16 output in the short run when at least one input is fixed. In the electricity sector, in the short run,
17 both generation capacity and grid capacity are fixed. SRMC is equal to the costs of producing
18 and delivering a marginal unit of electricity; or the sum of the wholesale locational marginal
19 price, (which includes the competitive clearing price of electricity generation plus high voltage
20 transmission losses), and the costs of distribution system losses.

21 Short run social marginal cost (SRSMC) is the full marginal cost to society of increasing
22 output in the short run when at least one input is fixed. The SRSMC is equal to the SRMC plus
23 the costs of associated environmental externalities, namely the social costs of greenhouse gases
24 and air pollution associated with producing an extra unit of electricity. In an increasingly
25 renewable grid like California, SRSMC will be low during off-peak periods when renewables are
26 increasingly on the margin, it could become extremely high during on-peak periods due to
27 generation constraints, transmission constraints, and environmental externalities associated with
28 fossil generation.

6
 1 The economic ideal is to set prices at SRSMC.4 t
2 economic efficiency is maximized when price reflects full short-run social marginal costs
3 (SRSMC) is a bedrock principle of microeconomics, because it is straightforward to show that
4 any departure from social marginal costs is likely to reduce the economic value that the industry
5 can create. Producing a good requires inputs labor, fuel, machinery, land, etc. and those
6 inputs have alternative uses. The price of an input is generally a good indicator of its value in its
7 next best use, so economics suggests that the inputs should only be brought together to produce
8 this good if the value of this good to whoever consumes it exceeds the value of all the inputs
9 necessary to make it. Setting price equal to short-run social marginal cost creates the incentive to
10 consume an incremental unit of the good if and only if one values it more than the value that the
5,6
11 i

12 Long run marginal costs (LRMC) are the marginal costs of increasing one unit of output
13 when all inputs can be varied. Accordingly, long run is the length of time through which all
14 inputs can be varied. Long run social marginal cost (LRSMC) also account for the costs of any
15 environmental externalities incurred in addition to LRMC. Avoided costs in the
16 Avoided Cost Calculator (ACC) are an intuitive adaptation of the LRMC concept. In summary,
17 with simplif increases
18 in future electricity demand by a unit in all hours of the year by adjusting all components of the
19 electricity system (generation, capacity, transmission, and distribution); the marginal costs for
20 generation capacity, transmission, and distribution are allocated to hours and locations based on
21 a probability of when and where the grid will constrained for capacity in the future. The
22 generation marginal costs for each hour are based on forecasts of wholesale market energy
23 prices.

4
to set all public
utility rates at short run marginal costs (with appropriate adjustments for the problems of second-best); and these
must cover all sacrifices, present or future and external as well as internal to the company, for which is production at
the margin causally responsible.
5
Severin Borenstein, The Economics of Fixed Cost Recovery by Utilities (2016), at 2.
6
For example, if the total societal cost to produce an extra unit of a good is $10 and it is priced at $10 then
customers who value it at $10 and above will purchase it. An efficient outcome. If it is incorrectly priced at $20,
then only those customers who value that good at more than $20 will purchase it. All the customers who value that
good between $10 and $20 will forego consumption and there will be deadweight loss. On the other hand, if the
good is incorrectly priced too low then it will induce overuse, which will lead to misallocation of resources and
additional environmental externalities.

7
 1 The ACC with minor modifications, henceforth called ACCM,7 could provide guidance
2 for setting average volumetric rates if policymakers choose to include some longer run marginal
3 costs (as explained above) and/ or collect some future fixed costs via volumetric rates to recover
4 future marginal capacity and grid expansion costs based on customer consumption patterns
5 today. However, the downside of including these additional longer run marginal costs from the
6 ACCM is loss of economic value in the short run when ACCM is higher than SRSMC. On the
7 other hand, reflect the full SRSMC during times when demand
8 exceeds supply which could lead to overbuilding, excess capacity, and a more expansive and
9 expensive grid than necessary.

10 Although SRSMC is the economic ideal for setting the electricity price, or the volumetric
11 rate, there are practical and policy reasons to deviate from SRSMC.

12 First, SRSMC may be too volatile as it changes with time, at least every fifteen minutes
13 per the wholesale market, and by location. The effort required to comprehensively implement
14 this price signal may not be the worth the additional benefit generated. Second, accurately
15 implementing the SRSMC will require technological infrastructure that may not exist uniformly
16 and may be very expensive to implement. Third, all residential customers may not be well
17 equipped to efficiently respond to these constant changes in price. Fourth, rates need to be
18 customer friendly and predictable so that residential customers understand their rates and its
19 implications on their monthly bill. Finally, policy makers may want to include additional ACCM
20 longer term marginal costs to both influence customer behavior to potentially defer avoidable
21 capital expenditures, and/or collect future fixed costs, which would also help smooth out sudden
22 SRSMC price surges.

23 default residential rates are based on neither SRSMC nor any application of
24 LRSMC. They are based on a variation of average costs; wherein (almost all) the residential
25 revenue requirement is divided by forecasted consumption to determine average volumetric rates

7
To apply the ACC, the GHG Adder should be replaced by social damage costs of carbon and air pollution.
n goals, or a shadow price of GHG
reduction, without any new or additional distributed energy resources. This shadow price, called the GHG Adder,
helps accounts for the fact that in the absence of DER, utilities will contract with more supply side resources to meet
GHG reduction goals. Social marginal costs should represent the total cost to society if an extra unit of electricity is
consumed including environmental externalities which in this case are the social cost of carbon and air pollution.

8
 1 per kWh. These average costs are then adjusted to reflect some of the time varying costs of
2 delivering electricity in Phase 2 General Rate Case proceedings, which are often resolved via
3 settlements. Currently, a very small portion of the residential revenue requirement is collected
4 via fixed charges by those few customers that are on electrification rates who pay around $15 per
5 month. Electrification specific rates have a higher on and off-peak differential and a modest
6 fixed customer charge. These electrification rates are not currently based on SRSMC or any
7 application of LRSMC.

8 B. Current Average Cost Based Volumetric Rates Have Economically Inefficient,

9 Inequitable, and Environmentally Deleterious Outcomes

10 An estimate of SRSMC can be derived from the C includes

11 forecasted wholesale prices, distribution losses
12 report on the Societal Cost Test (SCT Report) includes an estimate of social damages due to
13 d air pollution from marginal emissions.8 Combined, these two resources have all the
14 information to develop an estimate of the SRSMC. Figure 1 shows how much default TOU rates
15 differ from the SRSMC and ACCM; Figure 2 breaks out SRSMC into SRMC and externalities.

16 Figure 1 Comparison of SRMC and ACCM with TOU Rates (PG&E = E-TOU-C. SCE = TOU D 4-9, SDG&E = TOU-
17 DR1)9

18

8
Energy Division Staff and E3 Consulting, Societal Cost Test Impact Evaluation, CPUC, January 2022.
9
Calculation details in Appendix C, Section 5.2.

9
 1 Figure 2 Decomposing SRSMC into SRMC and Externalities

3 As seen in the figure, the retail price of electricity is much higher than both the SRSMC
4 and the ACCM (which, in this example, is equal to the SRSMC plus longer run capacity
5 adjustment costs as determined by the ACC). Aside from the economic surplus lost due to
6 mispriced electricity, wherein customers are overcharged for consumption and consume less than
7 they otherwise would, this mispricing causes serious environmental and equity issues.

8 As the California grid gets cleaner due to increasing penetration of renewable generation,
9 SRSMC and ACCM values will decrease in most hours except those with significant generation
10 capacity and transmission & distribution capacity constraints. This means that Californians
11 should be able to avail themselves of low-cost and clean electricity in all hours without scarcity
12 where supply is low relative to demand and when clean resources are on the margin. If retail
13 pricing for these hours matched SRSMC or ACCM values, customers would be more motivated
14 to electrify their building and transportation needs. Yet even as social marginal costs decrease,
15 existing residential electricity prices are escalating rapidly and increasingly provide inaccurate
16 price signals in virtually all hours. The inefficiencies illustrated in the figures above will only get
17 worse over time unless the Commission adopts the Joint Proposal and begins reforms to
18 residential electric rate design.

19 Figure 3 shows an estimate of the premium Californians are paying for electrified space
20 heating due to this inefficient electric pricing. This analysis, conducted by the Energy Institute at
21 Haas, uses slightly different rate and SRSMC values than presented in this testimony; the

10
 1 overarching finding, that operating costs of space heating via beneficial electrification are a lot
2 more than they should be, stands.

3 Figure 3 Current Inefficient Rates Make Electrification a Hard Proposition for Californians10

5 The second major issue with existing average cost volumetric rates is their regressive
6 impacts. The fact that lower income customers pay a much higher portion of their expendable
7 income on electricity than higher income customers in California is What is
8 shocking, however, is that compared to other essential household expenditures, spending on
9 electricity is by far the most regressive. Figures from a recent Next 10 report, based on research
10 conducted by the Haas Energy Institute, illustrate the inequitable impacts of the current
11 electricity rate structure. This analysis is based on 2017-18 data; because electric rates have
12 significantly increased since then, the trends in these charts are even more troublesome today.
13 The income graduated fixed charges in the NRDC-TURN proposal will improve this
14 regressivity.

10
Borenstein, Fowlie, and Sallee. 2022. Paying for Electricity in California: How Residential Rate Design Impacts
Equity and Electrification, 20. Next 10 and the Energy Institute. Available at:
https://www.next10.org/sites/default/files/2022-09/Next10-paying-for-electricity-final-comp.pdf
The values presented here are estimates of meeting heating demand, derived from the Residential Appliance
Saturation Survey, with 2019 Energy Star standard efficiency electric heating appliance.

11
1 Figure 4 Electricity Expenditure is more Regressive than Other Household Expenditures11

3 Figure 5 Electricity Expenditure Does Not Track Income; Lower Income Households Spent a Lot More on Electricity
4 Relative to Their Income11

6 The first part of the optimal economically efficient solution is to set prices, or volumetric
7 rates, equal to SRSMC. Because setting prices at SRSMC maximizes societal value and
8 efficiency, it provides a reference point for evaluating the economic efficiency of new proposed
9

11
vailable at:
https://energyathaas.wordpress.com/2020/11/16/reinventing-fixed-charges/

12
 1 However, this presents a challenge for revenue recovery. As illustrated above, utility
2 average costs are much higher than SRSMC or even ACCM; the gap between average costs and
3 utility marginal costs (SRMC) is even greater. Specifically, utilities and community
4 choice aggregators will not recover most fixed costs if volumetric rates are set at either SRSMC
5 or at ACCM. A different revenue collection mechanism in addition to one based on usage is
6 required to collect these residual fixed costs. Innovative methods of recovery, such as income
7 graduated fixed charges, can accomplish this- collection of full revenue requirement while
8 making electric bills more progressive.

9 C. Residual fixed cost Recovery Via Income Graduated Fixed Charges and The
10 Case Against Demand Charges

11 If volumetric rates are set at true SRSMC then each customer would pay for the full
12 marginal costs their usage imposes on the electricity system and society. Customers who use
13 more electricity during times of generation capacity and grid constraints would pay the most per
14 kilowatt-hour, while others who use electricity when there is excess clean supply would pay the
15 least. When electricity is priced based on economic efficiency, all residual costs, or revenue
16 requirement remaining over and above usage-based cost recovery, are fixed and unaffected by
17 the volume or timing of electricity consumption.

18 The primary consideration for allocating residual fixed costs se

19 is one of fairness. Who should pay how much and why? There are multiple dimensions to
20 fairness and multiple approaches to answering this question. One purely economic approach
21 would allocate fixed costs to all customers based on the consumer surplus each customer derives
22 from electricity use (from the grid). Those who use the most electricity and value electricity the
23 highest would then pay most. This determination, however, requires an understanding of each
24
25 function. Moreover, this method of allocating fixed costs does not differentiate between
26 customers who value electricity highly as a matter of necessity (e.g., a seven-person household
27 that requires a high base level of electricity use) and wealthy customers who want to (and can)
28 spend more on electricity to fulfil their desires. Said another way, two customers can have the
29 same demand functions for electricity for distinct reasons, and these distinctions may justify
30 different fixed charge amounts for each based on fairness considerations.

13
 1 Another way to allocate fixed costs is based Because
2 universal access to electricity is a basic right, fulfilling this right requires maintaining a
3 collective good, the grid, to serve all customers at all income levels. This approach supports
4 paying these fixed costs, which are independent of future usage, progressively or based on each
5 househol Households would pay toward fixed cost recovery based on
6 their individual income or wealth. Assembly Bill 205 (AB205) requirement to income graduate
7 fixed charges supports the implementation of such an approach.

8 Combining these two approaches would mean that customers who are the richest and use
9 the most electricity should pay a greater share of fixed costs. This ideal solution is nearly
10 impossible to implement. However, a progressive graduation of the fixed charge is feasible (as
11 demonstrated by this proposal) and takes a step in this idealized direction. In particular, there is a
12 significant correlation between income and energy use as wealthier customers tend to consume
13 more electricity within each climate zone as TURN has previously demonstrated.12 This ideal
14 approach would, on average, recover more fixed costs from wealthier customers with higher
15 energy use.

16 Practically, as rates evolve from their current state to SRSMC, utilities will continue to
17 recover a portion of fixed costs via volumetric rates.13 Larger electricity users will continue to
18 pay more towards fixed cost recovery than lower electricity users; and there is no need for an
19 additional usage or demand-based mechanism to allocate fixed costs among residential
20 customers.

21 The Problem with Demand Charges

22 Because pricing electricity based on economic efficiency, where variable charges are
23 equal to SRSMC, will recover whatever marginal costs each customer imposes on the grid, any
24 demand charge to ensure cost causation-based recovery of fixed costs is unnecessary. In addition

12
TURN analysis of PG&E data finds that when normalized by climate zone, there is a correlation between
wealthier customers and higher energy use. TURN conducted this analysis on customers on tiered rates and found
that the average rate for wealthier customers is higher. This implies that higher customers were also consuming
more and were thus on higher $/kWh tiers. See, TURN. July 26, 2013. of The Utility Reform
Network on Rate Proposals, 21-24. CPUC Rulemaking 12-06-013.
13
The fairness of fixed cost recovery through volumetric rates is also contingent on how fixed costs are spread over
different hours in current time of use rate structures.

14
 1 to being superfluous when electricity is priced at SRSMC, residential demand charges have
2 arbitrary impacts on customers, are misaligned with state policy goals, provide perverse
3 incentives, and cause confusion.

4 Non coincident peak demand charges (NCP) are usually based on a

5 minutes of usage, independent of the SRSMC or LRSMC at that time. Two customers with the
6 exact same profile and identical consumption quantities could have different NCP based on their
7 highest fifteen-minute period of electric consumption. Customers who intentionally use more
8 electricity and have a high NCP during periods of surplus will end up paying extra for being
9 good actors. As customers electrify, their NCP will increase so demand charges would cause
10 these customers to unnecessarily overpay even if they time their incremental electric usage to
11 coincide with periods of low grid costs. This disincentivizes electrification policy goals.14

12 Coincident demand charges beg the question: coincident with what? Coincident with
13 local distribution congestion or coincident with systemwide capacity shortfall? Or a mixture of
14 both? Applying a uniform definition of coincident demand charges will again have arbitrary
15 in addition to some of the same problems that an NCP
16 causes.

17 Finally, demand charges are notoriously hard to explain to customers. Customers have an
18 intuitive sense of how their electric usage corresponds to their total electric bill, but keeping
19 track of their highest fifteen minutes of consumption over a month or a year may prove to be
20 untenable and cause confusion.15 Demand charges also cause perverse and unfair incentives for
21 wealthier and savvier customers who have the resources to minimize their peak demand through
22 a mix of smart appliances, programmable storage, and or paid expert/ consultant advice. Demand
23 charges could effectively shift costs towards customers with less ability to avail themselves of
24 such services including renters (who tend to have lower than average incomes) and many

14
-shift and req See CPUC.
2022. Advanced Strategies for Demand Flexibility Management and Customer DER Compensation. Energy Division
White Paper and Staff Proposal, 32-36. Available at: https://www.cpuc.ca.gov/-/media/cpuc-
website/divisions/energy-division/documents/demand-response/demand-response-workshops/advanced-der---
demand-flexibility-management/ed-white-paper---advanced-strategies-for-demand-flexibility-management.pdf
15
Is it really practical to ask customers to not run their dishwasher while they charge their EV, particularly if this
occurs during off-peak hours?

15
 1 middle-income families.

2 Compliance with Public Utilities Code Section 739.9(d)

3 Public Utilities Code §739.9(d) requires that fixed charges reasonably reflect the costs of
4 serving small and large customers, not unreasonably impair incentives for conservation,
5 efficiency, beneficial electrification, and GHG reductions, and not overburden low-income
6 customers.16 Income graduating fixed charges addresses the requirement to not overburden low-
7 income customers. To the extent wealthy customers are also larger customers, larger customers
8 will on average pay higher fixed charges; and to the extent larger customers consume more
9 electricity, they will pay more toward fixed cost recovery so long as a significant fraction of
10 fixed costs are recovered via volumetric rates (as explained above.) Fixed charges aligned with
11 our Joint Proposal will incentivize beneficial electrification while continuing to prioritize
12 efficiency.

13 Finally, utilities should account for any difference in marginal customer access costs
14 between single family and multi-family dwellings by modifying our proposed fixed charge
15 levels. The Commission should direct the utilities to improve their collection of customer data to
16 include identifiers as to whether a residential account reflects a single or multi-family unit. Once
17 there is better confidence in the accuracy and completeness of this information, the Commission
18 can direct utilities to evaluate the establishment of separate single-family and multi-family fixed
19 charges in appropriate rate design proceedings (such as a Phase 2 General Rate Case).

20 D. Real World Barriers to An Economically Efficient and Ideally Progressive Rate

21 Design Require Pragmatic Solutions

22 As explained in Section II.A, there are pragmatic economic and policy reasons for
23 deviating from SRSMC, such as the need to develop a predictable and understandable default
24 rate. Geographic and hourly variations should be averaged to address customer understanding

16
§739.9(d) The commission may adopt new, or expand existing, fixed charges for the purpose of collecting a
reasonable portion of the fixed costs of providing electrical service to residential customers. The commission shall
ensure that any approved charges do all of the following:
(1) Reasonably reflect an appropriate portion of the different costs of serving small and large customers.
(2) Not unreasonably impair incentives for conservation, energy efficiency, and beneficial electrification and
greenhouse gas emissions reduction.
(3) Are set at levels that do not overburden low-income customers.

16
 1 without overly compromising price signals for both capacity constrained hours (which correlates
2 to times when polluting resources are on the margin) and off-peak hours when social marginal
3 costs for consumption are very low. Moreover, if volumetric rates (on-average) equal SRSMC,
4 very high fixed customer charges, between $75 and $90 per month, would be required to recover
5 residual fixed costs.

6 A rate design that meaningfully reduces the gap between SRSMC and current rates is a
7 reasonable starting place. Collecting residual fixed costs via progressive income graduated fixed
8 charges is a novel approach which requires new organizational and informational structure
9 development. Moreover, utility billing systems need to accommodate this scale of change, e.g.,
10 the way that transmission, distribution and policy-driven costs are collected will need to evolve,
11 and major changes would be required to accurately bill both bundled and departing load
12 customers.

13 Finally, funding for social policy goals and shared public safety obligations like wildfire
14 mitigations that go beyond compliance with utility regulatory requirements, or are driven by
15 larger public safety objectives, should be collected via the state budget or another external
16 funding source rather than the electricity revenue requirement. It is far more progressive to
17 collect funding from taxpayers than ratepayers given progressive state income tax.
18 This shift would also improve electricity pricing signals by removing these costs from the pricing
19 of electric consumption. Until new mechanisms are developed to collect these social policy and
20 public safety related costs via taxpayer funding, these will remain in utility revenue requirements
21 and should ultimately be recovered via fixed charges.

22 E. The Joint Proposal Balances Economic Efficiency, Environmental Goals, and

23 Prioritizes Equitable Outcomes

24 We propose starting with an average fixed charge that is less than halfway between
25 current fixed charges and the amount required to recover revenues when volumetric rates equal
26 SRSMC. Our proposal leverages existing programmatic structures to develop a three-tier
27 household income graduation starting point. We propose continuing opt-in electrification rates
28 with a slightly higher fixed charge than default rates. Off peak rates for customers on these
29 electrification rates are closer to SRSMC and thus encourage beneficial electrification; high on-

17
 1 peak charges in these electrification rates will provide the right signal for efficiency and demand
2 response.

3 Figure 6 TURN/ NRDC Proposed Average Fixed Charge Versus Fixed Charge Needed to Get Volumetric Rates to Equal
4 SRSMC

6 The Commission should implement this no-regrets first step. A no-regrets fixed charge
7 would result in volumetric electric rates that remain high. These rates will continue to incentivize
8 distributed generation, energy efficiency, and demand response even though not all this
9 encouragement will be economically efficient.

10 As existing rates still significantly deviate from the SRSMC, the Commission should
11 continue to adjust the fixed charge, existing time of use period definitions and volumetric
12 charges over time to make rate design more efficient. To address policy objectives, the
13 Commission should continue updating this rate structure to ensure that income graduated fixed
14 charges are collected more progressively over time, and that rates continue to balance
15 Commission priorities for cost-effective energy efficiency and demand response, beneficial
16 electrification, and cost-effective distributed generation.

17 In taking this stepwise approach, the Commission should continue to analyze

18 distributional impacts of rate reform. Specifically, there should be an ongoing evaluation as to
19 which customers gained and lost the most from these changes. For example, income graduated
20

18
 1 the greatest percentage increases in their bills, low-income inland customers will likely realize
2 the most savings. Future rate updates should continue to prioritize keeping default rates
3 understandable, predictable, and manage customer expectations.

4 III. DETAILS OF THE JOINT PROPOSED RATE STRUCTURE (SA & MC)
5 A. Determinants of Average Levels of Fixed Charge

6 The rationale for sorting cost categories between fixed and variable is straightforward.
7 All cost categories that the strict economic definition of marginal SRSMC are
8 candidates for fixed charges; cost categories that LRSMC adaptation to the electric
9 sector, or ACCM, are definite candidates.

10 To develop our fixed charge recommendation, we start with including all feasible cost
11 categories and then add a portion of non-marginal distribution costs for each utility until
12 achieving our desired fixed charge amount. We solved for an average fixed charge that results in
13 approximately $40 for the middle income graduated tier and $5 for CARE customers. This
14 approach yields an average fixed charge across all three utilities of approximately $37. This
15 recommended level considers the bill impacts for coastal customers who tend to have lower
16 usage than inland customers. We found moderate bill impacts for coastal customers at this (and
17 even higher) levels. We also wish to introduce fixed charges in a more gradual fashion than
18 required for volumetric rates to reach SRSMC to ensure customer acceptance of these rate
19 changes. changes. We recommend fixed charges for all residential rate options.

20 Table 3 presents all cost categories for each utility and the portions of each category we
21 propose for inclusion in the fixed charge. Highlighted categories are those categories that meet
22 the strict definition of SRSMC or are included in ACCM; all other categories are thus candidates
23 for inclusion in a fixed charge.

