SMUD isn’t as green as you think

Sacramento wants to become a greener city. Unfortunately, the Sacramento Municipal Utility District has antiquated rates with a high monthly fixed charge that hurts poor people and that discourages energy conservation and rooftop solar.

We all agree that SMUD needs to recover fixed costs such as energy transmission and distribution, but how it does so should be fair and create the right incentives.

Residential customers pay SMUD a fixed charge of $20.30 a month for distribution lines, meters, customer service and billing. It’s the same amount for a one-bedroom apartment or for a large home. This results in a high effective rate for people who don’t use a lot of electricity. For example, I paid an effective rate of 30 cents per kilowatt hour in a recent month, but if I used more electricity my effective rate would go down.

This is the opposite of what modern utility policy should be; customers should not pay less the more electricity they use.

SMUD’s rate structure is also different than California’s other big utilities. Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric have no fixed charges, and the California Public Utilities Commission has rejected their requests to add fixed charges.

The CPUC requires these other utilities to spread fixed costs so that bills are proportional to electricity use. For example, a PG&E customer who cuts their energy use by 50 percent saves 50 percent on their bill. But a low-use SMUD customer who reduces their use by 50 percent saves less—in my case, only 16 percent. So why bother to conserve?

SMUD’s rate structure is bad for the environment. Contractors say the fixed charge reduces the cost effectiveness of solar because they can’t reduce the fixed charge.

Getting rid of the fixed charge would reduce energy use and be fairer. And it would cost SMUD zero.

Fixed charges are opposed by the Sierra Club, the Union of Concerned Scientists, the Natural Resources Defense Council and consumer organizations. But SMUD seems disinterested, untouchable and unaccountable.

SMUD is developing new rates this year; Its board met this week to discuss the issue. It should lower or eliminate the fixed charge and try to help Sacramento’s green future. We should not accept a dinosaur utility.