PG&E Electric Rates
We have a virtual monopoly when it comes to electricity here in California. For most of central and northern California, we get our electricity from Pacific Gas & Electric, or PG&E.
Our rates are an example of “tiered rates” or “inclining block rates”. You get a certain amount at a low price, and you pay more for additional consumption. The theory is that it offers an incentive to conserve. PG&E has a 5-tier system. I wondered what our rates looked like, so made a chart:
A couple of things confused me. Why is the second tier so small, and why is the step up so minor? Why do all the prices have five decimal points? Still, I wonder why they don’t include a chart like this with the bill, or on their website. I think it is powerful to visualize how much more you’ll be paying if you go over a certain threshold.
Here’s how I made the chart. I got the costs from this document: Electric Schedule E-1: Residential Services.
You need to know what your “baseline allocation” is. It turns out this is based on where you live. I have either the good luck (or bad luck, depending on how you look at it, to live in Zone T, which the electric company says has the lowest energy needs, presumably due to our mild Mediterranean climate. There’s a map of the territories here.
As a final note, the American Water Works Association, in a Discussion of Tiered Rates,) notes that inclining tiers can send a strong conservation message (from the water world, but the same principles apply).
However, it should be noted that this type of rate structure itself, without a significant accompanying customer information program, will generally not produce the desired conservation, simply because the vast majority of customers do not understand rates and do not have any idea that the more they use, the higher the unit price becomes.