19
1 Table 3. Average Determinants of Default and Electrification Rate Average Customer Fixed Charge

Percent to Include in
Cost
Cost Component Customer Charge
Category
PG&E SCE SDG&E
Generation PCIA 100% 100% 100%
Generation Marginal Energy Cost 0% 0% 0%
Generation Marginal Generation Capacity Cost 0% 0% 0%
Generation Non-Marginal Generation 0% 0% 0%
Distribution Marginal Customer/ Customer Access 100% 100% 100%
Distribution Marginal Distribution Capacity Cost - Primary 0%
Distribution Marginal Distribution Capacity Cost - New Business 100%
Distribution Marginal Distribution Capacity Cost - Secondary 0%
Distribution Marginal - Grid 0% 0%
Distribution Marginal - Peak 0% 0%
Distribution Marginal Demand - Non-Coincident Peak 0%
Distribution Marginal Demand - Coincident Peak 0%
Distribution Non-Marginal Distribution 20% 45% 7%
Transmission All Transmission Categories 0% 0% 0%
Line Items Public Purpose Programs - SGIP 100% 100% 100%
Line Items Wildfire Fund Charge 0% 0% 0%
Line Items Wildfire Hardening Charge 100% 100%
Line Items Recovery Bond Charge 0% 0%
Line Items Recovery Bond Credit 0% 0%
Line Items Public Purpose Programs - Not CARE Exempt 100% 100% 100%
Line Items Nuclear Decommissioning 100% 100% 100%
Line Items New System Generation Charge 100% 100% 100%
Line Items Competition Transition Charge 0% 0%
Line Items Energy Cost Recovery Account 0%
Total Rate Adjustment Component - Baseline
Line Items adjustment component 0%
Line Items Residential CARE Contribution 100% 100% 100%
Average Default Fixed Charge Per Customer Per Month $36 $36 $36
Modifications for Electrification Rates
Distribution Non-Marginal Distribution 55% 76% 43%
2 Average Electrification Fixed Charge Per Customer Per Month $47 $47 $47

20
 1 Additional context for these categorizations:

2 Non-Marginal Generation: These are sunk costs and candidates for inclusion in a fixed
3 charge. However, the this category to be included in
4 a fixed charge.
5 Power Cost Indifference Adjustment (PCIA): These are sunk costs of legacy generation
6 resources including utility-owned generation and power purchase contracts. The PCIA
7 revenue requirement is a function of the difference between the annual costs of these
8 resources and their annual market value. Although the PCIA is currently collected on the
9 basis of usage and vintage of departing customers, they can also be collected via a fixed
10 charge. Once the annual PCIA revenue requirement is forecasted for each customer
11 vintage, it is divided by total forecasted retail sales to determine per kWh PCIA
12 contribution. Instead, the annual PCIA revenue requirement could be collected as a
13 vintaged monthly fixed charge amount from all customers. Currently, the PCIA is
14 collected on a vintaged basis which means that the IOUs have sufficient information to
15 determine which customers should be assigned different levels of cost responsibility. We
16 have not attempted to calculate the different fixed charge levels associated with each
17 customer vintage due to the limitations of the E3 model.
18 Marginal Distribution Capacity Cost New Business (PG&E): This, per the E3 tool, is
19 the cost of acquiring new customers and is thus not marginal to consumption.
20 Transmission: Almost all transmission costs are fixed (especially in the short run).
21 However, transmission costs are currently collected through volumetric rates that are
22 subject to approval by the Federal Energy Regulatory Commission (FERC). There is no
23 reason recover transmission costs from retail customers via a
24 fixed charge so long as this approach does not affect the manner in which transmission
25 access costs are assessed on wholesale market participants. Due to the requirement that
26 FERC approve any change in the method of retail rate collection, we assume no change
27 in the use of volumetric rates to recover transmission costs at this time.
28 Wildfire Fund Charge: The statutory requirement to collect this based on usage supports
29 no change to the status quo.
30 New System Generation Charge: These are sunk costs of mostly local capacity procured

21
 1 by the IOUs to meet reliability needs and collected to all customers via the Cost
2 Allocation Mechanism (CAM).
3 Residential CARE Contribution: The low-income discount reflects the costs of a social
4 policy goal and therefore

5 Consistently and accurately determining what cost categories to include in a fixed charge,
6 to what extent, and why, requires more granular categorization of costs and uniformity on how
7 costs are reported by all IOUs. For example, utility spending on societally oriented wildfire
8 mitigation is a fixed cost and a candidate for non-ratepayer funding from sources like the tax
9 base. However, the E3 model does not separately identify transmission and distribution spending
10 based on wildfire mitigation. This limitation frustrates our ability to determine what percentage
11 of the named cost categories should be separated out for collection via fixed charges and/ or from
12 non-ratepayer funds. Because utilities use different cost categorization schema, it is near
13 impossible to have a consistent determination of all the costs appropriately characterized as fixed
14 across all three IOUs.

15 In a future phase of this proceeding, or in future Phase 2 General Rate Cases, the
16 Commission should direct each utility to provide more accurate and consistent data on sub-
17 categories of costs that could be categorized as fixed. This information can inform future
18 adjustments to any fixed charges adopted in this proceeding.

19 B. Income Based Graduation of Fixed Charges

20 We propose three income tiers as a starting point to fulfill the statutory requirements of
21 AB 205 and realize significant progressive impacts on customer bills. The lowest income tier
22 should capture customers currently enrolled in the CARE and FERA programs, with household
23 income up to 200 and 250 percent of the Federal Poverty Level (FPL). This will provide
24 consistent support for protected low-income households, based on a well-established metric of
25 household earnings relative to size.17

26 The highest income tier should capture customers with household incomes over
27 $150,000. To achieve progressive fixed charge outcomes while keeping the

17
Many income-qualified programs in California base eligibility using the FPL, such as CARE, FERA, ESA,
Covered California, Lifeline, LIHEAP, Medi-Cal, and California Low-Cost Auto Insurance.

22
 1 fixed charge reasonable, the upper income tier needs to have enough customers. The highest
2 income band in the E3 tool, $200,000 and above, has too few customers to raise significant
3 revenue from a higher fixed charge; $150,000 and above captures many more customers.
4 $150,000 also exceeds 400 percent of the FPL ($120,000),18 the average California household
5 income ($119,149)19 and median California household income for a family of four in most
6 California counties.20 The middle-income tier would then capture non-CARE, non-FERA
7 customers with annual household income above 250 percent of the FPL, and below $150,000.

8 Additional tiers should be considered as the implementation and income verification

9 process improves (discussed in Section IV) to recover fixed costs as progressively as possible.
10 With more room for future precision, rationale for tier cutoffs could also be further developed
11 based on household size, median income relative to geographic regions, or other approaches.

12 For default and tiered rate schedules, customers in the CARE and FERA program should
13 pay a $5 monthly fixed charge. We propose a 1:1.5 ratio of fixed charges for middle- and high-
14 income customers. This approach represents a feasible degree of differentiation between non-
15 low-income tiers that balances the desire for low-income customer savings with a goal of
16 keeping the highest tier fixed charge reasonable.

17 Even under our proposed fixed charge, volumetric rates would remain much higher than
18 SRSMC and remain unreflective of low costs during off-peak hours. Moreover, to our
19 knowledge, temporal variations in current fully reflect the
20 variations in SRSMC. Until the Commission updates TOU rates to make them more reflective of
21 SRSMC, we propose retaining opt-in electrification rates with a slightly higher fixed charge. A
22 combination of higher fixed charge and a more time differentiated volumetric rate structure
23 means that off peak volumetric charges in electrification rates are closer to SRSMC than in
24 default rates. To this end, we propose that electrification rates have a $10 higher fixed charge
25 than default and tiered rates.

18
"Federal poverty level (FPL)." Healthcare.gov, accessed April 2023. https://www.healthcare.gov/glossary/federal-
poverty-level-fpl/
19
American Community Survey 2021 5-year estimates
20
Excluding Santa Clara, San Mateo, San Francisco, and Marin counties. See county median income:
https://www.hcd.ca.gov/docs/grants-and-funding/inc2k22.pdf

23
 1 The proposed fixed charge for each income tier, also reflected in the E3 model printouts
2 (Appendix D), are summarized in Table 4 for tiered rates. Although these differ slightly for other
3 rate types, the values in Table 4 are representative. Complete results are presented in the
4 Appendix.

5 Table 4. Proposed Income Graduated Fixed Charges for a Sample of Rates

7 Although our income graduation proposal recommends that both CARE and FERA
8 customers have a fixed charge of $5, the E3 tool does not allow a separately specified FERA
9 fixed charge. As a result, FERA customers are grouped in with the middle and high tiers in our
10 modelling. This means that the income graduated fixed charge for non-CARE/FERA customers
11 will be slightly higher than our estimate for the middle and high tier customers. Because of the
12 low number of customers currently enrolled in FERA, our estimates of income graduated fixed
13 materially change from the values included in the table above.

14 C. CARE Discount Methodology

15 To comply with AB205 and maximize benefit to lower income customers, we propose
16 applying the statutory CARE discount (30-35%) to the total revenues collected from non-CARE
17 customers net of any other rate discounts or exemptions provided to CARE customers including
18 the CARE fixed charge discount.21 The specific requirements of AB 205 with respect to the
19 calculation of the CARE discount have not yet been determined by the Commission although
20 reply briefs on the legal issues were submitted in February. It is not clear whether the E3 tool
21 calculates and applies the CARE discount in a manner that conforms with the position taken by
22 TURN/NRDC in briefs.

21 This approach is described in the TURN/NRDC opening and reply briefs submitted earlier in this proceeding
addressing the requirements of AB 205. See TURN/NRDC reply brief, pages 10-11.

24
 1 To model our basic proposal, we set the Customer Charge Option to -defined
2 stomer charges to $5 per month for default and
3 tiered rates and $15 for opt-in electrification rates in the Rate Design Dashboard tab. We further
4 set the lever $0 to ensure that no CARE
5 program funding is used to support a discount in the customer charge. Finally, we set 100% of
6 the residential CARE contribution to be included in the fixed charge for all IOUs via the Cost
7 Allocation tab.

8 D. Impact on Volumetric Charges to Achieve Revenue Neutrality

9 Volumetric rates commensurately decrease due to proposed average fixed charges per
10 customer. Average proposed volumetric rates are presented in Table 5. For brevity, here we only
11 present a weighted average volumetric rate, by referencing the non-TOU rate for each utility.
12 The magnitude of the differences between existing and new are indicative of the reduction in
13 TOU rates in each period. Detailed results for all rates are presented in Appendix D.

14 Table 5. Average Volumetric Charges for Each IOU's Default Rate

Volumetric Charges
PG&E (E-1) SCE (D) SDG&E (DR)
Existing Rate New Rate Existing Rate New Rate Existing Rate New Rate
CARE $ 0.24 $ 0.19 $ 0.26 $ 0.21 $ 0.38 $ 0.31
Non-CARE $ 0.39 $ 0.30 $ 0.40 $ 0.31 $ 0.59 $ 0.47
Baseline Credits
PG&E (E-1) SCE (D) SDG&E (DR)
Existing Rate New Rate Existing Rate New Rate Existing Rate New Rate
CARE $0.05 $ 0.04 $ 0.06 $0.05 $ 0.08 $ 0.06
Non-CARE $0.07 $ 0.06 $ 0.08 $0.07 $ 0.12 $ 0.10
High Usage Charge
PG&E (E-1) SCE (D) SDG&E (DR)
Existing Rate New Rate Existing Rate New Rate Existing Rate New Rate
CARE $ - $ - $ 0.06 $0.05 $ - $ -
15 Non-CARE $ - $ - $ 0.09 $0.08 $ - $ -

16 To illustrate the change in electrification rates, we present one electrification rate per
17 utility in the figures below. All electrification rate details are also presented in Appendix D. All
18 electrification rates results presented in this testimony refer to the specific rate schedules in Table

25
1 6: PG&E E-ELEC, SCE TOU-D-PRIME, SDG&E TOU-ELEC.

2 Table 6. Proposed Changes to PG&E, SCE, and SDG&E Electrification Rates

Volumetric Charges - Electrification Rates

PG&E (E-ELEC)
CARE Non-CARE
Existing Rate New Rate Existing Rate New Rate
Summer - Peak $ 0.32 $ 0.29 $ 0.52 $ 0.44
Summer - Part-Peak $ 0.22 $ 0.18 $ 0.36 $ 0.28
Summer - Off-Peak $ 0.18 $ 0.15 $ 0.30 $ 0.23
Winter - Peak $ 0.17 $ 0.14 $ 0.29 $ 0.21
Winter - Part-Peak $ 0.16 $ 0.12 $ 0.27 $ 0.19
3 Winter - Off-Peak $ 0.15 $ 0.11 $ 0.25 $ 0.18

Volumetric Charges - Electrification Rates

SCE (TOU-D-PRIME)
CARE Non-CARE
Existing Rate New Rate Existing Rate New Rate
Summer - Peak $ 0.41 $ 0.37 $ 0.62 $ 0.55
Summer - Part-Peak $ 0.24 $ 0.19 $ 0.36 $ 0.29
Summer - Off-Peak $ 0.15 $ 0.11 $ 0.24 $ 0.17
Winter - Peak $ 0.37 $ 0.33 $ 0.56 $ 0.49
Winter - Part-Peak $ 0.14 $ 0.10 $ 0.22 $ 0.15
4 Winter - Off-Peak $ 0.14 $ 0.10 $ 0.22 $ 0.15

Volumetric Charges - Electrification Rates

SDG&E (TOU-ELEC)
CARE Non-CARE
Existing Rate New Rate Existing Rate New Rate
Summer - Peak $ 0.49 $ 0.45 $ 0.77 $ 0.68
Summer - Part-Peak $ 0.25 $ 0.20 $ 0.40 $ 0.31
Summer - Off-Peak $ 0.22 $ 0.17 $ 0.35 $ 0.26
Winter - Peak $ 0.34 $ 0.29 $ 0.53 $ 0.44
Winter - Part-Peak $ 0.24 $ 0.19 $ 0.39 $ 0.30
5 Winter - Off-Peak $ 0.21 $ 0.16 $ 0.34 $ 0.25

6 E. Average Bill Impacts for Low-Income and Non-Low-Income Ratepayers

7 The bill impacts of the proposed fixed charge are progressive. CARE customers see a
8 lower average monthly bill across climate zones, middle-income customers receive minimal

26
 1 average bill impacts, and high-income customers generally see higher bills. We estimate that
2 CARE customers in inland climate zones will see greatest monthly savings and upper income
3 customers in coastal climate zones will see greatest bill increases. Table 7 presents the bill
4 impacts for all three income tiers for the average customer type in each utility
5 inland climate zone. Table 8 presents the same data for non-NEM customers only.22,23 These
6 extreme climate zones should encapsulate the full variation in bill impacts. The results in these
7 figures show how customer monthly bills would change all else kept equal, i.e., if customers
8 made no change to the amount of electricity they consume or when they consume.

9 Table 7. Average Monthly Bill Impacts, All Customers - Default TOU Rates

PG&E SCE SDG&E

Coastal Inland Coastal Inland
Coastal Desert
(T) (W) (6) (15)
CARE $ (10.12) $ (21.48) $ (10.49) $ (26.39) $ (13.69) $ (41.23)

< $150,000 $ 13.24 $ (7.65) $ 8.33 $ (16.27) $ 3.52 $ 0.77

10 $150,000+ $ 34.29 $ 21.57 $ 29.40 $ 7.18 $ 25.92 $ 28.47

11 Table 8. Average Monthly Bill Impacts, Non-NEM Customers Default TOU Rates

PG&E SCE SDG&E

Coastal Inland Coastal Inland
Coastal Desert
(T) (W) (6) (15)
CARE $ (10.35) $ (24.86) $ (10.60) $ (28.60) $ (14.07) $ (42.11)

< $150,000 $ 12.74 $ (14.59) $ 7.86 $ (20.44) $ 2.21 $ (3.58)

12 $150,000+ $ 33.45 $ 6.12 $ 28.49 $ 0.19 $ 22.85 $ 17.06

13 CARE customers are better off in all instances. The average CARE customer saves
14 approximately $10 to $40 per month. Relatively wealthy coastal customers see the highest
15 increase in bills since coastal customers tend to have lower consumption, so a higher fixed
16 charge impacts them the most. As the income based fixed charge more equitably recovers fixed

22
Data for both tables com
customer bill impacts within each income tier in two baseline territories per IOU, representative of different climate
zones (T and W for PG&E, 6 and 15 for SCE, and the coastal and desert zones for SDG&E). Default TOU rates
refer to: PG&E E-TOU-C, SCE TOU-D-4-9, and SDG&E TOU-DR1. Optional electrification rates refer to: PG&E
E-ELEC, SCE TOU-D-PRIME, and SDG&E TOU-ELEC.
23
- r bill
impacts within each income tier in two baseline territories per IOU.

27
 1 costs of the grid, non-NEM customers end up relatively better off than the average customer in
2 all categories. This also implies that, on average, non-CARE NEM customers will likely pay
3 more in monthly bills than they currently do due to fairer fixed cost recovery. Table 9 and Table
4 10 present bill impacts for customers on electrification rates.

5 Table 9. Average Monthly Bill Impacts, All Customers - Optional Electrification Rates

PG&E SCE SDG&E

Coastal Inland Coastal Inland
Coastal Desert
(T) (W) (6) (15)
CARE $ (7.70) $ (17.37) $ (9.23) $ (24.39) $ (12.32) $ (34.84)
< $150,000 $ 10.38 $ (8.25) $ 5.60 $ (18.22) $ 0.54 $ (2.63)

6 $150,000+ $ 35.83 $ 24.10 $ 31.28 $ 9.70 $ 27.26 $ 28.60

7 Table 10. Average Monthly Bill Impacts, Non-NEM Customers Optional Electrification Rates

PG&E SCE SDG&E

Coastal Inland Coastal Inland
Coastal Desert
(T) (W) (6) (15)
CARE $ (7.90) $ (20.11) $ (9.34) $ (26.46) $ (12.65) $ (35.68)
< $150,000 $ 9.94 $ (14.11) $ 5.16 $ (22.12) $ (0.54) $ (6.30)

8 $150,000+ $ 35.11 $ 11.06 $ 30.44 $ 3.16 $ 24.74 $ 18.98

9 The progressive impacts are clear. Under default TOU rates CARE customers would save
10 up to $40 per month, while upper income customers are forecasted to pay at most $35 more per
11 month. Collectively, these results show that the average low-income CARE customer will pay a
12 lower average monthly bill without any change in usage as required by AB 205.

13 These findings significantly improve as customers from all income levels start to
14 electrify.

15 F. Proposed Rate Design Improves the Economics of Electrification

16 Investment decisions are made on the margins, bill impacts are felt in the aggregate.
17 Understanding the impacts of our proposed rate design on whether electrification is an economic
18 proposition for customers requires an evaluation as to how much a customer saves on operating
19 cost of electrified space heating and water heating equipment under existing rates and under our
20 new rate proposal. Annual household energy expenditure before and after electrification is the

28
 1 right metric to understand the aggregate economic our proposed rates will have on customers that
2 decide to electrify.

3 Table 11 presents the annual operating costs of space and water heating equipment for a
4 mixed fuel customer under current rates, for that customer if they were to electrify under current
5 rates, and for the same customer who were to electrify after our rate design proposal is adopted.24
6 Operating costs only include the marginal costs of consumption from electrification equipment,
7 e.g., appliance consumption times the volumetric rate. In each case, we assume that the customer
8 chooses the optional electrification rate to maximize savings upon electrification. The E3 rates
9 model did not present operating cost data; we had to extract these data for each case using total
10 energy bill estimates for different scenarios. To illustrate the broadest range of impacts across
11 income tiers, we modelled results for CARE customers and non-CARE customers in the high-
12 income tier.

13 Table 11. Economics of Building Electrification Improve Relative to the Status Quo for All Customers Categories25

14

15 On the margins, customers save in operating expenses when they electrify space and

24
We created this table using the E3 In first column, we
display the gas bill (operating expenses) from the mixed-fuel heating and water heating case. In the second, we
isolate the change in electric bill (new operating expenses) if customers adopt electric space and water heating on
current electrification rates. The difference, in column three, shows the overall change in operating expenses. Next,
we isolate the change in electric bill (new operating expenses) if customers adopt electric space and water heating on
the new electrification rates with the fixed charge, and lastly show how it differs from the mixed fuel bill.

29
 1 water heating and take service under electrification rates today in almost all climate zones. We
2 expect savings to be lower under default rates. Under the new electrification rates, however,
3 customers save even more on water and space heating operating costs upon electrifying. Coastal
4 high tier customers for each IOU generally more than double their savings under our new
5 electrification rate proposal relative to the existing rate. Under SCE current TOU-D-PRIME
6 rate, for example, a coastal high tier customer could save $30 in annual operating costs by
7 switching from gas to electric space and water heating. After incorporation of the income based
8 fixed charge, and commensurately lower volumetric rates, those savings substantially increase by
9 $112 to total $142. A coastal CARE customer TOU-ELEC rate would see
10 slightly higher annual operating expenses ($27) from electrifying space and water heating; on the
11 new rate, that customer would pay $84 less than electrifying on the current rate, or $57 less than
12 on gas.

13 The economics of transportation electrification similarly improve under our proposed rate
14 design. These values are direct outputs from the E3 model and maintain all inputs and
15 assumptions. The only difference in operating costs between customer groups in the model
16 comes from the different volumetric rates paid by CARE and non-CARE customers, thus the
17 high tier savings displayed should be the same for middle tier customers. It is worth noting that
18 the E3 model assumes that gasoline costs $4/gallon and that the average ICE vehicle achieves a
19 real-world efficiency of 35 miles per gallon. These assumptions may not reflect future fuel costs
20 and over-estimate the efficiency of many existing passenger vehicles. Thus, savings from
21 switching to electric vehicles are likely even higher than what is shown below in Table 12. 26

22 Table 12. Economics of Transportation Electrification Improve Relative to the Status Quo for All Customers Categories

Transportation Annual Operating Expenses

Savings, switch from Savings, switch from
EV Fuel Costs (Existing EV Fuel Costs (New
ICE Fuel Costs ICE to EV (Existing ICE to EV (New
Electrification Rate) Electrification Rate)
Electrification Rate) Electrification Rate)
CARE $1,589 $730 $859 $568 $1,021
PG&E
$150,000+ $1,589 $1,219 $370 $887 $702
CARE $1,589 $717 $872 $535 $1,054
SCE
$150,000+ $1,589 $1,129 $460 $807 $782
CARE $1,589 $1,057 $532 $837 $752
SDG&E
23 $150,000+ $1,589 $1,682 ($93) $1,291 $298

26

and new electrification rates used: PG&E E-ELEC, SCE TOU-D-PRIME, and SDG&E TOU-ELEC

30
 1 A customer on their electrification journey will start off with a mixed fuel home and
2 gasoline car, likely on a default TOU rate. They will end their journey with a fully electrified
3 home and car and take service on an updated electrification rate with income graduated fixed
4 charges. Table 1327 presents the annual household energy expenditure for a household with a car
5 at the start (mixed fuel home, gasoline car, on existing TOU rates) and end of their electrification
6 journey (all electric home, electric vehicle, on new electrification rates.) Home electrification
7 measures here include space and water heating, as well as equipment for cooking and clothes
8 drying. This full picture view of annual household energy expenditure also accounts for the
9 addition of the fixed charge on customer bills. As a result, savings are slightly lower than on
10 previous tables, which displayed only savings on operating costs (volumetric charge impacts).

11 Table 13. Annual Household Energy Expenditure Before and After Electrification and Rate Reform for Homes with Cars

Annual Household Energy Expenditure (including

vehicles)
Savings
Mixed Fuel Bill and Fueling Electrified Bill and Fueling
(Existing TOU Rate) (New Elec. Rate)
CARE $ 3,070 $ 1,846 $ 1,224
Coastal $150,000+ $ 3,775 $ 3,505 $ 270
PG&E
CARE $ 4,601 $ 2,747 $ 1,854
Inland $150,000+ $ 6,228 $ 4,908 $ 1,320
CARE $ 3,027 $ 1,961 $ 1,066
Coastal $150,000+ $ 3,666 $ 3,589 $ 77
SCE
CARE $ 4,913 $ 3,005 $ 1,908
Inland $150,000+ $ 6,501 $ 5,145 $ 1,356
CARE $ 3,390 $ 2,718 $ 672
Coastal $150,000+ $ 4,269 $ 4,818 $ (549)
SDG&E
CARE $ 5,451 $ 3,912 $ 1,539
12 Inland $150,000+ $ 7,473 $ 6,741 $ 732

13 All customer categories, except for the high tier customers in coastal SDG&E territories,
14 will be better off in aggregate. A combination of high SDG&E electric rates, the reasons for
15 which are discussed in the introduction to this testimony, and income graduation of fixed charges
16 cause this issue. While we analyzed total customer impacts on electrification under

27
model, including ICE fuel cost assumptions. Existing
TOU rates used: PG&E E-TOU-C, SCE TOU-D-4-9, and SDG&E TOU-DR1. New electrification rates used: PG&E
E-ELEC, SCE TOU-D-PRIME, and SDG&E TOU-ELEC

31
 1 existing rates, we expect them to be less beneficial across all customer types.

2 Table 14 presents the same results for the electrification journey of customers without
3 cars.28 Savings decrease relative to households with cars because the savings in operating
4 expenses of an electric car on our proposed rates are significant
5 realize those savings. Total household energy expenditures decrease relative to the status quo in
6 all but four categories. Upper income customers in coastal zones in all IOUs pay slightly more.
7 This again is the product of high electric rates and income graduation of fixed charges. CARE
8 customers in SDG&E coastal climate zone pay a little more, around $6.50 per month, after they
9 electrify. This is because of high SDG&E electric rates even after fixed charges; without income
10 graduated fixed charges this impact will be even worse. We are open to minor modifications to
11 the SDG&E electrification rate that avoid this outcome for coastal CARE customers.

12 Table 14. Annual Household Energy Expenditure Before and After Electrification and Rate Reform for Homes without
13 Cars.

