California residential utility customers who use the least amount of electricity will have their electric rates raised in order to lower the rates for residential customers who use more power, under an order from the state's Public Utilities Commission (PUC). Unfortunately, although more California businesses will soon have the opportunity to buy power from an energy supplier other than their utility, legislation specifically prohibits the vast majority of residential customers for shopping for a low electric rate. That means customers facing this new rate hike have no choice but to grin and bear it.
The Public Utilities Commission's decision lifts a rate freeze imposed on residential customers in the two lower usage tiers, which was originally imposed during the 2000-01 energy crisis. The PUC did not freeze electricity rates for residential customers in the three higher tiers of usage, and these customers have had to shoulder the share of any required rate increases because of the freeze for small volume customers.
In most states, when a rate freeze comes off, customers are given the option to choose a new energy provider to avoid the increase and save money. For example, at PPL Electric Utilities in Pennsylvania, rate caps are expiring on January 1, 2010, and utility rates will rise about 30%. However, customers are able to shop among more than half a dozen competing energy companies to find a lower energy price, and can save up to 20% on their bills.
California residential customers do not enjoy this right to choose their own energy supplier, so they cannot avoid the utilities' rate increases. Unlike business customers, whom we've noted will soon be able to shop for a low electric rate, residential customers in California are required to remain with the utility. That means they can't vote with their feet when the utility raises rates, especially when the increase can be seen as punishing energy conservation.
As noted by the San Francisco Chronicle, "Critics have complained that the change hurts people who conserve energy while helping those who don't," because it lowers, or subsidizes, prices for large energy users by making those who use less electricity pay more.
When customers can choose their energy provider, such inequities are not possible. If customers feel that their electric company is treating them unfairly or charging a rate that's too high, they can choose another provider and vote with their pocketbook. This is the powerful tool that more California businesses will soon enjoy as the PUC allows more non-residential customers to shop starting in April, and will help businesses trim their energy costs. Unfortunately, California residents still do not enjoy the right to choose their energy provider.