Energy Costs to Rise

Southern California Edison
was recently given the green light by the California Public Utilities Commission
to raise monthly rates. And on April 4, electricity bill rates may change
noticeably for nearly five million Californians.

According to the AP, the approved
rate hike will mostly add an additional $2-$4 on to the average consumer’s
monthly utility bill. The rate increase was cited as necessary to help
update SCE utilities.

The California Public Utilities
Commission was the body that green-lighted the increased rates, on March
13. The commission also authorized future increases of approximately
1 percent between 2010 and 2011, not related to the 2009 rate increases (which
are expected to be closer to 2 percent).

Interestingly, the commission
was not unanimous in its decision, which ended up 4-1 in favor of the
price bump.

According to various estimates, the rate hikes are expected
to raise somewhere between $300 million and $500 million in 2009 for
Southern California Edison.

What does this really mean? If the average
electricity bill is really around $80 per month, and 2 percent of $80 is $1.60,
then the average consumer may only be paying slightly more than one
and a half additional dollars for electricity per month, or an additional
$19.20 per year. Now, the 2 percent increase may be a conservative estimate;
say there will be a 4 percent increase: that translates to $3.20 more per month,
and an additional $38.40 per year.

For a small family, that could buy
a moderate dinner out, or a number of fast-food meals. Now say that
a household is larger and uses much more energy, say to the tune of
$100 per month. With a 2-4 percent rate increase, that translates to an additional
$2-$4 per month, and $24-$48 per month.

In the grand scheme of things,
is this a huge deal? In the long-term, no, but in an economic crunch,
raising the rates on basic goods and services is never an idea accepted
with too much merriment.

SCE has laid out plans to retrieve energy from
renewable sources, including solar power (comprising 6 percent of the the SCE
“Renewable Portfolio”), geothermal (comprising 62 percent of the the SCE
“Renewable Portfolio”), and wind power (comprising 21 percent of the the
SCE “Renewable Portfolio”), with the hopes of one day providing
even cheaper energy alternatives. SCE already calls itself “the nation’s
leading purchaser of renewable energy,” having bought upwards of “80
percent of the solar energy produced in the United States for its customers.”
SCE says it aims to provide “20 percent or more of its customers’
energy needs with renewable energy.”

So think of the additional
(approximately) $19.20-$48 per month as an investment in the future,
of sorts.

For Southern California Edison, the bet needs to pay off to
deflect customer ire.