Annual Household Energy Expenditure (excluding

vehicles)
Mixed Fuel Bill (Existing Electrified Bill (New Elec. Savings
TOU Rate) Rate)
CARE $ 1,481 $ 1,278 $ 203
Coastal $150,000+ $ 2,187 $ 2,618 $ (431)
PG&E
CARE $ 3,013 $ 2,179 $ 834
Inland $150,000+ $ 4,640 $ 4,020 $ 620
CARE $ 1,438 $ 1,427 $ 11
Coastal $150,000+ $ 2,077 $ 2,782 $ (705)
SCE
CARE $ 3,324 $ 2,470 $ 854
Inland $150,000+ $ 4,912 $ 4,347 $ 565
CARE $ 1,802 $ 1,881 $ (79)
Coastal $150,000+ $ 2,680 $ 3,526 $ (846)
SDG&E
CARE $ 3,862 $ 3,134 $ 728
14 Inland $150,000+ $ 5,885 $ 5,450 $ 435

15 IV. IMPLEMENTATION AND INCOME VERIFICATION PROCESS (SA & MC)

16 Implementation of the fixed charge requires a process to assign customers to the
17 appropriate income tiers. There are multiple viable approaches to household income qualification

28
E3 model. Existing TOU rates used: PG&E E-TOU-C,
SCE TOU-D-4-9, and SDG&E TOU-DR1. New electrification rates used: PG&E E-ELEC, SCE TOU-D-PRIME,
and SDG&E TOU-ELEC

32
 1 and enrollment for this purpose. Existing income-qualified programs in California rely on a
2 variety of methods to identify eligible benefit recipients, including self-reporting, private income
3 verification services, and income verification using government databases.29 Different
4 implementation options should be considered based on costs, complexity, and accuracy.

5 A. Priorities Guiding Equitable Implementation

6 Priorities guiding design of the fixed charge tier enrollment are: balancing accuracy and
7 efficiency; establishing protections for low-income customers; and fostering accessibility,
8 transparency, and privacy. The process should weigh accurate customer assignment against
9 efficiency, in terms of cost and time to implement, to reduce the implementation costs borne by
10 customers and achieve the objectives of the fixed charge in a timely manner. Where possible, the
11 method should rely on customer enrollment in other income-qualified programs and otherwise
12 leverage existing income verification pathways. It should also establish equity safeguards to
13 ensure that low-income customers are not incorrectly defaulted into the wrong income tier. These
14 safeguards include minimizing enrollment barriers, such as paperwork submissions and
15 interviews, that frustrate customer participation in income-qualified programs.30 For accessibility
16 and transparency, there should be adequate time for customer outreach and appeals, so that
17 customers are informed of the new rate changes and understand their tier assignment.

18 Implementation should address data privacy concerns associated with income reporting
19 and verification. Confidentiality rules limit IOUs access and use of personal customer data.31
20 Utilities have also been increasingly subject to cyber-attacks 32 and data breaches33 in recent

29
For example, low-income customers in California can currently enroll in the CARE, FERA, and Covered
California programs through self-attestation. Programs such as CalWORKS and CalFRESH prompt applicants to
submit proof of income and use the Equifax Work Number service for income eligibility verification. The California
Earned Income Tax Credit is awarded after verification by the Franchise Tax Board upon tax return submission.
30
Research has demonstrated an inverse relationship between paperwork requirements and participation in income-
qualified programs. See: Schweitzer, Justin. "How To Address the Administrative Burdens of Accessing the Safety
Net." Center for American Progress. May 5, 2022. https://www.americanprogress.org/article/how-to-address-the-
administrative-burdens-of-accessing-the-safety-net/
31
See Decision 11-07-056 in CPUC Rulemaking 8-12-009, issued 7/29/2011
https://docs.cpuc.ca.gov/word_pdf/FINAL_DECISION/140369.pdf
32
These include the October 2022 ransomware attack on Sargent & Lundy that accessed data belonging to multiple
electric utilities. See: Lyngaas, Sean. "Hackers stole data from multiple electric utilities in recent ransomware
attack." CNN. December 27, 2022. https://www.cnn.com/2022/12/27/politics/hackers-data-utilities-ransomware-
sargent-lundy/index.html
33
For example, FERC fined PG&E $2.7 million for exposing thousands of confidential records in 2016. See: Smith,

33
 1 years, which may pose a challenge to customer acceptance of income verification through the
2 IOUs themselves.

3 Given these concerns, the CPUC should designate a third-party organization to

4 administer the income qualification process on behalf of the IOUs. This Third-Party
5 Administrator (TPA) may be a non-profit organization or government agency with the capability
6 of performing the specifically delegated functions. The Administrator would have their
7 performance, and budget, subject to regular Commission review and approval. Creating a single
8 statewide administrator would also improve the accessibility and efficiency of the process.
9 Establishing a single online user interface for customer enrollment and securing joint contracts
10 for third-party services, for example, would avoid duplicative administrative costs of each IOU
11 undertaking similar steps.

12 B. Implementation Proposal

13 In the near-term, we propose that the TPA use a combination of methods to verify
14 household income, as summarized below. These methods include previous program eligibility, a
15 third-party income verification service, and self-attestation. In the long-term, it will be valuable
16 to develop a new verification platform with direct access to government databases (such as the
17 California Franchise Tax Board) for more robust implementation. Given the diversity of feasible
18 implementation approaches, we expect that the income-graduated fixed charges can be
19 implemented quickly and are open to supporting other proposals, or a combination of multiple
20 proposals, that would accomplish key objectives.

Near-term implementation pathway

A designated TPA runs the income verification process for the income-graduated fixed
charge in five stages.
1- Customers currently enrolled in the CARE and FERA programs are assigned to the
lowest tier of the fixed charge and all other customers preliminarily assigned to the
highest tier.

Rebecca. "PG&E Identified as Utility That Lost Control of Confidential Information." Wall Street Journal. August
24, 2018. https://www.wsj.com/articles/pg-e-identified-as-utility-that-lost-control-of-confidential-information-
1535145850

34
 2- The TPA uses an income estimation service to identify households likely to be eligible
for the low- and middle-tier. Customers are informed of their assignment and non-
CARE/FERA customers are prompted to opt-in for income verification to change tiers
if they believe their assignment is incorrect, with targeted outreach based on estimates.
3- For those non-CARE/FERA customers that opt in to change tiers, the TPA uses an
income verification service to assign customers to the middle and high tiers.
4- All customers are informed of their tier assignment and granted a period for appeals.
5- The TPA shares customer tier assignments with the IOUs, and the IOUs apply fixed
charges and applicable rates to customers accordingly.
Post-implementation, the TPA works with contracted service providers to evaluate the
implementation process and recommend improvements.
1

2 The TPA could oversee the income tier assignment process in five stages. First, customers
3 currently enrolled in the CARE and FERA programs should be assigned to the lowest tier of the
4 fixed charge and all other customers preliminarily assigned to the highest tier. This defaulting
5 establishes an important protection for low-income customers. CARE and FERA customers have
6 already taken steps to enroll in an IOU discount program, attesting that they meet the
7 requirement of household income 200% under the federal poverty level (or 250% for FERA
8 customers). Further, there is confidence that the CARE program captures a significant portion of
9 eligible low-income households, given high participation rates across IOU territories: 95% at
10 PG&E; 88% at SCE; 93% at SDG&E; and 95% at SoCalGas.34 Participation rates in the FERA
11 program are lower (13%, 10% and 20% respectively),35 which suggest targeted outreach is
12 needed to reach all low-income customers. There is no evidence of significant fraud rates under
13 either program.

14 After this preliminary assignment, the TPA may contract with a third-party income
15 estimation service to identify potential low- and middle-income customers defaulted in the high
16 tier. These services , use

34
See D. 21-06-015 in the matter of A.19-11-003 et al., issued June 7, 2021, pp. 18-20.
https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M387/K107/387107687.PDFPp
35
Ibid, pp. 89-90.

35
 1 predictive modelling to estimate household income36 given an address and, if available, one
2 household member name.37 Intended for marketing purposes, such estimates are not data records
3 and do not require customer consent prior to purchase. The TPA can then contact all customers
4 about the opt-in period and inform a subset of customers that they may be eligible to pay a lower
5 fixed charge. This outreach could also be strengthened with targeted marketing based on
6 geography and other program eligibility.

7 Customers should be informed of their preliminary assignment for income verification to

8 adjust their enrollment through a central portal, such as an online web interface and physical
9 mailing address maintained by the TPA. When customers opt-in, they will confirm necessary
10 household information which the TPA transmits to a contracted third-party income verification
11 service. One such service is the Equifax Work Number, an income and employment verification
12
13 income verification system, including the CPUC.38 The Work Number also provides verification
14 for social service organizations administering low-income benefits programs in California,
15 including Medicaid, the Supplemental Nutrition Assistance Program (SNAP), and Temporary
16 Assistance for Needy Families (TANF).39 The Work Number can provide real-time income
17 verification, given customer consent via submission of address, household member names, and if
18 applicable, social security numbers.40 Customers should also be given the option to report their
19 household income at this stage, relevant in the event of a dispute or absence from the verification
20 database.41 Once the verification service has assessed household income based on all reported
21 household members, it can report back income tier assignment for the TPA to share with the
22 IOUs.

23 It is important to note that income verification services, such as the Work Number, are

36
Typically incremented by thousands, up to $250,000 - $2,000,000 depending on the service.
37
View product, see:
https://www.experian.com/assets/dataselect/brochures/consumerview.pdf
On https://assets.equifax.com/marketing/US/assets/income360_ps.pdf
38
"The Work Number Employment and Income Verification." California State Controller, accessed April 2023.
https://www.sco.ca.gov/ppsd_se_worknumber.html
39

2023. https://www.equifax.com/newsroom/all-news/-/story/how-verifications-help-enable-faster-decisions-for-vital-
social-service-benefits//
40
Work Number, accessed April 2023. https://theworknumber.com/how-it-works
41
This is particularly relevant for undocumented and unemployed customers. If these customers are missing from
the verification system -attestation and allow placement in the low tier.

36
 1 regulated by the Fair Credit Reporting Act (FCRA). Credit agencies are limited to furnishing
2 consumer reports for permissible purposes and restricted in terms of enabling adverse actions
3 against customers.42 In this use case, income verification would be conducted for the purposes of
4 administering a public program, through a contract facilitated by the CPUC and appointed TPA.
5 Verification would assess customer eligibility to pay a lower fixed charge than the present
6 default highest charge. As a result of this process, customers would only be subject to favorable
7 or neutral actions with respect to their financial interests: assignment into the low- or middle-
8 income tiers, or no change from their assignment in the high tier.

9 After this verification step, customers should be informed of their updated tier
10 assignment and granted an appeals period. This window should be adequate to enable middle and
11 high-income assigned households to appeal their tier assignment. This appeal could be handled
12 directly by the third-party verifier, as provided through the Work Number service, or by the
13 TPA. To maximize equity and accessibility, the appeals process should allow a pathway for tier
14 assignment based on self-attestation under penalty of perjury similar to the Covered California
15 program.43 This would ensure that low and middle-income customers are not overcharged in the
16 event of missing or outdated records in the chosen verification system.

17 Following appeals, the TPA will share customer tier assignments with the IOUs, enabling
18 the IOUs to charge customers appropriate rates and implement the income-graduated fixed
19 charges. The assignments should be reviewed periodically to ensure that customers remain on the
20 correct fixed charge tier. Customers should also be given the opportunity to request reverification
21 through the central portal at any point, in the event of changes in household composition or
22 income.

23 In the longer term, it may be viable to create a new income verification third-party
24 platform to implement the income-based fixed charges. This system would directly access
25 government data and improve upon the Income and Eligibility Verification System (IEVS)

42
See Fair Credit Reporting Act § 603 (k), § 604(a)(3), and § 615 (a) https://www.ftc.gov/legal-
library/browse/statutes/fair-credit-reporting-act
43
"Proof of Income." Covered California, accessed April 2023. https://www.coveredca.com/documents-to-confirm-
eligibility/income/

37
 1 supporting the CalWORKS and CalFresh programs.44 IEVS currently sources data from the
2
3 income, wealth, and low-income program enrollment and qualification. To identify as many
4 customers accurately for the low-income tier as possible, it would be particularly relevant to
5 reference customer enrollment in other income-qualified programs beyond CARE. This new
6 system could facilitate the implementation of granular income tiers and a more progressive
7 graduation of the fixed charge, to increasingly align with income tax collection over time. This
8 platform would, however, require new legislatively authorized pathways for data access and a
9 process for mapping household members to addresses for a complete picture of household
10 income, requiring significant financial investment. The costs, challenges and opportunities
11 associated with this type of platform should be evaluated while an existing income verification
12 method is administered in the short term.

13 C. Evaluating the Implementation Method

14 The TPA should work with the contracted verification service to evaluate the
15 implementation process and recommend improvements. Equifax, for example, conducts audits
16 on a set percentage of all Work Number verifications.45 The TPA should also defer to the income
17 verification processes and ongoing audits of the CARE/FERA programs for evaluation of the
18 low-income tier placement. These audits require random or high-usage sample of customers to
19 submit documentary proof of income for all household members.46 In the event of non-response,
20 following all reasonable attempts to contact the customer and repeat warnings, the customer is
21 removed from the CARE program. The TPA should ensure that those customers are
22 subsequently defaulted into the high-income tier and notified to opt-in to income verification for
23 correct tier assignment. After these audit steps, the TPA should submit an assessment for the
24 CPUC to evaluate the success of the implementation and adjust the design of the process in

44
For a description of IEVS, see: "Income Eligibility Verification System (IEVS)." Santa Clara County Social
Services Agency, accessed April 2023. https://stgenssa.sccgov.org/debs/policy_handbook_CP/cpchap02.pdf
45
"Government Verification." The Work Number, accessed April 2023.
https://theworknumber.com/solutions/industries/government-verification
46
Details on the CARE verification process can be found on the websites of PG&E:
https://www.pge.com/en_US/residential/save-energy-money/help-paying-your-bill/longer-term-assistance/care/post-
enrollment-verification/care-program-main.page SCE: https://www.sce.com/residential/assistance/fera-care/High-
Energy-Usage-FAQ SDGE: https://www.sdge.com/residential/pay-bill/get-payment-bill-assistance/assistance-
programs

38
 1 subsequent years.

2 Weaknesses of this combined methods approach include reliance on customer self-

3 attestation in the CARE program, the requirement that non-CARE customers opt-in for income
4 verification, and the limitations of third-party income estimation and verification services.
5 Enrollment via self-attestation raises concern for free ridership, which could ultimately lead to
6 inaccurate recovery of fixed costs relative to principles of fairness. The Commission should
7 address the process for identifying and remedying improper CARE or FERA enrollments in
8 ongoing proceedings dedicated to low-income program oversight.

9 Requiring non-CARE and -FERA customers to opt-in for income verification, or

10 otherwise pay the highest fixed charge, may lead to some low- and middle-income households
11 incorrectly paying the highest fixed charge. Customers that do not receive or understand
12 marketing notices, due to change in address, language barriers, or lacking internet access, may
13 inadvertently miss the window for enrollment. This challenge may be addressed by maintaining
14 an interim appeals and bill correction period after the fixed charges go into effect. In the first
15 billing periods of the new rates, customers that fail to pay their electricity bills or express alarm
16 at high and unexpected charges should be granted a pathway to adjust their tier enrollment.

17 Income estimation services are inherently limited by the data inputs to their predictive
18 modeling. Since estimates are not data, using estimates to send targeted notices to customers
19 about correcting their fixed charge enrollment will not reach all low- and middle-customers.
20 Income verification services are also limited by the freshness and completeness of the
21 information databases that they reference. While the Equifax Work Number provides verification
22 for much of the workforce, a small percentage of customers may not be in the system. This
23 challenge could be addressed by accepting household income self-attestation from residents that
24 cannot be verified, supplemented by random audits.

25 D. Cost of the Implementation Method

26 Costs associated with this combination of methods for near-term implementation include:
27 administrative costs of the TPA; developing and maintaining a central web portal; contracting an
28 income estimation service; contracting an income verification service; multiple rounds of
29 customer outreach; appeals; and auditing. Income estimates are inexpensive, potentially costing

39
 1 in the range of $0.005-$0.01547 per household record depending on the service and contract
2 volume. The costs of income verification services are significantly higher. For example, the
3 Master Service Agreement (MSA) between the Equifax Work Number and State of California,
4 valid until 2025, sets a rate per individual verification of $10.30-$15.08 based on a batch of
5 3,000 transactions.48 However, the terms of the MSA include a stipulation for price negotiation
6 based on volume. Verifying household, rather than individual, income requires purchasing
7 verification for a much larger number of records. It is also likely that only a subset of customers
8 would seek income verification, given CARE/FERA and high-income customers would not be
9 incentivized to opt-in to the verification process.

10 The costs associated with the creation of a new income verification system in the long-
11 term are less clear and will depend upon the specific approaches endorsed by the Commission in
12 this proceeding.

13 Conclusion

14 While this proposal lays out one potential combination of methods to verify customer
15 income and assign customer tiers, we are open to other proposals. What is clear is that a
16 reasonable income-graduated fixed charge is feasible to implement, and the statutory
17 requirements of AB 205 can be satisfied in the near-term. Timely implementation is critical to
18 address the energy affordability crisis and ensure residential electricity rates are not hindering
19 our decarbonization goals, as described in Section II. The charges should be implemented with
20 the understanding that accuracy will improve over time through customer appeals, audits, and
21 modifications to the combination of methods approach.

22 E. Post-Implementation Assessment of Income-Graduated Fixed Charges

23 Post-implementation, the CPUC should assess the effectiveness of the income-graduated

24 fixed charges based on whether the new residential rates increase equity, encourage beneficial
25 electrification, and fairly recover electric system costs. As proposed in section II, the fixed
26 charge should recover system costs in a progressive manner that reduces energy burden for low-

47
Based on conversations with sales representatives that provided non-binding estimates; exact costs depend on
negotiated terms.
48
The MSA can be accessed via the Cal eProcure portal: https://caleprocure.ca.gov/pages/LPASearch/lpa-
search.aspx

40
 1 income relative to higher-income households. Incorporation of the fixed charge should also
2 lower volumetric charges, sending price signals to customers that better encourage electrification
3 compared to existing residential rates. To ensure that fixed charge design and implementation
4 achieves these objectives, the CPUC should periodically assess the impact of the fixed charges
5 on households of different income levels and consumption bands across baseline territories.
6 Relevant impacts may include but are not limited to: electricity bill impacts; affordability
7 metrics, such as the affordability ratio established in the affordability rulemaking;49 changes in
8 rate enrollment; changes in energy use; and new electrification measures, such as investment in
9 electric household appliances, electric vehicles, and whole-home electrification.

10 The CPUC should separately assess the effectiveness of the income qualification process
11 to understand how implementation may affect these customer outcomes and alter the intended
12 impacts of the fixed charge. Incorrect tier enrollment would hinder the effectiveness of the fixed
13 charge design. Under-enrollment in the low and middle-income tiers would hinder the
14 mpacts on customer bills and affordability. Under-
15 enrollment in the high-income tier would raise the fixed charge level for the middle-income tier.
16 As described in Section D, the CPUC should evaluate the success of the income qualification
17 process with respect to accuracy, accessibility, and other priorities. This evaluation should
18 consider information on customer participation and findings from routine audits, as collected by
19 the TPA conducting income verification on behalf of the IOUs. These assessments should inform
20 improvements to the income qualification system in future years to ensure rates achieve equity
21 and electrification objectives.

22 Revenue collected from residential rates must also recover electric system costs and
23 allow recovery of authorized IOU annual revenue requirements. Over or under collection of
24 authorized fixed charge revenues should be trued up annually. If the collected revenue from the
25 fixed charge exceeds the forecast fixed
26 charge revenue requirement; if revenue falls short, the difference should be recouped similarly.
27 A mismatch in collection should not affect the IOUs revenue requirements apart from the fixed
28 charge and should not impact volumetric rates.

49
See affordability metrics established in D.20-07-032 of R.18-07-006

41
APPENDIX A: WITNESS QUALIFICATIONS

Mohit Singh Chhabra

Technical Lead and Advisor, Natural Resources Defense Council 720) 251-3561 [email protected]

Mohit Chhabra provides analysis and strategic guidance to policymakers and other stakeholders at
the state, regional, and national levels. He is currently working on redesigning electricity pricing to
facilitate decarbonization and enhance affordability, developing cost-effective pathways to reduce
greenhouse gas emissions and pollution from California's energy sector, and serving as a technical
advisor to other regional teams. He holds a master's degree in civil environmental and architectural
engineering from the University of Colorado Boulder and a bachelor's degree in mechanical
engineering from the University of Pune in India. He is based in NRDC's New York City office.

RECENT WORK EXPERIENCE

Natural Resources Defense Council | San Francisco, CA

Senior Scientist January 2017 2022
Technical Lead and Advisor January 2023 - Present

Advisor, Power Sector and Rates: Advise state and regional teams within NRDC on power sector,
electricity and gas rates, and cost-effectiveness related issues.

National Academy of Sciences: Coauthor on the upcoming NAS Net Energy Metering Report.

Net Energy Metering: Represent NRDC in the CPUC net energy metering (NEM) 3.0 proceeding and
cost-effective,
equitable, and statutory compliant NEM 3.0 tariff. Developed a set of joint recommendations with
consumer advocates for fair and equitable NEM policy in California.

Energy Efficiency and Distributed Energy Resources: Represent NRDC a

and various distributed energy resource (DER) related proceedings at the CPUC to ensure that all

nergy efficiency policy reform and a new method to measure energy

country as
needed.

Integrated Resource Planning:

Responsibilities include technical review of statewide IRP models, developing feedback to ensure

minimizing electric sector spending, impact on customer rates, and considering the unique needs of
disadvantaged communities.

Resource Adequacy: Manage NRDC advocacy at CPUC resource adequacy proceeding to ensure
reliability through the clean energy transition.

Cost Effectiveness: Worked to improve energy sector cost effectiveness practices in California.
Intervention in the Integrated Distributed Energy Resources (IDER) proceeding at the CPUC to
develop accurate cost effectiveness policy. Also serve on the Advisory Committee for the development
of the National Standard Practice Manual. Focus on carbon valuation in California resource
procurement.
Climate Adaptation: Advocate for integrating climate change impacts in energy sector planning at
the CPUC.

Northwest Energy Sector Planning

Resources Advisory Committee to participate in development of regional power plans and provide
expert feedback. Served on the RTF, an independent forum of energy efficiency experts, as a voting
member.

Regional Technical Forum | Ptarmigan Research LLC, Oakland, CA

Contract Analyst April 2013 December 2016

Measure Analysis for the Regional Technical Forum Developed estimates of energy efficiency
measure savings, incremental cost, and benefit-cost ratios. Summarized and presented analysis to
the RTF on an almost monthly basis.

Developing Protocols and Research Documents for the RTF Developed protocols to estimate
reliable energy savings for industrial pumps, efficient new homes, and industrial air compressors.
Developed research strategies required to reliably estimate energy savings for multiple measures
including residential weatherization. Helped draft the RTF report on the health impacts of reduced
wood burning due to heat pump installations.

Regional Coordination for the RTF Managed technical subcommittees for the RTF; these
subcommittees included the
Efficient Manufactured Homes, and Refrigerator Decommissioning subcommittees

Assisted in Developing Energy Efficiency Potential in the 7th Power Plan Developed estimates for
the 7th Plan for residential and commercial energy efficiency measures.

Navigant Consulting, Inc. (Formerly Summit Blue Consulting, LLC.) | Walnut Creek, CA
Managing Consultant March 2007 March 2013

California Public Utilities Commission (CPUC) Potential Goals & Targets Study (2011, and 2013).
Helped develop a potential model to estimate achievable energy savings potential in California. This
model analyzed energy savings potential in the Residential, Commercial, Industrial and Agricultural
sector. Responsible for developing the technical inputs for all sectors across all Investor Owned
Utilities (IOUs).

Impact Evaluations for Puget Sound Energy (PSE), PacifiCorp Commercial & Industrial Program
Evaluations. Led a multi-year impact evaluation of prescriptive C&I program in PacifiCorp and PSE
service territory. This evaluation included sampling and on-site M&V activity to achieve evaluation
statistically significant results. The evaluation activity included data logging at customer sites, site
level analysis, reporting, and presentation. Managed and led similar evaluations for Tucson Electric

Regional Technical Forum (RTF) Unit Energy Savings (UES) Measure Compliance. Project manager
and technical lead for a project with the RTF to develop standardized workbooks for 10 UES
measures and bring them into compliance with RTF guidelines. Mr. Chhabra managed the day to
day working of this project and provides in-person measure updates to the RTF every month.

CPUC Evaluation 2006 08. Worked with a team across consulting firms to develop the Evaluation
Reporting Template for the 2006 08 evaluations. Developed code to do Net to Gross analysis for a
subset of California IOU programs based on CPUC NTG guidelines.
TECHNICAL EXPERTISE

Building Energy Simulation: eQuest, DOE2, Energy Plus and TRNSYS

Database Analysis and Data Management: Database analysis using R, SAS, Access, basic SQL skills.

