Edison Plans 8% Hike Due To Polar Vortex

Tensions are rising along with electricity bills, as the price increase in natural gas due to winter's polar vortex catches up with consumers.

Wednesday's Terrence News briefing saw Southern Californian energy company Edison propose an 8% average increase on our monthly bills, as a result of the coldest winter in 32 years. As the consequent boom in heating use saw a huge rise in the price of natural gas from power plants, these companies are increasing rates to make up for the loss. But is it fair for the west to pay for the bitter weather on the other side of the country? Edison suggests there is simply no way around it; as California imports 85% of its natural gas, it inevitably relies on other regions and their conditions.

Edison has encountered a rough ride these last couple of years. With San Onofre Nuclear Generating Station ending their services in 2012 along with many other coal and nuclear-plant shutdowns there is an increasing reliance on natural gas, which now provides for over 50% of American households and 27% of our national power.

Edison is pushing for a new rate structure for summer 2015, whereby the existing 4 tier system, established in the aftermath of the 2001 energy crisis in California and based on energy consumption with a small flat fee of just under $1, will be replaced by a 2 tier system and a graduated increase in flat rates: $5 in 2015, $7.50 in 2016, and finally up to $10 in 2017. In addition, the amount of power in the baseline rate would drop from 53% to 50% of the average residential use.

Edison's director of regulatory operations, Russ Wordon, claims these changes will bring 'no mark-up or profit' for the company, yet its 5 million customers in Southern California alone are still anxious. For some, the price change may only be small, and those using more energy will still be expected to pay more. In addition, those with lower income who are part of the California Alternate Rates for Energy (CARE) program will still see discounted costs.

On the other hand, users of lower amounts of energy will now take a greater share of the burden. Furthermore, though Edison suggests this will be an incentive for consumers to reconsider their high energy consumption, those generating their own electricity, for instance through solar panels, will still succumb to the higher, flat fee.

Though this is the first complete restructuring of the way consumers pay their bill in 13 years, rising prices is not unknown to this area. Only 8 months ago, there was a 4% increase in our bills- could this be the beginning of an exponential rise in electricity prices? This is a main cause for concern, as many companies are getting behind this steady increase, including Pacific Gas and Electric and San Diego Gas and Electric.

According to the state Public Utilities Commission (PUC) president Michael Peevey, these proposals will be deliberated in November and a decision is expected to be made next spring.