Modeling: AnalyticaTM, R, and Excel.

PUBLICATIONS

One metric to rule them all: A common metric to comprehensively value all
distributed energy resources

Climate Adaption for Energy Utilities: Lessons Learned from

Submitted to the California Public Utilities Commission.

(May, 2021), Submitted to the California Public Utilities Commission.

(May, 2021), Submitted to the California Public Utilities Commission.

The Impact of Wildfires and Beneficial Electrification on

Electricity R Service Territory

(US Copyright Registration Number TX 8-092-277)

Chhabra, Mohit and Lee, Angie.

(August, 2013) Presented at the proceedings of the International Energy Program
Evaluation Conference (IEPEC)

Evaluation Conference (IEPEC)

List of NRDC blogs: https://www.nrdc.org/bio/mohit-chhabra

EDUCATION

B.S. in Mechanical Engineering with First Class, University of Pune, India

M.S. in Civil Environmental and Architectural Engineering, University of Colorado at Boulder

Mathematics: 42nd in all Delhi Math Olympiad (High School)

REFERENCES

Merrian Borgeson, Director, California Climate and Clean Energy, NRDC; [email protected]
Dr. Ryan Firestone, Contract Analyst, Regional Technical Forum; [email protected]
 Sylvie Ashford
Schneider Sustainable Energy Fellow 202) 679-5911 [email protected]

Sylvie Ashford is a Schneider Sustainable Energy Fellow with the NRDC Climate and Clean Energy

power sectors. She has commented on proceedings at the CEC and CPUC related to load
management and grid reliability. Prior to this position, she was a graduate student at Stanford
University. She holds a degree in International Relations and a in International
Policy specialized in Energy, Natural Resources, and the Environment. Previous work includes
research and data

WORK EXPERIENCE
Natural Resources Defense Council | San Francisco, CA
Schneider Sustainable Energy Fellow September 2022 Present

Power Sector: Supports engagement in CEC and CPUC proceedings related to load management
standards, grid reliability, cost-effectiveness, and equitable power sector decarbonization

Building Decarbonization: Supports engagement in CEC proceedings related to building and

appliance standards; researches buildings sector emissions and decarbonization costs

List of NRDC blogs: https://www.nrdc.org/bio/sylvie-ashford

The Hoover Institution | Stanford, CA

Research Assistant, LTG H.R. McMaster October 2018 August 2022

Stanford University | Stanford, CA

Teaching Assistant, Graduate-level Macroeconomics September December 2021

Center on Democracy, Development, and the Rule of Law | Stanford, CA

Research Assistant, Dr. Stephen Stedman July December 2020

The Tahrir Institute for Middle East Policy | Washington, DC

Policy Researcher July August 2018

TECHNICAL SKILLS
Data Analysis: Excel, R, Stata, and Python

EDUCATION
B.A. in International Relations with Honors, Phi Beta Kappa Stanford University

M.A. in International Policy (Energy, Natural Resources, and the Environment), Stanford University

Graduate Capstone on industrial heating decarbonization pathways in collaboration with the

National Renewable Energy Laboratory

REFERENCES
Merrian Borgeson, California Policy Director, NRDC [email protected]
Dr. Stephen Stedman, Senior Fellow, Freeman Spogli Institute [email protected]
APPENDIX B: GUIDING QUESTIONS

Pages in
Guiding Questions from the Income Graduated Fixed Charge Guidance Memo Opening
Testimony
Determinants of Average Level of Fixed Charge
Which cost categories should be recovered through a fixed charge? p. 19-22
Should the Commission increase the residential fixed charge level over time? p. 5
Impact on Volumetric Rates and Achieving Revenue Neutrality
What is the impact of a higher fixed charge on volumetric rates? p. 25-26
Income-Based Graduation of Fixed Charge Levels
What are the income thresholds and what degree of differentiation in the fixed p. 22-23
charge should there be based on income?
Lower Average Monthly Bills for Low-Income Ratepayers
How will the proposal guarantee that low-income ratepayers pay a lower average p. 28
monthly bill without any change in usage, as required by AB 205?
Income Verification Processes
p. 32-40
What costs associated with implementation of an income-graduated fixed charge p. 39-40
should be considered when evaluating proposals? How long will it take to
implement a given proposal? What information can the IOUs provide to help
understand the costs associated with different implementation plans?
CARE Discount Methodology and Income Graduated Fixed Charge
How should the CARE discount be applied in rates that feature an income- p. 24
graduated fixed charge?
Introduction of Income-Graduated Fixed Charges in Non-Default Rates
Should all non-default residential rates feature a fixed charge that is at least as p. 19-22,
high as what is included in default residential rates? How will that fixed charge 25-26
impact volumetric rates?
Post-Implementation Assessment of Income-Graduated Fixed Charges
How should over or under collection of revenue through the fixed charge be p.41
handled?
How should the CPUC assess the effectiveness of the design and implementation p.40-41
of income-graduated fixed charges after they have been incorporated into
residential rates?
APPENDIX C: SYNAPSE WHITEPAPER

Establishing Income Based

Fixed Charges in California
A review of economic theory, policy tradeoffs,
and practical considerations for fixed charge
reform

Prepared for The Utility Reform Network and National

Resources Defense Council
April 7, 2023

AUTHORS

Eric Borden
Ben Havumaki
Alex Lawton
Melissa Whited

485 Massachusetts Avenue, Suite 3

Cambridge, Massachusetts 02139

617.661.3248 | www.synapse-energy.com
Contents
1. Introduction and Overview ............................................................................................. 2
2. Fixed charges in the United States and California ........................................................... 4
3. Economic Theory and Fixed Charges ............................................................................... 5
3.1. Varying conceptions of the fixed charge .............................................................................5
3.2. Principles of rate design and fixed charges ..........................................................................6
3.3. Identifying customer-related costs for fixed charges ...........................................................8
4. Fixed charges and Interaction with Equity, Energy Efficiency, and Decarbonization Goals
10
4.1. Equity and Fairness Considerations .................................................................................. 10
4.2. Energy efficiency, Distributed Generation, and Decarbonization Policy Impacts of Fixed
Charges ....................................................................................................................................... 14
5. Common Approaches to Setting Fixed Charges ............................................................. 17
5.1. Low Case: Fixed Charge Based on the Marginal Customer Access Cost ............................... 17
5.2. High Case: Fixed Charge Based on Short Run Social Marginal Costs.................................... 17
6. Guidance For How to Assign Fixed Charges to Cost Categories ...................................... 21

1
1.
The purpose of this white paper is to provide an overview of the theoretical underpinnings of
rate design that should be considered when establishing how, and to what extent, a fixed
charge is appropriate for inclusion in residential rate design. This was developed to inform the
current proceeding in California that was established pursuant to recent legislation, and to aid
The Utility Reform Network (TURN) and National Resources Defense Council (NRDC) with
development of their fixed charge proposal. The content of this white paper is the work of
Synapse Energy Economics and does not necessarily reflect the views or opinions of TURN and
NRDC.

We discuss the interaction of sometimes conflicting theoretical economic frameworks with

diverse policy goals and considerations. We acknowledge that rate design is both a science and
an art to provide a framework for the CPUC to consider how best to implement progressive
fixed charges with existing tools and information.

This is spurred by legislative action allowing for higher residential fixed charges in California,
subject to a number of provisions and considerations. Namely, in 2022, the California
legislature passed Assembly Bill (AB) 205, which among other provisions states,

the commission may authorize fixed charges for any rate schedule applicable to a
residential customer account. The fixed charge shall be established on an income-
graduated basis with no fewer than three income thresholds so that a low-income
ratepayer in each baseline territory would realize a lower average monthly bill without
making any changes in usage. The commission shall, no later than July 1, 2024, authorize
a fixed charge for default residential rates.1

The law is clear that fixed charges are meant to be charged on a relatively progressive basis
e.g. higher-income households should generally be charged higher fixed charges, and vice-
versa. The exact implementation and rate schedules are subject to California Public Utilities
Commission (CPUC) approval.

At present, California IOU electric rates are among the highest in the country, and set to go
higher. With virtually no fixed charge established to-date,2 revenue requirements are collected
almost entirely through volumetric charges.

1
AB 205, Section 10(e)(1).
2
charges.

2
Figure 1. Investor Owned Utility Average Residential Rates in the United States, Top 50 Utilities, 20213
40
35
SDG&E
30 PG&E
25
cents/kWh

SCE
20
15
10
5
0 Nantucket Electric Co

Southwestern Electric Power Co

Hawaii Electric Light Co Inc

NSTAR Electric Company

Westfield Electric Company

Upper Michigan Energy

Pacific Gas & Electric Co.

Black Hills Colorado Electric,

Maui Electric Co Ltd

Green Mountain Power Corp

Versant Power
Unitil Energy Systems

Liberty Utilities
Liberty Utilities (Granite State
Alaska Power and Telephone Co

San Diego Gas & Electric Co

Fitchburg Gas & Elec Light Co

United Illuminating Co
Massachusetts Electric Co

The Narragansett Electric Co

Southern California Edison Co
Connecticut Light & Power Co

Atlantic City Electric Co

Consumers Energy Co

Rockland Electric Co
Public Service Elec & Gas Co
Interstate Power and Light Co
Madison Gas & Electric Co
Central Maine Power Co
Pioneer Power and Light Co
Southern Indiana Gas & Elec Co
Duquesne Light Co

Indiana Michigan Power Co

Northern Indiana Pub Serv Co
Wisconsin Electric Power Co

Mt Carmel Public Utility Co

Fishers Island Utility Co Inc

Hawaiian Electric Co Inc

Consolidated Edison Co-NY Inc

Orange & Rockland Utils Inc

Central Hudson Gas & Elec

DTE Electric Company

North Central Power Co Inc

Northwestern Wisconsin Elec

Public Service Co of NH

Black Hills Power, Inc.

Upper Peninsula Power

Delmarva Power
Cheyenne Light Fuel & Power
Bear Valley Electric Service

Note that the rates shown above are expected to be significantly higher in 2023 over 30 cents
for PG&E and SCE and over 45 cents for SDG&E.4 This would make them among the highest in
the country unless rates in other jurisdictions grow at the same astonishing pace.

We wish to note upfront the limitations of any rate design to solve or manage the affordability
predicament California IOU ratepayers currently find themselves. As stated in a recent CPUC
report to the legislature,

Cost reduction strategies result in a direct impact on electric IOU revenue requirement

authorized to recover through rates, and this benefits all customers. Cost allocation and
rate design strategies redistribute costs and have an indirect impact, because they
reduce system costs only to the extent that they can alter customer incentives to
achieve greater alignment between energy usage and grid conditions over time.5

Still, the influence of rate design on customer behavior and its impact on an array of policy
goals is significant and must be carefully considered. We provide an overview of these
considerations in this paper.

3
Energy Information Administration (EIA), https://www.eia.gov/electricity/sales_revenue_price/, Table 6.
4
5
CPUC 2022 Senate Bill 695 Report, May 2022, p. 48, https://www.cpuc.ca.gov/-/media/cpuc-
website/divisions/office-of-governmental-affairs-division/reports/2022/2022-sb-695-report.pdf.

3
2.
Residen

e selected to provide a
recent, diverse sample of electric fixed charges across the country, but are not meant to be
representative of the entire country.6

Figure 2. Electric Bill Fixed Charge Levels and Percentage of Residential Revenue across the United States

$25 25%

Percent of Revenue from Fixed Charges

$20 20%
Monthly Fixed Charge

$15 15%

$10 10%

$5 5%

$0 0%
ck )

S)

Ca k (N r )

)
)

y)

co )

il)
)
)

)
ga )
t)

)
er

rp

EG
(O S PS

ills
&L

UD
PL

ce

e
et

AE
rg

Ta
io

co
w

Y o Pow
ur
(F

H
(Id JCP

ns

YS
in

M
od rgin o Po

en n a (
r
nt

if i

so
m

ew ida

tte

(S
(

(E

ac
an (Do

er
Ar rra

y
a
i

dia
ex
ey

N tuck

ia
l
(P
ah

as

(B
Flo

Ev

rn
r
rs

n
ns

n
(N

e(
ta
ia

I
Je

lifo
go

ot
ka

so

hir
ho
ew

re

ew
(K
k
ne
N

Da
a

ps
O
Vi
N

Id

I sl

in

ky
am
h
M

uc
ut
e

nt
So

ew

Ke
Rh

In general, the level of fixed charge scaled linearly with the percentage of revenue collected. As
a percentage of revenue, customer charges collect 9 percent of the residential revenue
requirement on average, but range significantly from nearly 0 percent to greater than 20
percent. We are not aware of any fixed charge that has been assessed on a progressive basis,
by either income or usage, for the residential class.

6The OpenEI database was cross referenced with actual current utility tariff data to ensure accuracy.
Customer counts and residential revenues from EIA-861 schedules 4A&4D and EIA-861S, downloaded from

4
3.
3.1. Varying conceptions of the fixed charge
Fixed charges are common in utility rate design, yet there is how they should
be implemented or calculated. Discussion of fixed charges in utility regulatory proceedings is
frequently attended by both theoretical disagreements and more pragmatic, policy-related
ones. On one hand are variations on the plain argument that fixed charges should recover the
share of the utility bill that represents fixed costs.
of rate design, the time horizon across which rates are set, and other considerations. Since rate
design provides price signals to customers regarding their consumption, the effect of design on
customer behavior consumption patterns and investment incentives - is a key consideration.

Fixed charges are most commonly applied in the residential sector to recover customer-related
costs. These are the costs of physically connecting customers to the grid that do not vary with
the amount of customer usage in other words, these costs do not change - relative to energy
consumption. There is little debate that meters, service drops, and some amount of billing and
services may be categorized as customer-related fixed costs.7 Yet even within this simple-
sounding parameter, there are differing theoretical perspectives and differences in
methodologies to calculate these costs. These different perspectives are frequently on display
in California regulatory proceedings.8

There is also a recurring debate over whether additional facets of the distribution system ought
to be categorized as customer-related.9 Utilities may argue that there is an overarching
customer-related function that characterizes the entire distribution grid, including those parts
of the distribution grid that do not vary with the number of customers or other marginal
elements.10 The implication of this argument is that a portion of the costs of distribution grid
facilities not proximate to individual customers or explicitly deployed to provide grid connection
to these customers should nonetheless be conceptualized as customer-related or fixed with
potentially large consequences for both cost allocation and rate design.

non-customer related costs that do not obviously vary with energy or peak demand.11 Examples

7
National Association of Regulatory Utility Commissioners (NARUC). 1992. Electric Utility Cost Allocation
Manual, pp. 87-88 and 102-104.
8 See Regulatory Assistance Project (RAP), Electric Cost Allocation for a New Era. 2020, pp. 207-208.
9 Weston, Frederick, et al. 2000. Charging for Distribution Utility Services: Issues in Rate Design. Regulatory

Assistance Project (RAP), pp 29-30.

10 See, for example, Direct Testimony of Larry T. Legg on behalf of Georgia Power Company. Docket No.

42516. June 28, 2019, p. 7.

11 Faruqui, Ahmad and Kirby Leyshon. 2016. Methodologies for Establishing Fixed Charges in Residential

Tariffs: A Survey. Prepared for Pacific Gas and Electric Company, Southern California Edison Company, and
San Diego Gas & Electric Company, p. 4.

5
of such costs include administrative costs and the costs of public policy compliance. We discuss
the economic basis of considering these questions in the following section.

3.2. Principles of rate design and fixed charges

The claim that fixed charges should recover fixed costs may be an allusion to foundational rate
design goals. First is the objective of fairness. The second goal connecting fixed charges and
fixed costs is economic efficiency. While both of these aims appear clear in the abstract, there
may be considerable dispute over how they should best be balanced, especially given the utility
imperative to recover the costs of past investments, which comprises the vast majority of
revenue requirement.

cost causation, which requires that

customers pay according to the costs that they impose on the system. For example, in the case
of customer connection costs that can be attributed to a single class of customers, these costs
are caused by the customer connection to the grid, so they should be allocated accordingly.
This may be extended to rate design with the conclusion that customers should pay for the
costs they are responsible for, in the manner the costs were imposed.12 This often has
implications for future costs that are incurred in the same way, which may be avoided through
accurate price signals and consumer understanding of those price signals.

The objective of economic efficiency supports some degree of fixed charge cost recovery.
Economic theory holds that efficiency is maximized by setting price equal to short run social
marginal cost, which is the cost borne by society to producing an additional unit of a good or
ultimately talking about maximizing wellbeing by
appropriating limited resources according to societal need; by maximizing efficiency, the
competitive market with marginal cost pricing is predicted to maximize combined consumer
and producer wellbeing to an optimal level. When price is not equal to marginal costs, the level
of production and consumption is deemed inefficient because total wellbeing generated is less
than the theoretical maximum. This inefficiency is measured by , which
directly relates to the over- or under-consumption of a given good relative to efficient levels.

The cost causation and efficiency principles are related but may not always lead to the same
result. To the extent that the cost causation principle is applied retrospectively to utility
recovery of past investments, it may be in tension with the efficiency objective. Maximizing
economic efficiency requires looking ahead, assessing the future cost implications of
consumption decisions. Other principles and policy considerations may add further
complication such that a narrow fidelity to efficiency or fairness criteria is usually unworkable.
However, these principles provide guidance for how to think about and ultimately apply
economically defensible fixed charges.

12 Similarly,
costs caused by peak demand, or consumption at certain times, should be allocated to those
times and charged accordingly. This can be accomplished with a variety of price mechanisms including time
of use (TOU) rates, critical peak pricing (CPP), demand charges, and others.

6
Rate Design Principles

economic efficiency among other considerations:

1. The related, practical attributes of simplicity, understandability, public

acceptability, and feasibility of application.

2. Freedom from controversies as to proper interpretation.

3. Effectiveness in yielding total revenue requirements under the fair-return

standard.

4. Revenue stability from year to year.

5. Stability of the rates themselves, with a minimum of unexpected changes

seriously adverse to existing customers. (Compare The best tax is an old tax. )

6. Fairness of the specific rates in the apportionment of total costs of service

among the different consumers.

7. Avoidance of undue discrimination in rate relationships.

8. Efficiency of the rate classes and rate blocks in discouraging wasteful use of
service while promoting all justified types and amounts of use:

in the control of the total amounts of service supplied by the company:

in the control of the relative uses of alternative types of service (on-peak

versus off-peak electricity, Pullman travel versus coach travel, single-
party telephone service versus service from a multi-party line, etc.).13

Bonbright addresses fairness in his sixth principle, while economic efficiency is addressed
through the eighth principle.
could be in conflict, as explained in the previous section. A
historical
use of service is stifled.

additional policy priorities of the state. The current CPUC proposal for these principles, which
have been modified over time, is shown here.

13
James Bonbright. 1961. Principles of Public Utility Rates, p. 155.

7
 1. All residential customers (including low-income customers and those who
receive a medical baseline or discount) should have access to enough electricity
to ensure that their essential needs are met at an affordable cost.

2. Rates should be based on marginal cost.

3. Rates should be based on cost causation.

4. Rates should encourage economically efficient (i) use of energy, (ii) reduction of
greenhouse gas emissions, and (iii) electrification.

5. Rates should encourage customer behaviors that improve electric system

reliability in an economically efficient manner.

6. Rates should encourage customer behaviors that optimize the use of existing
grid infrastructure to reduce long-term electric system costs.

7. Customers should be able to understand their rates and rate incentives and
should have options to manage their bills.

8. Rates should avoid cross-subsidies that do not transparently and appropriately

support explicit state policy goals.

9. Rate design should not be technology-specific and should avoid creating

unintended cost-shifts.

10. Transitions to new rate structures should (i) include customer education and
outreach that enhances customer understanding and acceptance of new rates,
and (ii) minimize or appropriately consider the bill impacts associated with such
transitions.14

3.3. Identifying customer-related costs for fixed charges

As discussed above, recovery of marginal customer costs through a fixed charge is consistent
with theoretical efficiency-maximizing criteria. The marginal costs to be included in the monthly
fixed charge are those principally driven by the number of customers connected to the grid, and
not by customer demand or energy consumption. This approach turns out to be commonplace
across many jurisdictions. Meanwhile, inclusion of non-marginal customer-related costs, or
other costs that are otherwise fixed relative to the standard determinants is more contentious.

14
Many of these principles were set forth in R.12-06-013 and incorporated into D.15-07-001, D.17-01-006,
and D.17-08-030. CPUC, Basics of Rate Design Presentation, 2018, https://www.cpuc.ca.gov/-/media/cpuc-
website/files/legacyfiles/r/6442457672-ratedesign101-for-evs-june-7-2018-june-6-final.pdf. The currently
proposed revisions reflected here are from R.22-07-005, Proposed Decision of ALJ Wang Adopting Electric
Rate Design Principles and Demand Flexibility Design Principles, March 17, 2023,
https://docs.cpuc.ca.gov/PublishedDocs/Efile/G000/M503/K824/503824406.PDF.

8
Distribution plant costs are contained in the FERC distribution account numbers 360 to 374.
While certain costs in this category are clearly customer-related (e.g., meters and services),
other accounts are sometimes classified as customer-related, sometimes as demand-related,
and sometimes as a combination of the two. According to the 1992 NARUC Electric Utility Cost
Allocation Manual,15 the distribution plant accounts that may be classified as some combination
of demand and customer include:

360 Land and land rights

361 Structures and improvements
364 Poles, towers and fixtures
365 Overhead conductors and devices
366 Underground conduit
367 Underground conductors and devices
368 Line transformers

Distribution expenses are contained in FERC account numbers 580 through 598. These are also
sometimes classified as demand-related and sometimes classified as customer-related. In
particular, the following costs may be classified as either demand-related, customer-related, or
some combination thereof:

Operation
580 Operation supervision and engineering
583 Overhead line expenses (Major only)
584 Underground line expenses (Major only)
588 Miscellaneous distribution expenses
589 Rents

Maintenance
590 Maintenance supervision and engineering (Major only)
591 Maintenance of structures (Major only)
593 Maintenance of overhead lines (Major only)
594 Maintenance of underground lines (Major only)
595 Maintenance of line transformers
598 Maintenance of miscellaneous distribution plant

Where costs are thought to be jointly related to demand and the number of customers, there
are several methods for splitting the costs into their respective demand and customer

apportioning these costs. Under the minimum system method, the analyst estimates the cost of
building a hypothetical system from scratch employing the smallest size components typically
installed, and then deems those costs customer-related.16 While this method has some intuitive

15
NARUC. 1992.
16
Ibid, p. 95.

9
appeal, it is also widely critiqued on a number of methodological grounds beyond the scope of
this report.17

4.

The inverse relationship between fixed charges and volumetric charges higher fixed charges
means lower volumetric charges, and vice-versa - means that when fixed charges are raised,
customers have less control over managing their bills, though this depends on the level of fixed
charge established. On the other hand, customers are not penalized for using more electricity,
which is desirable when the short-run social marginal cost is low. As discussed further below,
low-usage customers experience a larger percentage increase in their bills as a result and are
disproportionately impacted by higher fixed charges. While this is generally seen as regressive
due to the correlation of income and usage discussed herein, this is also distorted by high levels
of DG in California.

AB 205 presents a paradigm shift in these traditional concerns by allowing for a progressive
fixed charge, but it is likely impossible to completely alleviate these issues due to practical and
data limitations. California has recognized in AB 205 that rates must be set to not only satisfy
traditional rate design principles, but also must promote equity and protect incentives for
policies encouraging energy efficiency, energy conservation, beneficial electrification, and GHG
emission reductions. These goals can help provide positive distributional impacts and
contribute to decarbonization efforts. This law comes at a time of increasing fixed charges
nationally.18 This section explores some of these interacting policy issues to explain why they
should be considered in setting a fixed charge. Better understanding the interplay between
policy considerations and fixed charges helps to lay a foundation for setting reasonable,
progressively increasing fixed charges, as outlined in AB 205.

4.1. Equity and Fairness Considerations

Fixed charges must be carefully considered due to their disproportionate impact on equity and
fairness. As we show in this section, when fixed charges are increased, low-usage customers
who are more likely to be low income - will experience a significantly greater percentage bill

17Weston,
Frederick, et al. 2000, p. 34.
18
A Troubling Trend in Rate Design: Proposed Rate Design Alternatives to Harmful Fixed Charges, Southern
Environmental Law Center (Dec 2015). Available at: https://legacy.uploads.southernenvironment.org/news-
feed/A_Troubling_Trend_in_Rate_Design.pdf; Trabish, H. Are regulators starting to rethink fixed charges,
UtilityDive (Aug 2018). Available at: https://www.utilitydive.com/news/are-regulators-starting-to-rethink-
fixed-charges/530417/

10
increase than high-usage, higher income customers. This means a fixed charge can compound
the already regressive nature of utility bills.

National data reveals that income is correlated with energy usage, and that low-income
customers tend to be lower-usage customers.19
demonstrates the correlation between energy usage and income in California when electricity
spending is used as a proxy for usage.20

Table 1. Average site electricity consumption (kWh per household using the end use).21
2015 annual household income Total (kWh) usage
Less than $20,000 11,819
$20,000 to $39,999 12,321
$40,000 to $59,999 13,477
$60,000 to $79,999 13,843
$80,000 to $99,999 13,932
$100,000 to $119,999 14,825
$120,000 to $139,999 14,683
$140,000 or more 15,693

Similarly, TURN has analyzed the relationship between income and usage by climate zone for
California customers and determined they are correlated at all levels.22
steeply inclining block rate structure in 2012, the average rate paid corresponded directly to a
levels (i.e. there were higher marginal rates at higher usage levels), so
overall rates and usage were directly correlated. This was matched with income data by climate
zone, whereby significant correlations between usage and income were found.

19
U.S. Energy Information Administration, Table CE5.3a Detailed household site electricity end-use
consumption, part 1 averages., EIA (2015). Available at:
https://www.eia.gov/consumption/residential/data/2015/c&e/ce5.3a.xlsx;
20 U.S. Department of Energy, Low-Income Energy Affordability Data (LEAD) Tool: Avg. Annual Energy Cost for

Census Tracts in California, Office of State and Community Energy Programs (2018). Available at:
https://www.energy.gov/scep/slsc/lead-tool
21 U.S. Energy Information Administration, Table CE5.3a Detailed household site electricity end-use

consumption, part 1 averages., EIA (2015). Available at:

https://www.eia.gov/consumption/residential/data/2015/c&e/ce5.3a.xlsx
22 Analysis by the Residential Appliance Saturation Study also confirms the positive correlation between

income and usage; KEMA, Inc., 2009 California Residential Appliance Saturation Study, October 2010, CEC-
200-2010-004-ES (hereinafter KEMA RASS Report).

11
Figure 3. Relationship between income and usage in California. 23

The correlation between income and usage relate directly to implications of establishing a fixed
charge. The figure below, from an analysis Synapse conducted in Maine,24 illustrates a typical
distributional result of the impact of a fixed charge. For higher-usage customers, there is
essentially a negligible bill increase or bill decrease, while lower-usage customers see significant
bill increases.

23
Reply Comments of The Utility Reform Network on Rate Proposals, Rulemaking 12-06-013, Public Utilities
Commission of the State of California (June 2012), 23.
24 Direct Testimony of Melissa Whited and Eric Borden, On Behalf of Maine Office of the Public Advocate,

December 2, 2022.

12
Figure 4. Percentage change in average monthly bill

We have also found that there is a strong correlation between electricity consumption (kWh)
and electricity demand (kW).25

25

13
Figure 5. Correlation between residential energy consumption and non-coincident peak demand.26

If demand-related costs are recovered through fixed charges, this raises equity considerations,
since these may unfairly burden low-usage, low-income customers.

While reconfiguring prices to minimize fixed charges on low-income customers can have
positive distributional impacts to reduce inequities, needs-based programs can also help reduce
adverse impacts to lower-income customers, though they cannot be considered a panacea. As
recognized in AB 205, income-based fixed charges can ameliorate the inequitable impacts that
a flat increase in a fixed charge would produce while still leaving sufficient financial incentives
for these customers to further lower energy use through conservation or distributed generation
technology. This introduces parallel issues regarding how fixed charges interact with policies
concerning energy efficiency, decarbonization, and distributed generation, discussed in the next
section.

4.2. Energy efficiency, Distributed Generation, and Decarbonization Policy

Impacts of Fixed Charges
Energy and climate policies like promoting energy efficiency, energy conservation, distributed
generation, GHG emission reductions, electrification, and overall decarbonization are key state
policies that are affected by rate design, including the level of fixed charges. These policies are
promoted because they have garnered broad consensus as a means to keep energy costs low,

26
Analysis of Massachusetts D.P.U. Docket 15-155, response to data request DPU-1-12-1.

14
achieve state climate goals, bolster the local economy, and improve overall economic
competitiveness. This is evidenced by the proliferation of ratepayer funded energy efficiency
programs throughout the US, which are in effect in all 50 states and the District of Columbia. 27
Governments have also advanced these policies through building codes, appliance standards,
federal weatherization assistance, and tax incentives. Establishing and modernizing net
metering programs and tax incentives to promote distributed generation policies also highlights
efforts to advance these policies.

Layered into all of this, including the equity discussion, is how technological advances enable
greater customer control over energy usage monitoring and management than ever before.
Utilities often tout how smart meters, online information portals, and other programs can
empower customers to better manage bills. Time of use (TOU) rates are predicated on
customers ability to react to changing grid dynamics. Yet raising fixed charges for customers can
reduce customer control and ability to reduce their bill, decreasing the incentive to respond to

level of control over their energy costs therefore has implications for energy and climate
policies, and should be considered in setting the level of any fixed charge.

Energy Efficiency and Energy Conservation

Energy efficiency denotes installation of a measure (such as installing an appliance or
insulation) that maintains the same level of performance while using less energy. All else equal,
the more that costs are embedded in volumetric charges, the greater the incentive is for
customers to upgrade to energy efficient appliances and to implement weatherization
measures since lowering their usage saves more, relative to higher fixed charges. Lower fixed
charges may also encourage energy conservation, which is similar yet distinct from efficiency.
Energy conservation is defined as instances where customers avoid consumption altogether,
such as by turning off lights, unplugging appliances, and lowering their thermostats. When
more costs are placed in volumetric charges, customer have greater ability to save through
lowering usage.

Distributed Generation
In the same way as energy efficiency, the economics of distributed generation (DG) are affected
by a fixed charge. In general, net metering compensation schemes offset the variable portion of
the electric bill, so a higher fixed charge necessarily decreases this offset. At the same time, it is
possible that higher fixed charges for net metering participants will alleviate cost shifts between
DG customers and customers who do not have access to DG.28 These cost shifts depend on the
design of net metering tariffs in general, since DG production offsets a portion or all of the
volumetric charges that would have been paid by those utility customers, the utility must
collect more revenue from customers without access to DG technology. The presence of this
cost shift means that these customers do not adequately contribute to the fixed costs of the

27 American Council for an Energy Efficient Economy, The 2022 State Energy Efficiency Scorecard (2022).
Available at: The State Energy Efficiency Scorecard | ACEEE
28 This principle also applies to customers who have invested in energy efficiency or conservation measures.

15
grid. At the same time, cost shifts among these customers are mitigated by avoided costs due
to DG production, including generation, transmission, and distribution costs. In a state like
California, where fixed charges (not fixed costs) are very low and volumetric charges among the
highest in the country, cost shifts from DG are likely exacerbated by the lack of a significant
fixed charge.

Electrification
As increased electrification penetration becomes a priority under s to
29
electrify transport and buildings as part of its larger decarbonization efforts, electricity
consumption will rise. Decrease in overall consumption through continued energy efficiency
and conservation efforts will likely be partially or completely offset in coming years as the state
promotes beneficial electrification throughout its economy as a strategy to meet GHG emission
reduction targets.30 Higher fixed charges generally benefit the economics of electrification
since, as explained above, higher usage customers benefit from fixed charges through lower
volumetric rates. This should also be considered as California addresses its rate design
objectives. However, there are differences between a customer who buys an electric vehicle
and seldomly drives and one who buys an electric heat pump. Furthermore, electrification will
occur heterogeneously across different types of consumers, and over a long time period.

Balancing Rate Design Objectives

Compliance with AB 205 will require fixed charges to be designed in a manner that preserves
incentives to advance state policy. At the same time, rates must be designed to fulfill other rate
design principles such as fairness, cost-causation, and preventing inequitable intra-class cost-
shifting.31 Varying levels of fixed charges could be a step in the right direction if it can be
designed in such a way that protects the incentives for energy efficiency, conservation, and
decarbonization while satisfying broader objectives. Admittedly, this is no simple task. Such a
design should balance the interests of (1) protecting low-income customers from the
disproportionate impacts of high fixed costs; (2) appropriate incentives for energy and climate
policies; (3) recovering more utility costs through fixed charges without unduly burdening
customers, and (4) addressing cost-shifting concerns appropriately.

29Governor Newsom, Letter to Chair Randolph, Office of the Governor (July 22, 2022). Available at:
https://www.gov.ca.gov/wp-content/uploads/2022/07/07.22.2022-Governors-Letter-to-
CARB.pdf?emrc=1054d6. Plan to Achieve Net Zero Carbon Pollution, Office
of the Governor (November 2022). Available at: https://www.gov.ca.gov/2022/11/16/california-releases-
worlds-first-plan-to-achieve-net-zero-carbon-pollution/.
30

16
5.
There are a range of policy options that Commission considers what level of fixed charge to
implement across income tiers. We seek here to outline the bookends of what prevalent rate
design theory supports in terms of the level of fixed charge that can appropriately be levied on
ratepayers. Our discussion and calculations presented below focuses on an average fixed
charge across all residential ratepayers, with an understanding that the charge would be lower
for low-income customers and higher for high-income customers.

5.1. Low Case: Fixed Charge Based on the Marginal Customer Access Cost

As detailed above, one approach to fixed charges considers only those costs which can be
attributed to an individual . This is because these
costs do not vary with the level of demand (or energy) of an individual customer. Put another
way, when, how, and to what degree a customer consumes energy will not increase or decrease
these costs, which is why including them in a fixed charge is seen as appropriate based on
economic principles.

uniquely dedicated to individual customers or specific customer classes can be classified as

These costs include the service drop and meter, which
are costs incurred due to an individual
service, and O&M costs for customer equipment.32

rate design and cost allocation proceedings which

estimate marginal costs, which are scaled up to on an equal percentage basis to recover
embedded costs. The public tool for this proceeding estimates these costs directly, based on

5.2. High Case: Fixed Charge Based on Short Run Social Marginal Costs
At the high end of the spectrum, a fixed charge could include all costs other than short run
social marginal costs, which would remain variable and collected on an energy (per kWh) or
power (per kW) basis. Social marginal costs are defined as marginal costs - the cost of producing
or consuming the next unit of electricity (e.g. kilowatt or kilowatt hour) - plus the marginal cost
of environmental externalities. A classic example of the latter is pollution, which can be directly
linked to consumption of energy at certain times, but it also includes the societal cost of carbon
to reflect the marginal impact on climate change. Without a price signal that incorporates this

32
RAP Cost Allocation Manual, pp. 207-211.

17
externality, a consumer has no financial incentive or dis-incentive to consume electricity in a
way that minimizes environmental harm or maximizes private gain from the use of electricity.

The economic theory behind this option ,

the cost incurred by society due to market inefficiency, prices to which the consumer can
respond should reflect the social marginal cost. Deadweight loss is incurred from over or under-
consumption of electricity relative to the societal optimum. While a fixed charge does not vary,
and thus cannot be affected by consumption patterns, variable charges on a per kWh or per kW
basis do, by definition, vary over time or by time period, and can therefore provide price signals
that effect customer behavior.

In their paper quantifying the difference between social marginal cost and retail prices seen by
residential customers across the U.S., Borenstein and Bushnell found that variable retail prices
in California significantly exceed social marginal costs, rivaled only by utilities in the Northeast
this is indicated by the dark blue areas of the map shown below.

Figure 6. Difference Between Price and Social Marginal Cost in the U.S.

Calculating Fixed Charges Based on Marginal Customer Access Costs and Social Marginal Cost

Synapse used the public spreadsheet tool created for the fixed charge Rulemaking
to calculate fixed charges based on the marginal customer access costs and social marginal cost
theories described above. We show fixed charges for all customers below; these can be

18
 (and CARE) in the
context of AB 205.

Marginal customer access costs were estimated directly by each utility and incorporated into
the E3 tool. The figure shows the average fixed charge across all residential customers.

Figure 7. Monthly Fixed Charges Based on Marginal Customer Access Cost

$12 $11

$10

$8
$8 $8

$6

$4

$2

$-
PG&E SCE SDG&E

Calculating social marginal costs required the summation of multiple cost categories, as well as
a separate estimation of externality costs by utility, which were not incorporated into the E3
tool.

Short-run social marginal costs (SRSMCs) are comprised of three primary components 1.
Marginal energy costs (plus losses); 2. Societal externality costs of pollution; 3. Societal
externality costs of carbon.33

Marginal energy costs and losses have been estimated for each IOU in cost
calculator (ACC).34 Further, the CPUC has directly estimated the cost of pollution due to
marginal gas generation in California in a recent study, which we adopt here. 35

33
Additional societal externalities, if quantifiable, may also be included in this calculation.
34 See E3, https://www.ethree.com/public_proceedings/energy-efficiency-calculator/.
35 We adopt the statewide average value of $14/MWh. See CPUC, Societal Cost Test Impact Evaluation,

January 2022, p. 14.

19
For the social cost of carbon we adopt the latest estimate from the White House Interagency
Working Group of $76 per tonne in 2020, based on a 2.5 percent discount rate.36 To calculate
what this signifies in the California context, we derive a weighted average marginal emission
rate in the avoided cost calculator,37 which allows for a calculation of marginal CO2 emissions in
tonnes per MWh across the year (2023). We multiply this factor by the social cost of carbon
($76 per tonne) to calculate the marginal social cost of carbon in dollars per MWh, which is
tal annual load to derive an annual cost of carbon impacts.

Incorporating all costs into a fixed charge other than the social marginal cost results in the
following fixed charges for each IOU. The figure shows the average fixed charge across all
residential customers.

Figure 8. Monthly Fixed Charges Based on Social Marginal Cost Approach to Fixed Charges

$91
$85
$75

PG&E SCE SDG&E

SRMC Fixed Charge

As seen above, monthly fixed charges vary among utilities. The exact drivers of this difference is
beyond the scope of this report, but likely relate to how various cost categories were calculated
by each utility, revenue requirements, total load and customer base, past investments, CARE
population percentages, and other factors.

The figure below provides a comparison of fixed charges based on monthly customer access
costs (calculated in the section above) to those based on the exclusion of social marginal costs.

36
Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates under
Executive Order 1399, Interagency Working Group on Social Cost of Greenhouse Gases, United States
Government, Table ES-1, p. 5.
37

marginal emissions rates in each hour.

20
Figure 9. Monthly Fixed Charges Based on Marginal Customer Access Cost and Social Marginal Cost Approach to
Fixed Charges

$91
$85
$75

$11
$8 $8

PG&E SCE SDG&E

SRSMC Fixed Charge MCAC Fixed Charge

6.

It is important that a fixed charge is instituted based on sound economic principles, discussed in
the sections above, to guide practical decisions about the economic rationale for which utility
costs ought to be included in a fixed charge.

A fixed charge should be set no lower than the marginal customer access cost, and no higher
than the exclusion of social marginal cost, both calculated above for each IOU using E3 tool
inputs and assumptions. We note that pure economic theory might simply follow the latter
approach, whereby variable charges should be set at social marginal costs, with all other costs
embedded in a fixed charge. However, utilities operate far from the idealized competitive
market equilibrium, and pricing schemes, that underlies this theory. A practical approach to
rate design that balances policy goals, fairness, and economic efficiency is required.

For purposes of the exercise of assigning certain cost categories for inclusion (or not) in a fixed
charge, we find that the principle of cost causation, which is central to fair and economically
supported rate design,38 is a helpful guide to what can appropriately be included in a fixed
charge. Namely, understanding and examining cost causation can help determine whether a
certain type of cost should be included in the variable or fixed charge. To determine this, we

38
This principle often surfaces in the context of cost allocation not an issue here since we are only considering
fixed charges for the residential class.

21
encourage stakeholders to examine the purpose or function of each cost why has it been
incurred, and can it be reasonably be avoided through shifts in consumption behavior? If a
utility cost can be reasonably avoided by customer behavior i.e. by reducing or shifting
electricity usage it does not belong in a fixed charge.

and
provides underlying economic theory to help guide stakeholders and the Commission in its
deliberation on a progressive fixed charge. California is on the forefront of energy policy issues
and should move deliberately to address unnecessary inequities in its current rate design.

22
APPENDIX D: Printable Results
(Default Rates)

Fixed Charge Tool Outputs - Cover Sheet

Purpose:
This section of the tool is formatted to be easily printed or saved as a PDF and filed as a part of testimony.

Instructions:
This worksheet automatically draws values from the rest of the tool.
This worksheet displays both rate design details and bill impacts for all three IOUs.
Please run the macro (button above) to re-generate model results using current inputs to ensure that the rate design details and bill impacts are aligned.
This macro can also be run from the Rate Design Dashboard worksheet. Please see the Rate Design Dashboard worksheet for further details.

How to Save as PDF:

Click "File", then "Print", then select "Microsoft Print to PDF". Click the large "Print" button to choose a file location and name.

How to Print:
Click "File", then "Print", then select your choice of printer.

Table of Contents

Section Sub-Section Page

Cover -- 1
Revenue Requirement Allocations PG&E 2
SDG&E 3
SCE 4
Rate Design Inputs -- 5
Revenue Requirement Components -- 6
New Rates -- 7
-- 8
-- 9
Bill Impacts PG&E 10
SDG&E 11
SCE 12

Energy and Environmental Economics, Inc. Model Release Date: March 23, 2023
44 Montgomery Street, Suite 1500
San Francisco, CA 94104
Phone: 415-391-5100

Page 1 of 23
Revenue Requirement Allocations

PG&E

Percent to Percent to Percent to

Residential
Cost Cost Component (See "Glossary" tab for Bundled Include in Include in Include in
Revenue CARE-Exempt
Category descriptions) Generation Customer Demand Volumetric
Requirement
Charge Charge Charge
$ T/F T/F % % %
Generation PCIA $ 183,408,243 FALSE FALSE 100% 0% 0%
Generation Marginal Energy Cost $ 538,263,216 FALSE TRUE 0% 0% 100%
Generation Marginal Generation Capacity Cost $ 218,481,550 FALSE TRUE 0% 0% 100%
Generation Non-Marginal Generation $ 865,996,766 FALSE TRUE 0% 0% 100%

Distribution Marginal Customer Access $ 454,792,861 FALSE FALSE 100% 0% 0%

Distribution Marginal Distribution Capacity Cost - Primary $ 439,382,040 FALSE FALSE 0% 0% 100%
Distribution Marginal Distribution Capacity Cost - New Business $ 476,043,853 FALSE FALSE 100% 0% 0%
Distribution Marginal Distribution Capacity Cost - Secondary $ 29,945,145 FALSE FALSE 0% 0% 100%
Distribution Non-Marginal Distribution $ 1,833,578,625 FALSE FALSE 20% 0% 80%

Transmission Transmission $ 1,447,654,612 FALSE FALSE 0% 0% 100%

Line Items Public Purpose Programs - SGIP $ 58,854,252 TRUE FALSE 100% 0% 0%
Line Items Wildfire Fund Charge $ 63,120,120 TRUE FALSE 0% 0% 100%
Line Items Wildfire Hardening Charge $ 68,921,008 TRUE FALSE 100% 0% 0%
Line Items Recovery Bond Charge $ 215,256,658 TRUE FALSE 0% 0% 100%
Line Items Recovery Bond Credit $ (215,256,658) TRUE FALSE 0% 0% 100%
Line Items Public Purpose Programs - Not CARE Exempt $ 230,732,710 FALSE FALSE 100% 0% 0%
Line Items Nuclear Decommissioning $ 37,938,712 FALSE FALSE 100% 0% 0%
Line Items New System Generation Charge $ 96,956,158 FALSE FALSE 100% 0% 0%
Line Items Competition Transition Charge $ 8,518,646 FALSE FALSE 0% 0% 100%
Line Items Energy Cost Recovery Account $ (19,846,861) FALSE FALSE 0% 0% 100%

Line Items Residential CARE Contribution TRUE FALSE 100% 0% 0%

See "New Rates" Section (pg. 7 - 9)

Line Items 2023 Total Estimated CARE Discount $ (891,914,356)

Note: included for comparison to model-calculated values

Delivery RR - Before CARE Bill Discount $ 7,032,741,656

Page 3 of 23
SCE

Percent to Percent to Percent to

Residential
Cost Cost Component (See "Glossary" tab for Bundled Include in Include in Include in
Revenue CARE-Exempt
Category descriptions) Generation Customer Demand Volumetric
Requirement
Charge Charge Charge
$ T/F T/F % % %
Generation PCIA $ 18,066,203 FALSE FALSE 100% 0% 0%
Generation Marginal Energy Cost $ 606,708,166 FALSE TRUE 0% 0% 100%
Generation Marginal Generation Capacity Cost $ 584,831,167 FALSE TRUE 0% 0% 100%
Generation Non-Marginal Generation $ 1,378,829,544 FALSE TRUE 0% 0% 100%

Distribution Marginal - Customer $ 427,567,610 FALSE FALSE 100% 0% 0%

Distribution Marginal - Grid $ 888,543,196 FALSE FALSE 0% 0% 100%
Distribution Marginal - Peak $ 503,372,326 FALSE FALSE 0% 0% 100%
Distribution Non-Marginal Distribution $ 1,845,967,040 FALSE FALSE 45% 0% 55%

Transmission Base Transmission $ 599,320,433 FALSE FALSE 0% 0% 100%

Transmission Transmission Balancing Accounts $ (1,839,212) FALSE FALSE 0% 0% 100%

Line Items Public Purpose Programs - SGIP $ 23,619,309 TRUE FALSE 100% 0% 0%
Line Items Wildfire Fund Charge $ 103,390,404 TRUE FALSE 0% 0% 100%
Line Items Wildfire Hardening Charge $ 17,556,861 TRUE FALSE 100% 0% 0%
Line Items Recovery Bond Charge $ - TRUE FALSE 0% 0% 100%
Line Items Recovery Bond Credit $ (40,575,857) TRUE FALSE 0% 0% 100%
Line Items Public Purpose Programs - Not CARE Exempt $ 313,291,510 FALSE FALSE 100% 0% 0%
Line Items Nuclear Decommissioning $ 2,364,701 FALSE FALSE 100% 0% 0%
Line Items New System Generation Charge $ 148,976,188 FALSE FALSE 100% 0% 0%

Line Items Residential CARE Contribution TRUE FALSE 100% 0% 0%

See "New Rates" Section (pg. 7 - 9)

Line Items 2023 Total Estimated CARE Discount $ (660,034,291)

Note: included for comparison to model-calculated values

Delivery RR - Before CARE Bill Discount $ 6,995,933,045

Page 5 of 23
SDG&E

Percent to Percent to Percent to

Residential
Cost Cost Component (See "Glossary" tab for Bundled Include in Include in Include in
Revenue CARE-Exempt
Category descriptions) Generation Customer Demand Volumetric
Requirement
Charge Charge Charge
$ T/F T/F % % %
Generation PCIA $ 180,005,950 FALSE FALSE 100% 0% 0%
Generation Marginal Energy Cost $ 100,915,850 FALSE TRUE 0% 0% 100%
Generation Marginal Generation Capacity Cost $ 57,547,258 FALSE TRUE 0% 0% 100%
Generation Non-Marginal Generation $ 163,094,812 FALSE TRUE 0% 0% 100%

Distribution Marginal - Customer $ 183,005,936 FALSE FALSE 100% 0% 0%

Distribution Marginal Demand - Non-Coincident Peak $ 198,205,378 FALSE FALSE 0% 0% 100%
Distribution Marginal Demand - Coincident Peak $ 26,974,391 FALSE FALSE 0% 0% 100%
Distribution Non-Marginal Distribution $ 490,650,411 FALSE FALSE 7% 0% 93%

Transmission Base Transmission $ 537,401,722 FALSE FALSE 0% 0% 100%

Transmission Transmission Balancing Accounts $ (111,012,377) FALSE FALSE 0% 0% 100%

Line Items Public Purpose Programs - SGIP $ 8,781,000 TRUE FALSE 100% 0% 0%
Line Items Wildfire Fund Charge $ 29,143,070 TRUE FALSE 0% 0% 100%
Line Items Public Purpose Programs - Not CARE Exempt $ 61,433,000 FALSE FALSE 100% 0% 0%
Line Items Nuclear Decommissioning $ 526,530 FALSE FALSE 100% 0% 0%
Line Items Local Generation Charge/New System Generation Charge$ 81,949,029 FALSE FALSE 100% 0% 0%
Line Items Competition Transition Charge $ 11,052,908 FALSE FALSE 0% 0% 100%
Line Items $ component
Total Rate Adjustment Component - Baseline adjustment 1,000,000 FALSE FALSE 0% 0% 100%
Line Items Reliability Services $ 177,809 FALSE FALSE 0% 0% 100%

Line Items Residential CARE Contribution TRUE FALSE 100% 0% 0%

See "New Rates" Section (pg. 7 - 9)

Line Items 2023 Total Estimated CARE Discount $ (178,549,476)

Note: included for comparison to model-calculated values

Delivery RR - Before CARE Bill Discount $ 2,020,852,676

Page 7 of 23
Rate Design Inputs
PG&E SCE SDG&E
Customer charge option User-Defined CARE Charges User-Defined CARE Charges User-Defined CARE Charges
Customer Charge Weighting is used when Customer Charge Option is set to "Uniform Weights"
Customer Charge Weighting [0,25] $ 1 $ 1 $ 1
[25,50] $ 1 $ 1 $ 1
[50,75] $ 2 $ 2 $ 2
[75,100] $ 2 $ 2 $ 2
[100,150] $ 3 $ 3 $ 3
[150,200] $ 3 $ 3 $ 3
200+ $ 3 $ 3 $ 3
Customer Charge Weighting is used when Customer Charge Option is set to "User-Defined CARE Charges"
CARE Customer Charge ($/mo) [0,25] $ 5 $ 5 $ 5
[25,50] $ 5 $ 5 $ 5
[50,75] $ 5 $ 5 $ 5
[75,100] $ 5 $ 5 $ 5
[100,150] $ 5 $ 5 $ 5
[150,200] $ 5 $ 5 $ 5
200+ $ 5 $ 5 $ 5
Non-CARE Customer Charge Weighting is used when Customer Charge Option is set to "User-Defined CARE Charges"
Non-CARE Customer Charge Weighting [0,25] $ 1 $ 1 $ 1
[25,50] $ 1 $ 1 $ 1
[50,75] $ 1 $ 1 $ 1
[75,100] $ 1 $ 1 $ 1
[100,150] $ 1 $ 1 $ 1
[150,200] $ 1.5 $ 1.5 $ 1.5
200+ $ 1.5 $ 1.5 $ 1.5
Average CARE Program Discount is used when Customer Charge Option is set to "User-Defined CARE Charges"
Average CARE Program Discount ($/month) $ - $ - $ -

Demand Charge Options Billing determinant to use X Highest Demand Months X Highest Demand Months X Highest Demand Months
No. of highest demand $ 3 $ 3 $ 3
months to include
Adjustments to distribution rate Equal Cents Equal Cents Equal Cents
Include baseline credit from existing rate (if applicable) TRUE TRUE TRUE

Page 9 of 23
 Revenue Requirement Components

PG&E
ARE Charges
Delivery - excluding CARE-exempt Delivery - CARE-exempt
Rev Req - Rev Req - Rev Req - Rev Req -
Rev Req - Demand Rev Req - Demand
Customer Volumetric Customer Volumetric
$ 1,846,588,263 $ - $ 3,372,516,482 $ 341,241,016 $ - $ 63,120,120

Delivery - excluding CARE-exempt Delivery - CARE-exempt

Volumetric Rev Req Breakdown Volumetric Rev Req Breakdown
Distribution $ 1,936,190,085 Distribution $ -
NBCs $ 8,518,646 NBCs $ 63,120,120
Non-Dist $ 1,427,807,751 Non-Dist $ -

SDG&E

Delivery - excluding CARE-exempt Delivery - CARE-exempt

Rev Req - Rev Req - Rev Req - Rev Req -
Rev Req - Demand Rev Req - Demand
Customer Volumetric Customer Volumetric
$ 541,265,974 $ - $ 1,120,104,712 $ 62,881,643 $ - $ 29,143,070

Delivery - excluding CARE-exempt Delivery - CARE-exempt

Volumetric Rev Req Breakdown Volumetric Rev Req Breakdown
Distribution $ 681,484,650 Distribution $ -
NBCs $ 11,052,908 NBCs $ 29,143,070
Non-Dist $ 427,567,154 Non-Dist $ -

SCE

Delivery - excluding CARE-exempt Delivery - CARE-exempt

Rev Req - Rev Req - Rev Req - Rev Req -
Rev Req - Demand Rev Req - Demand
Customer Volumetric Customer Volumetric
$ 1,740,951,380 $ - $ 3,004,678,614 $ 195,163,485 $ - $ 62,814,547

Delivery - excluding CARE-exempt Delivery - CARE-exempt

Volumetric Rev Req Breakdown Volumetric Rev Req Breakdown
Distribution $ 2,407,197,393 Distribution $ -
NBCs $ - NBCs $ 103,390,404
Non-Dist $ 597,481,220 Non-Dist $ (40,575,857)

Page 11 of 23
New Rates
PG&E PG&E PG&E PG&E PG&E PG&E
E-1 E-1 E-TOU-C E-TOU-C EV2-A EV2-A
Non-CARE CARE Non-CARE CARE Non-CARE CARE
Income Bracket (1000$):
[0,25] $ 41.47 $ 5.00 $ 41.42 $ 5.00 $ 41.40 $ 5.00
[25,50] $ 41.47 $ 5.00 $ 41.42 $ 5.00 $ 41.40 $ 5.00
[50,75] $ 41.47 $ 5.00 $ 41.42 $ 5.00 $ 41.40 $ 5.00
[75,100] $ 41.47 $ 5.00 $ 41.42 $ 5.00 $ 41.40 $ 5.00
[100,150] $ 41.47 $ 5.00 $ 41.42 $ 5.00 $ 41.40 $ 5.00
[150,200] $ 62.20 $ 5.00 $ 62.14 $ 5.00 $ 62.10 $ 5.00
200+ $ 62.20 $ 5.00 $ 62.14 $ 5.00 $ 62.10 $ 5.00
Tier Credits/Charges ($/kWh)
Baseline Credit $ 0.059 $ 0.038 $ 0.062 $ 0.040 $ - $ -
High Usage Charge $ - $ - $ - $ - $ - $ -
Demand Charges ($/kW)
Billing Determinant X Highest Demand Months
X Highest Demand Months
X Highest Demand Months
X Highest Demand Months
X Highest Demand Months
X Highest Demand Months
No. of Highest Demand Months 3 3 3 3 3 3
Demand Charge ($/kW-mo) $ - $ - $ - $ - $ - $ -
Energy Charges ($/kWh)
Summer - Peak $ 0.300 $ 0.193 $ 0.393 $ 0.254 $ 0.469 $ 0.303
Summer - Part-Peak $ 0.300 $ 0.193 $ - $ - $ 0.358 $ 0.231
Summer - Off-Peak $ 0.300 $ 0.193 $ 0.330 $ 0.212 $ 0.156 $ 0.100
Winter - Peak $ 0.300 $ 0.193 $ 0.296 $ 0.191 $ 0.342 $ 0.220
Winter - Part-Peak $ 0.300 $ 0.193 $ - $ - $ 0.325 $ 0.209
Winter - Off-Peak $ 0.300 $ 0.193 $ 0.279 $ 0.179 $ 0.156 $ 0.100
Total CARE Program Funding - Modeled
Customer $ - $ - $ -
Demand $ - $ - $ -
Volumetric - Delivery $ (363,796,732) $ (363,796,732) $ (363,796,732)
Volumetric - Generation $ (431,894,113) $ (423,536,307) $ (418,748,960)
Total CARE Credits $ (795,690,844) $ (787,333,039) $ (782,545,691)

Residential CARE Funding $ 215,731,768 $ 213,465,757 $ 212,167,786

Non-Res CARE Funding $ 579,959,077 $ 573,867,282 $ 570,377,905
Total IOU forecast CARE program size
2023 Forecast (Existing Rates) $ (891,914,356) $ (891,914,356) $ (891,914,356)
Modeled Credits as % of Forecast -11% -12% -12%

Page 13 of 23
 PG&E PG&E SCE SCE SCE SCE SCE SCE
E-ELEC E-ELEC D D TOU-D-4-9 TOU-D-4-9 TOU-D-PRIME TOU-D-PRIME
Non-CARE CARE Non-CARE CARE Non-CARE CARE Non-CARE CARE

$ 41.33 $ 5.00 $ 41.20 $ 5.00 $ 41.25 $ 5.00 $ 41.29 $ 5.00

$ 41.33 $ 5.00 $ 41.20 $ 5.00 $ 41.25 $ 5.00 $ 41.29 $ 5.00
$ 41.33 $ 5.00 $ 41.20 $ 5.00 $ 41.25 $ 5.00 $ 41.29 $ 5.00
$ 41.33 $ 5.00 $ 41.20 $ 5.00 $ 41.25 $ 5.00 $ 41.29 $ 5.00
$ 41.33 $ 5.00 $ 41.20 $ 5.00 $ 41.25 $ 5.00 $ 41.29 $ 5.00
$ 61.99 $ 5.00 $ 61.80 $ 5.00 $ 61.87 $ 5.00 $ 61.93 $ 5.00
$ 61.99 $ 5.00 $ 61.80 $ 5.00 $ 61.87 $ 5.00 $ 61.93 $ 5.00

$ - $ - $ 0.068 $ 0.046 $ 0.075 $ 0.050 $ - $ -

$ - $ - $ 0.077 $ 0.052 $ - $ - $ - $ -

X Highest Demand Months

X Highest Demand Months
X Highest Demand Months
X Highest Demand Months
X Highest Demand Months
X Highest Demand Months
X Highest Demand Months
X Highest Demand Months
3 3 3 3 3 3 3 3
$ - $ - $ - $ - $ - $ - $ - $ -

$ 0.468 $ 0.302 $ 0.313 $ 0.209 $ 0.480 $ 0.322 $ 0.571 $ 0.383

$ 0.306 $ 0.197 $ 0.313 $ 0.209 $ 0.372 $ 0.249 $ 0.314 $ 0.209
$ 0.249 $ 0.160 $ 0.313 $ 0.209 $ 0.265 $ 0.177 $ 0.191 $ 0.127
$ 0.236 $ 0.152 $ 0.313 $ 0.209 $ 0.412 $ 0.276 $ 0.514 $ 0.345
$ 0.214 $ 0.137 $ 0.313 $ 0.209 $ 0.290 $ 0.193 $ 0.170 $ 0.113
$ 0.200 $ 0.128 $ 0.313 $ 0.209 $ 0.254 $ 0.170 $ 0.170 $ 0.113

$ - $ - $ - $ -
$ - $ - $ - $ -
$ (363,796,732) $ (251,497,270) $ (251,497,270) $ (251,497,270)
$ (405,034,979) $ (339,559,859) $ (347,681,851) $ (354,957,511)
$ (768,831,710) $ (591,057,130) $ (599,179,121) $ (606,454,782)

$ 208,449,582 $ 151,899,987 $ 153,987,315 $ 155,857,139

$ 560,382,128 $ 439,157,143 $ 445,191,806 $ 450,597,643

$ (891,914,356) $ (660,034,291) $ (660,034,291) $ (660,034,291)

-14% -10% -9% -8%

Page 15 of 23
 SDG&E SDG&E SDG&E SDG&E SDG&E SDG&E SDG&E SDG&E
DR DR TOU-DR1 TOU-DR1 EV-TOU-5 EV-TOU-5 TOU-ELEC TOU-ELEC
Non-CARE CARE Non-CARE CARE Non-CARE CARE Non-CARE CARE

$ 41.37 $ 5.00 $ 41.29 $ 5.00 $ 41.30 $ 5.00 $ 41.23 $ 5.00

$ 41.37 $ 5.00 $ 41.29 $ 5.00 $ 41.30 $ 5.00 $ 41.23 $ 5.00
$ 41.37 $ 5.00 $ 41.29 $ 5.00 $ 41.30 $ 5.00 $ 41.23 $ 5.00
$ 41.37 $ 5.00 $ 41.29 $ 5.00 $ 41.30 $ 5.00 $ 41.23 $ 5.00
$ 41.37 $ 5.00 $ 41.29 $ 5.00 $ 41.30 $ 5.00 $ 41.23 $ 5.00
$ 62.05 $ 5.00 $ 61.93 $ 5.00 $ 61.95 $ 5.00 $ 61.85 $ 5.00
$ 62.05 $ 5.00 $ 61.93 $ 5.00 $ 61.95 $ 5.00 $ 61.85 $ 5.00

$ 0.096 $ 0.063 $ 0.093 $ 0.061 $ - $ - $ - $ -

$ - $ - $ - $ - $ - $ - $ - $ -

X Highest Demand Months

X Highest Demand Months
X Highest Demand Months
X Highest Demand Months
X Highest Demand Months
X Highest Demand Months
X Highest Demand Months
X Highest Demand Months
3 3 3 3 3 3 3 3
$ - $ - $ - $ - $ - $ - $ - $ -

$ 0.471 $ 0.308 $ 0.732 $ 0.479 $ 0.775 $ 0.508 $ 0.709 $ 0.465

$ 0.471 $ 0.308 $ 0.418 $ 0.273 $ 0.440 $ 0.287 $ 0.340 $ 0.221
$ 0.471 $ 0.308 $ 0.253 $ 0.164 $ 0.185 $ 0.119 $ 0.292 $ 0.189
$ 0.471 $ 0.308 $ 0.535 $ 0.350 $ 0.470 $ 0.307 $ 0.468 $ 0.306
$ 0.471 $ 0.308 $ 0.450 $ 0.294 $ 0.406 $ 0.265 $ 0.327 $ 0.212
$ 0.471 $ 0.308 $ 0.426 $ 0.278 $ 0.177 $ 0.113 $ 0.283 $ 0.183

$ - $ - $ - $ -
$ - $ - $ - $ -
$ (92,214,209) $ (92,214,209) $ (92,214,209) $ (92,214,209)
$ (100,157,376) $ (96,179,165) $ (96,851,978) $ (93,461,884)
$ (192,371,585) $ (188,393,374) $ (189,066,187) $ (185,676,093)

$ 55,243,060 $ 54,100,643 $ 54,293,854 $ 53,320,326

$ 137,128,525 $ 134,292,731 $ 134,772,333 $ 132,355,767

$ (178,549,476) $ (178,549,476) $ (178,549,476) $ (178,549,476)

8% 6% 6% 4%

Page 17 of 23
Bill Impacts

PG&E

Customer Average Bill Impact ($/mo)

Income Bracket Bill Discount PG&E P Q R S T V W X Y Z
$0 - $25,000 None 1 $ 5.95 $ (11.69) $ (7.80) $ (11.37) $ (7.73) $ 13.78 $ (0.22) $ (8.42) $ 3.05 $ 2.37 $ 18.72
$25,000 - $50,000 None 2 $ 1.54 $ (11.32) $ (7.77) $ (11.50) $ (7.49) $ 13.88 $ (0.37) $ (8.77) $ 3.04 $ 2.37 $ 18.74
$50,000 - $75,000 None 3 $ 1.09 $ (10.97) $ (7.62) $ (10.34) $ (6.66) $ 13.98 $ (0.37) $ (7.30) $ 3.22 $ 2.39 $ 18.70
$75,000 - $100,000 None 4 $ 2.02 $ (10.35) $ (7.65) $ (8.82) $ (5.46) $ 14.06 $ (0.22) $ (5.20) $ 3.35 $ 2.41 $ 18.71
$100,00 - $150,000 None 5 $ 3.19 $ (9.64) $ (7.24) $ (7.02) $ (4.12) $ 14.15 $ (0.07) $ (2.69) $ 3.61 $ 2.43 $ 18.74
$150,000 - $200,000 None 6 $ 25.38 $ 12.51 $ 13.80 $ 15.73 $ 18.31 $ 34.95 $ 20.86 $ 20.87 $ 24.67 $ 23.21 $ 39.40
$200,000+ None 7 $ 27.37 $ 14.28 $ 14.81 $ 18.83 $ 20.75 $ 35.10 $ 20.90 $ 24.16 $ 25.62 $ 23.30 $ 39.41

$0 - $25,000 CARE 1 $ (17.74) $ (27.46) $ (22.46) $ (23.54) $ (21.20) $ (9.71) $ (14.27) $ (22.77) $ (14.28) $ (24.02) $ (17.12)
$25,000 - $50,000 CARE 2 $ (18.19) $ (27.35) $ (22.45) $ (23.06) $ (20.88) $ (9.66) $ (14.28) $ (22.08) $ (14.17) $ (24.02) $ (17.30)
$50,000 - $75,000 CARE 3 $ (17.49) $ (27.15) $ (22.03) $ (22.57) $ (20.63) $ (9.63) $ (14.15) $ (21.28) $ (14.12) $ (24.00) $ (17.38)
$75,000 - $100,000 CARE 4 $ (17.22) $ (27.12) $ (21.19) $ (22.38) $ (20.28) $ (9.59) $ (14.02) $ (20.54) $ (14.12) $ (24.00) $ (17.43)
$100,00 - $150,000 CARE 5 $ (16.81) $ (26.99) $ (22.31) $ (21.80) $ (19.95) $ (9.57) $ (14.23) $ (20.10) $ (13.99) $ (23.99) $ (17.50)
$150,000 - $200,000 CARE 6 $ (16.10) $ (26.75) $ (22.65) $ (21.43) $ (19.66) $ (9.58) $ (14.25) $ (19.03) $ (13.96) $ (23.98) $ (17.21)
$200,000+ CARE 7 $ (15.04) $ (25.99) $ (22.65) $ (20.73) $ (19.15) $ (9.57) $ (14.01) $ (18.58) $ (13.84) $ (23.97) $ (22.01)

$0 - $25,000 FERA 1 $ (1.96) $ (19.04) $ (10.88) $ (11.47) $ (8.18) $ 9.95 $ 2.56 $ (10.07) $ 2.65 $ (13.66) $ (1.78)
$25,000 - $50,000 FERA 2 $ (2.34) $ (18.86) $ (10.84) $ (10.17) $ (7.42) $ 10.05 $ 2.53 $ (8.33) $ 2.86 $ (13.65) $ (2.65)
$50,000 - $75,000 FERA 3 $ (1.30) $ (18.55) $ (9.90) $ (8.94) $ (6.86) $ 10.11 $ 2.76 $ (6.50) $ 2.96 $ (13.61) $ (2.99)
$75,000 - $100,000 FERA 4 $ (0.91) $ (18.49) $ (8.13) $ (8.49) $ (6.10) $ 10.19 $ 2.97 $ (4.96) $ 2.95 $ (13.61) $ (3.17)
$100,00 - $150,000 FERA 5 $ (0.36) $ (18.28) $ (10.52) $ (7.19) $ (5.41) $ 10.24 $ 2.63 $ (4.12) $ 3.21 $ (13.58) $ (3.42)
$150,000 - $200,000 FERA 6 $ 17.58 $ (0.90) $ 5.69 $ 10.55 $ 12.18 $ 27.21 $ 19.59 $ 14.79 $ 20.27 $ 3.42 $ 14.76
$200,000+ FERA 7 $ 18.93 $ 0.28 $ 5.69 $ 11.88 $ 13.15 $ 27.23 $ 19.99 $ 15.52 $ 20.50 $ 3.44 $ 9.99

New rate option User-selected rate across all subclasses

Counterfactual rate option User-selected rate across all subclasses
Use model-calculated counterfactual rates TRUE

Select single new rate (if applicable) E-1

Select single counterfactual rate (if applicable) E-1

Page 19 of 23
SDG&E

Customer Average Bill Impact ($/mo)

Income Bracket Bill Discount SDG&E Inland Coastal Desert Mountain
$0 - $25,000 None 1 $ 1.96 $ 0.23 $ 3.05 $ (0.85) $ (18.08)
$25,000 - $50,000 None 2 $ 1.78 $ (0.55) $ 3.05 $ (1.51) $ (15.81)
$50,000 - $75,000 None 3 $ 1.39 $ (0.63) $ 3.14 $ 0.40 $ (15.13)
$75,000 - $100,000 None 4 $ 1.54 $ (0.26) $ 3.27 $ 2.96 $ (14.13)
$100,00 - $150,000 None 5 $ 2.33 $ 1.00 $ 3.72 $ 1.32 $ (11.57)
$150,000 - $200,000 None 6 $ 24.22 $ 23.52 $ 24.96 $ 35.20 $ 12.64
$200,000+ None 7 $ 26.27 $ 26.09 $ 26.45 $ 21.34 $ 17.09

$0 - $25,000 CARE 1 $ (17.01) $ (19.59) $ (14.03) $ (41.00) $ (44.87)

$25,000 - $50,000 CARE 2 $ (17.10) $ (19.53) $ (14.03) $ (42.23) $ (44.39)
$50,000 - $75,000 CARE 3 $ (16.95) $ (19.43) $ (13.99) N/A $ (44.46)
$75,000 - $100,000 CARE 4 $ (16.43) $ (19.37) $ (13.85) N/A $ (45.05)
$100,00 - $150,000 CARE 5 $ (16.09) $ (19.47) $ (13.91) N/A N/A
$150,000 - $200,000 CARE 6 $ (13.30) N/A $ (13.30) N/A N/A
$200,000+ CARE 7 N/A N/A N/A N/A N/A

$0 - $25,000 FERA 1 $ 2.24 $ (1.02) $ 6.63 $ (29.04) $ (37.62)

$25,000 - $50,000 FERA 2 $ 2.13 $ (0.87) $ 6.63 $ (31.84) $ (36.59)
$50,000 - $75,000 FERA 3 $ 2.40 $ (0.68) $ 6.70 N/A $ (36.76)
$75,000 - $100,000 FERA 4 $ 3.16 $ (0.56) $ 6.96 N/A $ (37.96)
$100,00 - $150,000 FERA 5 $ 3.62 $ (0.75) $ 6.85 N/A N/A
$150,000 - $200,000 FERA 6 $ 24.88 N/A $ 24.88 N/A N/A
$200,000+ FERA 7 N/A N/A N/A N/A N/A

New rate option User-selected rate across all subclasses

Counterfactual rate option User-selected rate across all subclasses
Use model-calculated counterfactual rates TRUE

Select single new rate (if applicable) DR

Select single counterfactual rate (if applicable) DR

Page 21 of 23
SCE

Customer Average Bill Impact ($/mo)

Income Bracket Bill Discount SCE 5 6 8 9 10 13 14 15 16
$0 - $25,000 None 1 $ 1.10 $ (1.54) $ 8.27 $ 6.01 $ (2.48) $ (3.63) $ (12.16) $ (9.27) $ (16.10) $ 3.96
$25,000 - $50,000 None 2 $ (0.41) $ (1.54) $ 8.32 $ 5.86 $ (3.04) $ (5.07) $ (11.41) $ (8.78) $ (17.42) $ 4.07
$50,000 - $75,000 None 3 $ (0.12) $ (1.54) $ 8.39 $ 5.85 $ (3.09) $ (4.89) $ (10.05) $ (8.18) $ (16.53) $ 4.18
$75,000 - $100,000 None 4 $ 0.34 $ (1.54) $ 8.44 $ 5.97 $ (2.89) $ (4.28) $ (9.00) $ (7.27) $ (15.71) $ 4.52
$100,00 - $150,000 None 5 $ 1.09 $ (1.54) $ 8.55 $ 6.15 $ (2.60) $ (3.18) $ (7.68) $ (6.34) $ (14.96) $ 4.88
$150,000 - $200,000 None 6 $ 22.58 $ 19.06 $ 29.29 $ 27.03 $ 18.52 $ 18.47 $ 13.87 $ 15.31 $ 6.52 $ 25.87
$200,000+ None 7 $ 24.08 $ 19.06 $ 29.57 $ 27.65 $ 19.29 $ 19.77 $ 15.85 $ 16.63 $ 8.02 $ 26.14

$0 - $25,000 CARE 1 $ (17.94) N/A $ (10.56) $ (12.71) $ (16.25) $ (21.95) $ (24.31) $ (24.67) $ (27.46) $ (19.36)
$25,000 - $50,000 CARE 2 $ (17.65) N/A $ (10.53) $ (12.69) $ (16.22) $ (21.80) $ (23.95) $ (24.31) $ (26.94) $ (19.22)
$50,000 - $75,000 CARE 3 $ (17.48) N/A $ (10.52) $ (12.68) $ (16.19) $ (21.57) $ (23.69) $ (24.10) $ (26.67) $ (19.24)
$75,000 - $100,000 CARE 4 $ (17.45) N/A $ (10.51) $ (12.66) $ (16.18) $ (21.44) $ (23.41) $ (24.06) $ (26.41) $ (19.24)
$100,00 - $150,000 CARE 5 $ (17.20) N/A $ (10.48) $ (12.64) $ (16.16) $ (21.19) $ (23.37) $ (23.66) $ (26.24) $ (19.03)
$150,000 - $200,000 CARE 6 $ (16.75) N/A $ (10.46) $ (12.59) $ (16.10) $ (20.76) $ (23.06) $ (23.24) $ (25.82) $ (18.75)
$200,000+ CARE 7 $ (16.11) N/A $ (10.45) $ (12.53) $ (16.02) $ (20.43) $ (22.57) $ (22.93) $ (25.05) $ (18.45)

$0 - $25,000 FERA 1 $ 1.16 N/A $ 11.21 $ 8.18 $ 3.10 $ (4.56) $ (7.58) $ (8.43) $ (12.35) $ (1.64)
$25,000 - $50,000 FERA 2 $ 1.45 N/A $ 11.26 $ 8.23 $ 3.14 $ (4.25) $ (6.76) $ (7.70) $ (11.25) $ (1.39)
$50,000 - $75,000 FERA 3 $ 1.63 N/A $ 11.27 $ 8.26 $ 3.20 $ (3.81) $ (6.20) $ (7.30) $ (10.71) $ (1.42)
$75,000 - $100,000 FERA 4 $ 1.68 N/A $ 11.29 $ 8.29 $ 3.22 $ (3.55) $ (5.60) $ (7.22) $ (10.19) $ (1.43)
$100,00 - $150,000 FERA 5 $ 2.02 N/A $ 11.34 $ 8.34 $ 3.25 $ (3.09) $ (5.54) $ (6.48) $ (9.87) $ (1.05)
$150,000 - $200,000 FERA 6 $ 19.54 N/A $ 28.27 $ 25.33 $ 20.26 $ 14.57 $ 11.97 $ 11.15 $ 7.81 $ 16.30
$200,000+ FERA 7 $ 20.41 N/A $ 28.29 $ 25.44 $ 20.39 $ 15.13 $ 12.86 $ 11.66 $ 9.18 $ 16.79

New rate option User-selected rate across all subclasses

Counterfactual rate option User-selected rate across all subclasses
Use model-calculated counterfactual rates TRUE

Select single new rate (if applicable) D

Select single counterfactual rate (if applicable) D

Page 23 of 23
Bill Impacts

PG&E

Customer Average Bill Impact ($/mo)

Income Bracket Bill Discount PG&E P Q R S T V W X Y Z
$0 - $25,000 None 1 $ 5.03 $ (13.07) $ (9.09) $ (12.70) $ (8.96) $ 13.05 $ (1.27) $ (9.66) $ 2.07 $ 1.32 $ 18.09
$25,000 - $50,000 None 2 $ 0.52 $ (12.68) $ (9.06) $ (12.83) $ (8.71) $ 13.15 $ (1.43) $ (10.02) $ 2.06 $ 1.32 $ 18.11
$50,000 - $75,000 None 3 $ 0.07 $ (12.32) $ (8.90) $ (11.63) $ (7.86) $ 13.26 $ (1.43) $ (8.51) $ 2.24 $ 1.35 $ 18.06
$75,000 - $100,000 None 4 $ 1.02 $ (11.68) $ (8.93) $ (10.06) $ (6.62) $ 13.34 $ (1.27) $ (6.34) $ 2.38 $ 1.37 $ 18.08
$100,00 - $150,000 None 5 $ 2.22 $ (10.94) $ (8.51) $ (8.21) $ (5.24) $ 13.43 $ (1.12) $ (3.75) $ 2.64 $ 1.39 $ 18.11
$150,000 - $200,000 None 6 $ 24.42 $ 11.23 $ 12.52 $ 14.59 $ 17.22 $ 34.21 $ 19.80 $ 19.88 $ 23.69 $ 22.15 $ 38.75
$200,000+ None 7 $ 26.47 $ 13.07 $ 13.57 $ 17.79 $ 19.74 $ 34.37 $ 19.84 $ 23.26 $ 24.68 $ 22.25 $ 38.75

$0 - $25,000 CARE 1 $ (18.51) $ (28.58) $ (23.41) $ (24.50) $ (22.09) $ (10.22) $ (14.92) $ (23.70) $ (14.94) $ (25.02) $ (17.86)
$25,000 - $50,000 CARE 2 $ (18.98) $ (28.47) $ (23.40) $ (24.01) $ (21.75) $ (10.16) $ (14.94) $ (22.99) $ (14.83) $ (25.02) $ (18.04)
$50,000 - $75,000 CARE 3 $ (18.25) $ (28.26) $ (22.96) $ (23.50) $ (21.50) $ (10.13) $ (14.80) $ (22.16) $ (14.78) $ (25.00) $ (18.12)
$75,000 - $100,000 CARE 4 $ (17.98) $ (28.23) $ (22.10) $ (23.30) $ (21.14) $ (10.09) $ (14.66) $ (21.40) $ (14.78) $ (25.00) $ (18.17)
$100,00 - $150,000 CARE 5 $ (17.55) $ (28.09) $ (23.25) $ (22.70) $ (20.79) $ (10.06) $ (14.88) $ (20.94) $ (14.65) $ (24.99) $ (18.25)
$150,000 - $200,000 CARE 6 $ (16.81) $ (27.85) $ (23.61) $ (22.32) $ (20.49) $ (10.08) $ (14.91) $ (19.82) $ (14.62) $ (24.98) $ (17.95)
$200,000+ CARE 7 $ (15.72) $ (27.05) $ (23.61) $ (21.59) $ (19.96) $ (10.07) $ (14.65) $ (19.36) $ (14.49) $ (24.97) $ (22.86)

$0 - $25,000 FERA 1 $ (2.89) $ (20.43) $ (12.05) $ (12.61) $ (9.25) $ 9.31 $ 1.74 $ (11.18) $ 1.82 $ (14.90) $ (2.71)
$25,000 - $50,000 FERA 2 $ (3.28) $ (20.24) $ (12.02) $ (11.27) $ (8.47) $ 9.42 $ 1.72 $ (9.38) $ 2.04 $ (14.89) $ (3.60)
$50,000 - $75,000 FERA 3 $ (2.20) $ (19.91) $ (11.04) $ (10.01) $ (7.89) $ 9.48 $ 1.94 $ (7.49) $ 2.14 $ (14.84) $ (3.95)
$75,000 - $100,000 FERA 4 $ (1.80) $ (19.86) $ (9.22) $ (9.54) $ (7.11) $ 9.56 $ 2.17 $ (5.91) $ 2.14 $ (14.85) $ (4.14)
$100,00 - $150,000 FERA 5 $ (1.24) $ (19.63) $ (11.69) $ (8.20) $ (6.39) $ 9.61 $ 1.81 $ (5.04) $ 2.40 $ (14.81) $ (4.39)
$150,000 - $200,000 FERA 6 $ 16.70 $ (2.26) $ 4.49 $ 9.54 $ 11.19 $ 26.56 $ 18.75 $ 13.91 $ 19.44 $ 2.17 $ 13.80
$200,000+ FERA 7 $ 18.09 $ (1.03) $ 4.49 $ 10.91 $ 12.19 $ 26.58 $ 19.16 $ 14.67 $ 19.68 $ 2.20 $ 8.90

New rate option User-selected rate across all subclasses

Counterfactual rate option User-selected rate across all subclasses
Use model-calculated counterfactual rates TRUE

Select single new rate (if applicable) E-TOU-C

Select single counterfactual rate (if applicable) E-TOU-C

Page 19 of 23
SDG&E

Customer Average Bill Impact ($/mo)

Income Bracket Bill Discount SDG&E Inland Coastal Desert Mountain
$0 - $25,000 None 1 $ 2.25 $ 0.53 $ 3.33 $ (0.53) $ (17.60)
$25,000 - $50,000 None 2 $ 2.07 $ (0.24) $ 3.33 $ (1.18) $ (15.35)
$50,000 - $75,000 None 3 $ 1.68 $ (0.32) $ 3.41 $ 0.71 $ (14.67)
$75,000 - $100,000 None 4 $ 1.83 $ 0.05 $ 3.55 $ 3.24 $ (13.69)
$100,00 - $150,000 None 5 $ 2.62 $ 1.30 $ 4.00 $ 1.61 $ (11.15)
$150,000 - $200,000 None 6 $ 24.46 $ 23.76 $ 25.19 $ 35.33 $ 12.98
$200,000+ None 7 $ 26.48 $ 26.31 $ 26.66 $ 21.61 $ 17.39

$0 - $25,000 CARE 1 $ (16.82) $ (19.38) $ (13.86) $ (40.62) $ (44.46)

$25,000 - $50,000 CARE 2 $ (16.91) $ (19.32) $ (13.86) $ (41.84) $ (43.97)
$50,000 - $75,000 CARE 3 $ (16.76) $ (19.22) $ (13.83) N/A $ (44.05)
$75,000 - $100,000 CARE 4 $ (16.25) $ (19.17) $ (13.69) N/A $ (44.64)
$100,00 - $150,000 CARE 5 $ (15.91) $ (19.26) $ (13.75) N/A N/A
$150,000 - $200,000 CARE 6 $ (13.14) N/A $ (13.14) N/A N/A
$200,000+ CARE 7 N/A N/A N/A N/A N/A

$0 - $25,000 FERA 1 $ 2.47 $ (0.75) $ 6.82 $ (28.53) $ (37.04)

$25,000 - $50,000 FERA 2 $ 2.36 $ (0.61) $ 6.83 $ (31.30) $ (36.01)
$50,000 - $75,000 FERA 3 $ 2.63 $ (0.42) $ 6.89 N/A $ (36.18)
$75,000 - $100,000 FERA 4 $ 3.38 $ (0.30) $ 7.15 N/A $ (37.38)
$100,00 - $150,000 FERA 5 $ 3.84 $ (0.49) $ 7.04 N/A N/A
$150,000 - $200,000 FERA 6 $ 25.02 N/A $ 25.02 N/A N/A
$200,000+ FERA 7 N/A N/A N/A N/A N/A

New rate option User-selected rate across all subclasses

Counterfactual rate option User-selected rate across all subclasses
Use model-calculated counterfactual rates TRUE

Select single new rate (if applicable) TOU-DR1

Select single counterfactual rate (if applicable) TOU-DR1

Page 21 of 23
SCE

Customer Average Bill Impact ($/mo)

Income Bracket Bill Discount SCE 5 6 8 9 10 13 14 15 16
$0 - $25,000 None 1 $ 1.00 $ (1.50) $ 8.21 $ 5.92 $ (2.62) $ (3.77) $ (12.36) $ (9.49) $ (16.23) $ 3.94
$25,000 - $50,000 None 2 $ (0.53) $ (1.50) $ 8.26 $ 5.77 $ (3.19) $ (5.22) $ (11.60) $ (9.00) $ (17.56) $ 4.05
$50,000 - $75,000 None 3 $ (0.24) $ (1.50) $ 8.33 $ 5.76 $ (3.23) $ (5.04) $ (10.23) $ (8.40) $ (16.66) $ 4.15
$75,000 - $100,000 None 4 $ 0.23 $ (1.50) $ 8.38 $ 5.87 $ (3.03) $ (4.42) $ (9.17) $ (7.48) $ (15.84) $ 4.50
$100,00 - $150,000 None 5 $ 0.98 $ (1.50) $ 8.49 $ 6.06 $ (2.74) $ (3.31) $ (7.85) $ (6.54) $ (15.08) $ 4.85
$150,000 - $200,000 None 6 $ 22.50 $ 19.13 $ 29.26 $ 26.96 $ 18.41 $ 18.37 $ 13.73 $ 15.13 $ 6.42 $ 25.87
$200,000+ None 7 $ 24.01 $ 19.13 $ 29.54 $ 27.59 $ 19.18 $ 19.68 $ 15.73 $ 16.46 $ 7.93 $ 26.14

$0 - $25,000 CARE 1 $ (17.98) N/A $ (10.55) $ (12.73) $ (16.26) $ (22.03) $ (24.40) $ (24.80) $ (27.49) $ (19.41)
$25,000 - $50,000 CARE 2 $ (17.69) N/A $ (10.52) $ (12.71) $ (16.24) $ (21.87) $ (24.04) $ (24.43) $ (26.96) $ (19.27)
$50,000 - $75,000 CARE 3 $ (17.53) N/A $ (10.51) $ (12.69) $ (16.21) $ (21.65) $ (23.78) $ (24.22) $ (26.69) $ (19.29)
$75,000 - $100,000 CARE 4 $ (17.50) N/A $ (10.50) $ (12.68) $ (16.20) $ (21.51) $ (23.49) $ (24.18) $ (26.43) $ (19.29)
$100,00 - $150,000 CARE 5 $ (17.24) N/A $ (10.47) $ (12.66) $ (16.18) $ (21.26) $ (23.46) $ (23.77) $ (26.27) $ (19.07)
$150,000 - $200,000 CARE 6 $ (16.79) N/A $ (10.45) $ (12.61) $ (16.12) $ (20.83) $ (23.14) $ (23.35) $ (25.84) $ (18.80)
$200,000+ CARE 7 $ (16.15) N/A $ (10.44) $ (12.55) $ (16.04) $ (20.50) $ (22.65) $ (23.04) $ (25.07) $ (18.49)

$0 - $25,000 FERA 1 $ 1.09 N/A $ 11.23 $ 8.16 $ 3.07 $ (4.67) $ (7.73) $ (8.61) $ (12.43) $ (1.74)
$25,000 - $50,000 FERA 2 $ 1.38 N/A $ 11.27 $ 8.20 $ 3.10 $ (4.36) $ (6.89) $ (7.88) $ (11.32) $ (1.49)
$50,000 - $75,000 FERA 3 $ 1.57 N/A $ 11.28 $ 8.24 $ 3.16 $ (3.92) $ (6.33) $ (7.48) $ (10.77) $ (1.53)
$75,000 - $100,000 FERA 4 $ 1.61 N/A $ 11.31 $ 8.27 $ 3.19 $ (3.66) $ (5.73) $ (7.40) $ (10.26) $ (1.53)
$100,00 - $150,000 FERA 5 $ 1.95 N/A $ 11.35 $ 8.31 $ 3.21 $ (3.19) $ (5.66) $ (6.65) $ (9.93) $ (1.15)
$150,000 - $200,000 FERA 6 $ 19.49 N/A $ 28.30 $ 25.32 $ 20.24 $ 14.49 $ 11.87 $ 11.00 $ 7.77 $ 16.22
$200,000+ FERA 7 $ 20.38 N/A $ 28.32 $ 25.43 $ 20.37 $ 15.05 $ 12.76 $ 11.51 $ 9.14 $ 16.71

New rate option User-selected rate across all subclasses

Counterfactual rate option User-selected rate across all subclasses
Use model-calculated counterfactual rates TRUE

Select single new rate (if applicable) TOU-D-4-9

Select single counterfactual rate (if applicable) TOU-D-4-9

Page 23 of 23
APPENDIX D: Printable Results
(Electrification Rates)

Fixed Charge Tool Outputs - Cover Sheet

Purpose:
This section of the tool is formatted to be easily printed or saved as a PDF and filed as a part of testimony.

Instructions:
This worksheet automatically draws values from the rest of the tool.
This worksheet displays both rate design details and bill impacts for all three IOUs.
Please run the macro (button above) to re-generate model results using current inputs to ensure that the rate design details and bill impacts are aligned.
This macro can also be run from the Rate Design Dashboard worksheet. Please see the Rate Design Dashboard worksheet for further details.

How to Save as PDF:

Click "File", then "Print", then select "Microsoft Print to PDF". Click the large "Print" button to choose a file location and name.

How to Print:
Click "File", then "Print", then select your choice of printer.

Table of Contents

Section Sub-Section Page

Cover -- 1
Revenue Requirement Allocations PG&E 2
SDG&E 3
SCE 4
Rate Design Inputs -- 5
Revenue Requirement Components -- 6
New Rates -- 7
-- 8
-- 9
Bill Impacts PG&E 10
SDG&E 11
SCE 12

Energy and Environmental Economics, Inc. Model Release Date: March 23, 2023
44 Montgomery Street, Suite 1500
San Francisco, CA 94104
Phone: 415-391-5100

Page 1 of 23
Revenue Requirement Allocations
PG&E

Percent to Percent to Percent to

Residential
Cost Cost Component (See "Glossary" tab for Bundled Include in Include in Include in
Revenue CARE-Exempt
Category descriptions) Generation Customer Demand Volumetric
Requirement
Charge Charge Charge
$ T/F T/F % % %
Generation PCIA $ 183,408,243 FALSE FALSE 100% 0% 0%
Generation Marginal Energy Cost $ 538,263,216 FALSE TRUE 0% 0% 100%
Generation Marginal Generation Capacity Cost $ 218,481,550 FALSE TRUE 0% 0% 100%
Generation Non-Marginal Generation $ 865,996,766 FALSE TRUE 0% 0% 100%

Distribution Marginal Customer Access $ 454,792,861 FALSE FALSE 100% 0% 0%

Distribution Marginal Distribution Capacity Cost - Primary $ 439,382,040 FALSE FALSE 0% 0% 100%
Distribution Marginal Distribution Capacity Cost - New Business $ 476,043,853 FALSE FALSE 100% 0% 0%
Distribution Marginal Distribution Capacity Cost - Secondary $ 29,945,145 FALSE FALSE 0% 0% 100%
Distribution Non-Marginal Distribution $ 1,833,578,625 FALSE FALSE 55% 0% 45%

Transmission Transmission $ 1,447,654,612 FALSE FALSE 0% 0% 100%

Line Items Public Purpose Programs - SGIP $ 58,854,252 TRUE FALSE 100% 0% 0%
Line Items Wildfire Fund Charge $ 63,120,120 TRUE FALSE 0% 0% 100%
Line Items Wildfire Hardening Charge $ 68,921,008 TRUE FALSE 100% 0% 0%
Line Items Recovery Bond Charge $ 215,256,658 TRUE FALSE 0% 0% 100%
Line Items Recovery Bond Credit $ (215,256,658) TRUE FALSE 0% 0% 100%
Line Items Public Purpose Programs - Not CARE Exempt $ 230,732,710 FALSE FALSE 100% 0% 0%
Line Items Nuclear Decommissioning $ 37,938,712 FALSE FALSE 100% 0% 0%
Line Items New System Generation Charge $ 96,956,158 FALSE FALSE 100% 0% 0%
Line Items Competition Transition Charge $ 8,518,646 FALSE FALSE 0% 0% 100%
Line Items Energy Cost Recovery Account $ (19,846,861) FALSE FALSE 0% 0% 100%

Line Items Residential CARE Contribution TRUE FALSE 100% 0% 0%

See "New Rates" Section (pg. 7 - 9)

Line Items 2023 Total Estimated CARE Discount $ (891,914,356)

Note: included for comparison to model-calculated values

Delivery RR - Before CARE Bill Discount $ 7,032,741,656

Page 2 of 12
SCE

Percent to Percent to Percent to

Residential
Cost Cost Component (See "Glossary" tab for Bundled Include in Include in Include in
Revenue CARE-Exempt
Category descriptions) Generation Customer Demand Volumetric
Requirement
Charge Charge Charge
$ T/F T/F % % %
Generation PCIA $ 18,066,203 FALSE FALSE 100% 0% 0%
Generation Marginal Energy Cost $ 606,708,166 FALSE TRUE 0% 0% 100%
Generation Marginal Generation Capacity Cost $ 584,831,167 FALSE TRUE 0% 0% 100%
Generation Non-Marginal Generation $ 1,378,829,544 FALSE TRUE 0% 0% 100%

Distribution Marginal - Customer $ 427,567,610 FALSE FALSE 100% 0% 0%

Distribution Marginal - Grid $ 888,543,196 FALSE FALSE 0% 0% 100%
Distribution Marginal - Peak $ 503,372,326 FALSE FALSE 0% 0% 100%
Distribution Non-Marginal Distribution $ 1,845,967,040 FALSE FALSE 76% 0% 24%

Transmission Base Transmission $ 599,320,433 FALSE FALSE 0% 0% 100%

Transmission Transmission Balancing Accounts $ (1,839,212) FALSE FALSE 0% 0% 100%

Line Items Public Purpose Programs - SGIP $ 23,619,309 TRUE FALSE 100% 0% 0%
Line Items Wildfire Fund Charge $ 103,390,404 TRUE FALSE 0% 0% 100%
Line Items Wildfire Hardening Charge $ 17,556,861 TRUE FALSE 100% 0% 0%
Line Items Recovery Bond Charge $ - TRUE FALSE 0% 0% 100%
Line Items Recovery Bond Credit $ (40,575,857) TRUE FALSE 0% 0% 100%
Line Items Public Purpose Programs - Not CARE Exempt $ 313,291,510 FALSE FALSE 100% 0% 0%
Line Items Nuclear Decommissioning $ 2,364,701 FALSE FALSE 100% 0% 0%
Line Items New System Generation Charge $ 148,976,188 FALSE FALSE 100% 0% 0%

Line Items Residential CARE Contribution TRUE FALSE 100% 0% 0%

See "New Rates" Section (pg. 7 - 9)

Line Items 2023 Total Estimated CARE Discount $ (660,034,291)

Note: included for comparison to model-calculated values

Delivery RR - Before CARE Bill Discount $ 6,995,933,045

Page 3 of 12
SDG&E

Percent to Percent to Percent to

Residential
Cost Cost Component (See "Glossary" tab for Bundled Include in Include in Include in
Revenue CARE-Exempt
Category descriptions) Generation Customer Demand Volumetric
Requirement
Charge Charge Charge
$ T/F T/F % % %
Generation PCIA $ 180,005,950 FALSE FALSE 100% 0% 0%
Generation Marginal Energy Cost $ 100,915,850 FALSE TRUE 0% 0% 100%
Generation Marginal Generation Capacity Cost $ 57,547,258 FALSE TRUE 0% 0% 100%
Generation Non-Marginal Generation $ 163,094,812 FALSE TRUE 0% 0% 100%

Distribution Marginal - Customer $ 183,005,936 FALSE FALSE 100% 0% 0%

Distribution Marginal Demand - Non-Coincident Peak $ 198,205,378 FALSE FALSE 0% 0% 100%
Distribution Marginal Demand - Coincident Peak $ 26,974,391 FALSE FALSE 0% 0% 100%
Distribution Non-Marginal Distribution $ 490,650,411 FALSE FALSE 43% 0% 57%

Transmission Base Transmission $ 537,401,722 FALSE FALSE 0% 0% 100%

Transmission Transmission Balancing Accounts $ (111,012,377) FALSE FALSE 0% 0% 100%

Line Items Public Purpose Programs - SGIP $ 8,781,000 TRUE FALSE 100% 0% 0%
Line Items Wildfire Fund Charge $ 29,143,070 TRUE FALSE 0% 0% 100%
Line Items Public Purpose Programs - Not CARE Exempt $ 61,433,000 FALSE FALSE 100% 0% 0%
Line Items Nuclear Decommissioning $ 526,530 FALSE FALSE 100% 0% 0%
Line Items Local Generation Charge/New System Generation Charge$ 81,949,029 FALSE FALSE 100% 0% 0%
Line Items Competition Transition Charge $ 11,052,908 FALSE FALSE 0% 0% 100%
Line Items $ component
Total Rate Adjustment Component - Baseline adjustment 1,000,000 FALSE FALSE 0% 0% 100%
Line Items Reliability Services $ 177,809 FALSE FALSE 0% 0% 100%

Line Items Residential CARE Contribution TRUE FALSE 100% 0% 0%

See "New Rates" Section (pg. 7 - 9)

Line Items 2023 Total Estimated CARE Discount $ (178,549,476)

Note: included for comparison to model-calculated values

Delivery RR - Before CARE Bill Discount $ 2,020,852,676

Page 4 of 12
Rate Design Inputs
PG&E SCE SDG&E
Customer charge option User-Defined CARE Charges User-Defined CARE Charges User-Defined CARE Charges
Customer Charge Weighting is used when Customer Charge Option is set to "Uniform Weights"
Customer Charge Weighting [0,25] $ 1 $ 1 $ 1
[25,50] $ 1 $ 1 $ 1
[50,75] $ 2 $ 2 $ 2
[75,100] $ 2 $ 2 $ 2
[100,150] $ 3 $ 3 $ 3
[150,200] $ 3 $ 3 $ 3
200+ $ 3 $ 3 $ 3
Customer Charge Weighting is used when Customer Charge Option is set to "User-Defined CARE Charges"
CARE Customer Charge ($/mo) [0,25] $ 15 $ 15 $ 15
[25,50] $ 15 $ 15 $ 15
[50,75] $ 15 $ 15 $ 15
[75,100] $ 15 $ 15 $ 15
[100,150] $ 15 $ 15 $ 15
[150,200] $ 15 $ 15 $ 15
200+ $ 15 $ 15 $ 15
Non-CARE Customer Charge Weighting is used when Customer Charge Option is set to "User-Defined CARE Charges"
Non-CARE Customer Charge Weighting [0,25] $ 1 $ 1 $ 1
[25,50] $ 1 $ 1 $ 1
[50,75] $ 1 $ 1 $ 1
[75,100] $ 1 $ 1 $ 1
[100,150] $ 1 $ 1 $ 1
[150,200] $ 1.5 $ 1.5 $ 1.5
200+ $ 1.5 $ 1.5 $ 1.5
Average CARE Program Discount is used when Customer Charge Option is set to "User-Defined CARE Charges"
Average CARE Program Discount ($/month) $ - $ - $ -

Demand Charge Options Billing determinant to use X Highest Demand Months X Highest Demand Months X Highest Demand Months
No. of highest demand $ 3 $ 3 $ 3
months to include
Adjustments to distribution rate Equal Cents Equal Cents Equal Cents
Include baseline credit from existing rate (if applicable) TRUE TRUE TRUE

Page 5 of 12
 Revenue Requirement Components
PG&E
ARE Charges
Delivery - excluding CARE-exempt Delivery - CARE-exempt
Rev Req - Rev Req - Rev Req - Rev Req -
Rev Req - Demand Rev Req - Demand
Customer Volumetric Customer Volumetric
$ 2,488,340,781 $ - $ 2,730,763,963 $ 322,470,160 $ - $ 63,120,120

Delivery - excluding CARE-exempt Delivery - CARE-exempt

Volumetric Rev Req Breakdown Volumetric Rev Req Breakdown
Distribution $ 1,294,437,566 Distribution $ -
NBCs $ 8,518,646 NBCs $ 63,120,120
Non-Dist $ 1,427,807,751 Non-Dist $ -

SDG&E

Delivery - excluding CARE-exempt Delivery - CARE-exempt

Rev Req - Rev Req - Rev Req - Rev Req -
Rev Req - Demand Rev Req - Demand
Customer Volumetric Customer Volumetric
$ 717,900,122 $ - $ 943,470,564 $ 58,700,312 $ - $ 29,143,070

Delivery - excluding CARE-exempt Delivery - CARE-exempt

Volumetric Rev Req Breakdown Volumetric Rev Req Breakdown
Distribution $ 504,850,502 Distribution $ -
NBCs $ 11,052,908 NBCs $ 29,143,070
Non-Dist $ 427,567,154 Non-Dist $ -

SCE

Delivery - excluding CARE-exempt Delivery - CARE-exempt

Rev Req - Rev Req -
Rev Req - Rev Req - Rev Req - Demand
Rev Req - Demand Customer Volumetric
Customer Volumetric
$ 2,313,201,163 $ - $ 2,432,428,832 $ 182,853,737 $ - $ 62,814,547

Delivery - excluding CARE-exempt Delivery - CARE-exempt

Volumetric Rev Req Breakdown Volumetric Rev Req Breakdown
Distribution $ 1,834,947,611 Distribution $ -
NBCs $ - NBCs $ 103,390,404
Non-Dist $ 597,481,220 Non-Dist $ (40,575,857)

Page 6 of 12
New Rates
PG&E PG&E PG&E PG&E PG&E PG&E
E-1 E-1 E-TOU-C E-TOU-C EV2-A EV2-A
Non-CARE CARE Non-CARE CARE Non-CARE CARE
Income Bracket (1000$):
[0,25] $ 50.47 $ 15.00 $ 50.43 $ 15.00 $ 50.40 $ 15.00
[25,50] $ 50.47 $ 15.00 $ 50.43 $ 15.00 $ 50.40 $ 15.00
[50,75] $ 50.47 $ 15.00 $ 50.43 $ 15.00 $ 50.40 $ 15.00
[75,100] $ 50.47 $ 15.00 $ 50.43 $ 15.00 $ 50.40 $ 15.00
[100,150] $ 50.47 $ 15.00 $ 50.43 $ 15.00 $ 50.40 $ 15.00
[150,200] $ 75.71 $ 15.00 $ 75.64 $ 15.00 $ 75.60 $ 15.00
200+ $ 75.71 $ 15.00 $ 75.64 $ 15.00 $ 75.60 $ 15.00
Tier Credits/Charges ($/kWh)
Baseline Credit $ 0.054 $ 0.035 $ 0.057 $ 0.037 $ - $ -
High Usage Charge $ - $ - $ - $ - $ - $ -
Demand Charges ($/kW)
Billing Determinant X Highest Demand Months
X Highest Demand Months
X Highest Demand Months
X Highest Demand Months
X Highest Demand Months
X Highest Demand Months
No. of Highest Demand Months 3 3 3 3 3 3
Demand Charge ($/kW-mo) $ - $ - $ - $ - $ - $ -
Energy Charges ($/kWh)
Summer - Peak $ 0.274 $ 0.176 $ 0.366 $ 0.236 $ 0.446 $ 0.288
Summer - Part-Peak $ 0.274 $ 0.176 $ - $ - $ 0.335 $ 0.216
Summer - Off-Peak $ 0.274 $ 0.176 $ 0.303 $ 0.195 $ 0.133 $ 0.085
Winter - Peak $ 0.274 $ 0.176 $ 0.269 $ 0.173 $ 0.319 $ 0.205
Winter - Part-Peak $ 0.274 $ 0.176 $ - $ - $ 0.302 $ 0.194
Winter - Off-Peak $ 0.274 $ 0.176 $ 0.252 $ 0.162 $ 0.133 $ 0.085
Total CARE Program Funding - Modeled
Customer $ - $ - $ -
Demand $ - $ - $ -
Volumetric - Delivery $ (294,563,540) $ (294,563,540) $ (294,563,540)
Volumetric - Generation $ (431,894,113) $ (423,536,307) $ (418,748,960)
Total CARE Credits $ (726,457,652) $ (718,099,847) $ (713,312,499)

Residential CARE Funding $ 196,960,911 $ 194,694,900 $ 193,396,930

Non-Res CARE Funding $ 529,496,741 $ 523,404,947 $ 519,915,569
Total IOU forecast CARE program size
2023 Forecast (Existing Rates) $ (891,914,356) $ (891,914,356) $ (891,914,356)
Modeled Credits as % of Forecast -19% -19% -20%

Page 7 of 12
 PG&E PG&E SCE SCE SCE SCE SCE SCE
E-ELEC E-ELEC D D TOU-D-4-9 TOU-D-4-9 TOU-D-PRIME TOU-D-PRIME
Non-CARE CARE Non-CARE CARE Non-CARE CARE Non-CARE CARE

$ 50.33 $ 15.00 $ 50.47 $ 15.00 $ 50.52 $ 15.00 $ 50.56 $ 15.00

$ 50.33 $ 15.00 $ 50.47 $ 15.00 $ 50.52 $ 15.00 $ 50.56 $ 15.00
$ 50.33 $ 15.00 $ 50.47 $ 15.00 $ 50.52 $ 15.00 $ 50.56 $ 15.00
$ 50.33 $ 15.00 $ 50.47 $ 15.00 $ 50.52 $ 15.00 $ 50.56 $ 15.00
$ 50.33 $ 15.00 $ 50.47 $ 15.00 $ 50.52 $ 15.00 $ 50.56 $ 15.00
$ 75.49 $ 15.00 $ 75.71 $ 15.00 $ 75.78 $ 15.00 $ 75.84 $ 15.00
$ 75.49 $ 15.00 $ 75.71 $ 15.00 $ 75.78 $ 15.00 $ 75.84 $ 15.00

$ - $ - $ 0.063 $ 0.042 $ 0.069 $ 0.046 $ - $ -

$ - $ - $ 0.071 $ 0.048 $ - $ - $ - $ -

X Highest Demand Months

X Highest Demand Months
X Highest Demand Months
X Highest Demand Months
X Highest Demand Months
X Highest Demand Months
X Highest Demand Months
X Highest Demand Months
3 3 3 3 3 3 3 3
$ - $ - $ - $ - $ - $ - $ - $ -

$ 0.445 $ 0.287 $ 0.287 $ 0.192 $ 0.455 $ 0.305 $ 0.550 $ 0.369

$ 0.283 $ 0.182 $ 0.287 $ 0.192 $ 0.346 $ 0.232 $ 0.292 $ 0.195
$ 0.226 $ 0.145 $ 0.287 $ 0.192 $ 0.240 $ 0.160 $ 0.169 $ 0.112
$ 0.213 $ 0.137 $ 0.287 $ 0.192 $ 0.387 $ 0.259 $ 0.492 $ 0.330
$ 0.191 $ 0.122 $ 0.287 $ 0.192 $ 0.264 $ 0.176 $ 0.149 $ 0.098
$ 0.177 $ 0.113 $ 0.287 $ 0.192 $ 0.229 $ 0.152 $ 0.149 $ 0.098

$ - $ - $ - $ -
$ - $ - $ - $ -
$ (294,563,540) $ (203,598,884) $ (203,598,884) $ (203,598,884)
$ (405,034,979) $ (339,559,859) $ (347,681,851) $ (354,957,511)
$ (699,598,518) $ (543,158,743) $ (551,280,734) $ (558,556,395)

$ 189,678,725 $ 139,590,239 $ 141,677,567 $ 143,547,391

$ 509,919,793 $ 403,568,504 $ 409,603,167 $ 415,009,004

$ (891,914,356) $ (660,034,291) $ (660,034,291) $ (660,034,291)

-22% -18% -16% -15%

Page 8 of 12
 SDG&E SDG&E SDG&E SDG&E SDG&E SDG&E SDG&E SDG&E
DR DR TOU-DR1 TOU-DR1 EV-TOU-5 EV-TOU-5 TOU-ELEC TOU-ELEC
Non-CARE CARE Non-CARE CARE Non-CARE CARE Non-CARE CARE

$ 50.70 $ 15.00 $ 50.62 $ 15.00 $ 50.63 $ 15.00 $ 50.56 $ 15.00

$ 50.70 $ 15.00 $ 50.62 $ 15.00 $ 50.63 $ 15.00 $ 50.56 $ 15.00
$ 50.70 $ 15.00 $ 50.62 $ 15.00 $ 50.63 $ 15.00 $ 50.56 $ 15.00
$ 50.70 $ 15.00 $ 50.62 $ 15.00 $ 50.63 $ 15.00 $ 50.56 $ 15.00
$ 50.70 $ 15.00 $ 50.62 $ 15.00 $ 50.63 $ 15.00 $ 50.56 $ 15.00
$ 76.05 $ 15.00 $ 75.93 $ 15.00 $ 75.95 $ 15.00 $ 75.85 $ 15.00
$ 76.05 $ 15.00 $ 75.93 $ 15.00 $ 75.95 $ 15.00 $ 75.85 $ 15.00

$ 0.088 $ 0.058 $ 0.085 $ 0.056 $ - $ - $ - $ -

$ - $ - $ - $ - $ - $ - $ - $ -

X Highest Demand Months

X Highest Demand Months
X Highest Demand Months
X Highest Demand Months
X Highest Demand Months
X Highest Demand Months
X Highest Demand Months
X Highest Demand Months
3 3 3 3 3 3 3 3
$ - $ - $ - $ - $ - $ - $ - $ -

$ 0.436 $ 0.284 $ 0.696 $ 0.456 $ 0.745 $ 0.488 $ 0.680 $ 0.445

$ 0.436 $ 0.284 $ 0.382 $ 0.249 $ 0.410 $ 0.267 $ 0.310 $ 0.201
$ 0.436 $ 0.284 $ 0.218 $ 0.140 $ 0.155 $ 0.099 $ 0.262 $ 0.169
$ 0.436 $ 0.284 $ 0.499 $ 0.326 $ 0.440 $ 0.287 $ 0.439 $ 0.286
$ 0.436 $ 0.284 $ 0.415 $ 0.270 $ 0.376 $ 0.245 $ 0.297 $ 0.193
$ 0.436 $ 0.284 $ 0.390 $ 0.254 $ 0.147 $ 0.094 $ 0.253 $ 0.164

$ - $ - $ - $ -
$ - $ - $ - $ -
$ (77,653,661) $ (77,653,661) $ (77,653,661) $ (77,653,661)
$ (100,157,376) $ (96,179,165) $ (96,851,978) $ (93,461,884)
$ (177,811,037) $ (173,832,826) $ (174,505,638) $ (171,115,545)

$ 51,061,729 $ 49,919,312 $ 50,112,523 $ 49,138,995

$ 126,749,308 $ 123,913,514 $ 124,393,115 $ 121,976,550

$ (178,549,476) $ (178,549,476) $ (178,549,476) $ (178,549,476)

0% -3% -2% -4%

Page 9 of 12
Bill Impacts
PG&E

Customer Average Bill Impact ($/mo)

Income Bracket Bill Discount PG&E P Q R S T V W X Y Z
$0 - $25,000 None 1 $ 3.10 $ (13.70) $ (9.74) $ (12.64) $ (9.29) $ 10.21 $ (1.69) $ (9.94) $ 0.59 $ (1.42) $ 14.04
$25,000 - $50,000 None 2 $ (0.92) $ (13.37) $ (9.71) $ (12.75) $ (9.08) $ 10.29 $ (1.82) $ (10.25) $ 0.58 $ (1.42) $ 14.05
$50,000 - $75,000 None 3 $ (1.33) $ (13.06) $ (9.58) $ (11.74) $ (8.37) $ 10.39 $ (1.81) $ (8.97) $ 0.73 $ (1.40) $ 14.02
$75,000 - $100,000 None 4 $ (0.50) $ (12.51) $ (9.61) $ (10.42) $ (7.33) $ 10.46 $ (1.69) $ (7.14) $ 0.85 $ (1.37) $ 14.03
$100,00 - $150,000 None 5 $ 0.55 $ (11.87) $ (9.26) $ (8.86) $ (6.18) $ 10.54 $ (1.57) $ (4.95) $ 1.06 $ (1.36) $ 14.05
$150,000 - $200,000 None 6 $ 27.02 $ 14.55 $ 16.17 $ 18.05 $ 20.45 $ 35.76 $ 23.76 $ 22.67 $ 26.51 $ 23.86 $ 39.16
$200,000+ None 7 $ 28.83 $ 16.13 $ 17.03 $ 20.74 $ 22.56 $ 35.89 $ 23.79 $ 25.53 $ 27.32 $ 23.96 $ 39.16

$0 - $25,000 CARE 1 $ (14.85) $ (23.70) $ (19.15) $ (19.89) $ (17.91) $ (7.79) $ (11.60) $ (19.17) $ (11.85) $ (20.68) $ (14.19)
$25,000 - $50,000 CARE 2 $ (15.26) $ (23.61) $ (19.14) $ (19.49) $ (17.64) $ (7.74) $ (11.62) $ (18.59) $ (11.76) $ (20.68) $ (14.29)
$50,000 - $75,000 CARE 3 $ (14.65) $ (23.44) $ (18.79) $ (19.08) $ (17.43) $ (7.72) $ (11.50) $ (17.92) $ (11.72) $ (20.66) $ (14.34)
$75,000 - $100,000 CARE 4 $ (14.42) $ (23.41) $ (18.10) $ (18.93) $ (17.14) $ (7.68) $ (11.39) $ (17.30) $ (11.72) $ (20.66) $ (14.36)
$100,00 - $150,000 CARE 5 $ (14.07) $ (23.30) $ (19.02) $ (18.43) $ (16.87) $ (7.66) $ (11.57) $ (16.93) $ (11.61) $ (20.64) $ (14.41)
$150,000 - $200,000 CARE 6 $ (13.46) $ (23.10) $ (19.31) $ (18.13) $ (16.62) $ (7.67) $ (11.59) $ (16.03) $ (11.58) $ (20.64) $ (14.24)
$200,000+ CARE 7 $ (12.54) $ (22.47) $ (19.31) $ (17.54) $ (16.20) $ (7.66) $ (11.38) $ (15.65) $ (11.48) $ (20.63) $ (16.95)

$0 - $25,000 FERA 1 $ (3.48) $ (19.03) $ (11.26) $ (12.11) $ (9.09) $ 7.31 $ 0.95 $ (10.88) $ 0.67 $ (14.16) $ (4.16)
$25,000 - $50,000 FERA 2 $ (3.87) $ (18.88) $ (11.23) $ (11.00) $ (8.45) $ 7.40 $ 0.93 $ (9.37) $ 0.86 $ (14.15) $ (4.95)
$50,000 - $75,000 FERA 3 $ (2.94) $ (18.61) $ (10.48) $ (9.95) $ (7.97) $ 7.45 $ 1.13 $ (7.80) $ 0.94 $ (14.10) $ (5.26)
$75,000 - $100,000 FERA 4 $ (2.61) $ (18.57) $ (9.08) $ (9.56) $ (7.33) $ 7.52 $ 1.33 $ (6.48) $ 0.93 $ (14.11) $ (5.42)
$100,00 - $150,000 FERA 5 $ (2.14) $ (18.39) $ (10.97) $ (8.45) $ (6.74) $ 7.56 $ 1.01 $ (5.75) $ 1.15 $ (14.08) $ (5.64)
$150,000 - $200,000 FERA 6 $ 19.34 $ 2.55 $ 9.03 $ 12.82 $ 14.38 $ 28.17 $ 21.61 $ 16.53 $ 21.84 $ 6.56 $ 16.06
$200,000+ FERA 7 $ 20.56 $ 3.54 $ 9.03 $ 13.95 $ 15.21 $ 28.19 $ 21.98 $ 17.15 $ 22.04 $ 6.58 $ 11.73

New rate option User-selected rate across all subclasses

Counterfactual rate option User-selected rate across all subclasses
Use model-calculated counterfactual rates TRUE

Select single new rate (if applicable) E-ELEC

Select single counterfactual rate (if applicable) E-ELEC

Page 10 of 12
SDG&E

Customer Average Bill Impact ($/mo)

Income Bracket Bill Discount SDG&E Inland Coastal Desert Mountain
$0 - $25,000 None 1 $ (0.64) $ (2.31) $ 0.38 $ (3.73) $ (18.71)
$25,000 - $50,000 None 2 $ (0.80) $ (2.96) $ 0.38 $ (4.28) $ (16.79)
$50,000 - $75,000 None 3 $ (1.16) $ (3.02) $ 0.44 $ (2.68) $ (16.21)
$75,000 - $100,000 None 4 $ (1.05) $ (2.71) $ 0.56 $ (0.55) $ (15.36)
$100,00 - $150,000 None 5 $ (0.40) $ (1.66) $ 0.92 $ (1.92) $ (13.19)
$150,000 - $200,000 None 6 $ 25.90 $ 25.15 $ 26.65 $ 34.39 $ 15.09
$200,000+ None 7 $ 27.61 $ 27.30 $ 27.86 $ 22.81 $ 18.86

$0 - $25,000 CARE 1 $ (14.96) $ (17.14) $ (12.47) $ (34.25) $ (37.66)

$25,000 - $50,000 CARE 2 $ (15.05) $ (17.09) $ (12.46) $ (35.42) $ (37.49)
$50,000 - $75,000 CARE 3 $ (14.92) $ (17.01) $ (12.43) N/A $ (37.52)
$75,000 - $100,000 CARE 4 $ (14.48) $ (16.96) $ (12.32) N/A $ (37.73)
$100,00 - $150,000 CARE 5 $ (14.20) $ (17.04) $ (12.37) N/A N/A
$150,000 - $200,000 CARE 6 $ (11.84) N/A $ (11.84) N/A N/A
$200,000+ CARE 7 N/A N/A N/A N/A N/A

$0 - $25,000 FERA 1 $ 0.01 $ (2.81) $ 3.76 $ (25.98) $ (32.57)

$25,000 - $50,000 FERA 2 $ (0.10) $ (2.70) $ 3.76 $ (28.61) $ (32.18)
$50,000 - $75,000 FERA 3 $ 0.12 $ (2.54) $ 3.82 N/A $ (32.24)
$75,000 - $100,000 FERA 4 $ 0.77 $ (2.44) $ 4.03 N/A $ (32.70)
$100,00 - $150,000 FERA 5 $ 1.16 $ (2.60) $ 3.94 N/A N/A
$150,000 - $200,000 FERA 6 $ 25.56 N/A $ 25.56 N/A N/A
$200,000+ FERA 7 N/A N/A N/A N/A N/A

New rate option User-selected rate across all subclasses

Counterfactual rate option User-selected rate across all subclasses
Use model-calculated counterfactual rates TRUE

Select single new rate (if applicable) TOU-ELEC

Select single counterfactual rate (if applicable) TOU-ELEC

Page 11 of 12
SCE

Customer Average Bill Impact ($/mo)

Income Bracket Bill Discount SCE 5 6 8 9 10 13 14 15 16
$0 - $25,000 None 1 $ (1.27) $ (5.43) $ 5.49 $ 3.54 $ (4.46) $ (5.64) $ (13.54) $ (10.38) $ (18.18) $ 0.79
$25,000 - $50,000 None 2 $ (2.58) $ (5.43) $ 5.53 $ 3.41 $ (4.96) $ (6.96) $ (12.85) $ (9.92) $ (19.43) $ 0.90
$50,000 - $75,000 None 3 $ (2.29) $ (5.43) $ 5.59 $ 3.40 $ (5.01) $ (6.79) $ (11.60) $ (9.37) $ (18.58) $ 1.01
$75,000 - $100,000 None 4 $ (1.85) $ (5.43) $ 5.63 $ 3.51 $ (4.82) $ (6.23) $ (10.64) $ (8.51) $ (17.82) $ 1.35
$100,00 - $150,000 None 5 $ (1.16) $ (5.43) $ 5.74 $ 3.67 $ (4.56) $ (5.23) $ (9.44) $ (7.64) $ (17.11) $ 1.70
$150,000 - $200,000 None 6 $ 24.94 $ 19.85 $ 31.15 $ 29.21 $ 21.18 $ 21.01 $ 16.71 $ 18.62 $ 8.99 $ 27.37
$200,000+ None 7 $ 26.31 $ 19.85 $ 31.41 $ 29.77 $ 21.88 $ 22.19 $ 18.52 $ 19.85 $ 10.41 $ 27.64

$0 - $25,000 CARE 1 $ (15.94) N/A $ (9.28) $ (11.12) $ (14.54) $ (19.53) $ (21.71) $ (21.71) $ (25.41) $ (17.29)
$25,000 - $50,000 CARE 2 $ (15.65) N/A $ (9.26) $ (11.10) $ (14.52) $ (19.39) $ (21.38) $ (21.37) $ (24.92) $ (17.16)
$50,000 - $75,000 CARE 3 $ (15.50) N/A $ (9.25) $ (11.08) $ (14.49) $ (19.18) $ (21.15) $ (21.18) $ (24.67) $ (17.18)
$75,000 - $100,000 CARE 4 $ (15.47) N/A $ (9.23) $ (11.07) $ (14.47) $ (19.06) $ (20.89) $ (21.14) $ (24.43) $ (17.18)
$100,00 - $150,000 CARE 5 $ (15.24) N/A $ (9.20) $ (11.05) $ (14.46) $ (18.83) $ (20.86) $ (20.77) $ (24.27) $ (16.97)
$150,000 - $200,000 CARE 6 $ (14.83) N/A $ (9.18) $ (11.00) $ (14.39) $ (18.44) $ (20.57) $ (20.38) $ (23.87) $ (16.72)
$200,000+ CARE 7 $ (14.27) N/A $ (9.17) $ (10.94) $ (14.31) $ (18.14) $ (20.13) $ (20.10) $ (23.14) $ (16.43)

$0 - $25,000 FERA 1 $ (0.92) N/A $ 8.26 $ 5.62 $ 0.63 $ (6.18) $ (8.90) $ (9.26) $ (14.34) $ (3.36)
$25,000 - $50,000 FERA 2 $ (0.65) N/A $ 8.31 $ 5.66 $ 0.67 $ (5.89) $ (8.14) $ (8.58) $ (13.31) $ (3.12)
$50,000 - $75,000 FERA 3 $ (0.48) N/A $ 8.32 $ 5.70 $ 0.74 $ (5.49) $ (7.64) $ (8.21) $ (12.80) $ (3.15)
$75,000 - $100,000 FERA 4 $ (0.43) N/A $ 8.35 $ 5.73 $ 0.76 $ (5.25) $ (7.09) $ (8.13) $ (12.32) $ (3.16)
$100,00 - $150,000 FERA 5 $ (0.13) N/A $ 8.39 $ 5.78 $ 0.79 $ (4.83) $ (7.03) $ (7.44) $ (12.02) $ (2.80)
$150,000 - $200,000 FERA 6 $ 21.18 N/A $ 29.17 $ 26.60 $ 21.65 $ 16.60 $ 14.26 $ 13.97 $ 9.44 $ 18.36
$200,000+ FERA 7 $ 21.97 N/A $ 29.18 $ 26.71 $ 21.79 $ 17.11 $ 15.07 $ 14.45 $ 10.72 $ 18.82

New rate option User-selected rate across all subclasses

Counterfactual rate option User-selected rate across all subclasses
Use model-calculated counterfactual rates TRUE

Select single new rate (if applicable) TOU-D-PRIME

Select single counterfactual rate (if applicable) TOU-D-PRIME

Page 12 of 12