Rate change FAQs
The Chief Executive Officer and General Manager’s Report and Recommendation on Rates and Services (Report), dated June 15, 2023, released by SMUD CEO and General Manager Paul Lau, outlines the following:
- Rate increases for all customers in 2024 and 2025, which are driven largely by cost pressures for infrastructure and reliability improvements to our grid, compliance to meet state requirements, vegetation management, wildfire insurance and outage response for severe weather and inflation and supply chain pressures.
- Using non-retail rate revenue to increase assistance for customers on the Energy Assistance Program Rate (EAPR) who are most in need, specifically those with household income between 0 and 50% of the Federal Poverty Level.
- Updating our rate holidays to align with federal holidays.
- Other minor miscellaneous rate updates.
What is the proposed rate increase?
While we’ve been able to reduce our overall costs through our Operational Excellence program that’s delivered numerous savings, there continue to be new spending requirements that cause SMUD rates to increase. We’re proposing a total of 4 rate increases of 2.75%, one each effective Jan. 1, 2024, May 1, 2024, Jan. 1, 2025 and May 1, 2025, for residential and non-residential customers.
This translates to about a $7.33 increase on an average residential customer’s monthly bill in 2024 and another $7.73 more per month in 2025. It’s a total of about $15 more (per month) over the next 2 years. For a sample small business customer with an average monthly bill of about $3,121, this translates to about a $174 increase per month on their bill in 2024 and another $184 increase per month on their bill in 2025. It’s a total of about $358 more per month over the next 2 years. The proposed increases apply to energy charges, the System Infrastructure Fixed Charge and other charges.
How will the proposed rate increase affect low-income customers on the Energy Assistance Program Rate (EAPR) and customers on the Medical Equipment Discount (MED) Rate?
Customers on SMUD’s Energy Assistance Program Rate (EAPR) and will see slightly lower bill impacts than standard rate customers, depending on their discount qualification and energy usage.
Customers on SMUD’s Medical Equipment Discount Rate (MED Rate) may have slightly higher monthly bill impacts due to potentially having higher average electricity usage due to the equipment in their home.
We offer programs and services that can help our EAPR and MED Rate customers manage their electric bills and stay comfortable in their homes. And, we’ll continue to provide information on energy saving tips and ways to reduce electricity use.
Households are eligible for EAPR if their household income doesn’t exceed 200% of the federal poverty level. Visit smud.org/FinancialAssistance for more information about EAPR and MED Rate.
What is the purpose of the proposed rate increases?
Rate increases are necessary to balance keeping rates affordable while making sure we maintain financial viability, meet our Board’s Strategic Directions, achieve state reliability targets and continue to provide safe, reliable and affordable power.
These rate increases support our commitment to continue to keep rate increases within the rate of inflation. This rate increase does that while paying for key infrastructure to support reliability and new renewables and battery storage to meet state mandates and support our zero carbon goals.
Why does SMUD need to raise rates?
SMUD works hard to control costs and operate as efficiently as possible. The proposed increase in rates is mostly driven by increased costs and compliance for renewable mandates, including:
- Reliability: Maintaining our world-class reliability is critical to our success. Therefore, we continue to invest to ensure our grid stays reliable. We’re facing cost increases in:
- Grid investments
- Wildfire and vegetation management and
- Reliability for our hydro facilities and thermal generation
- Customer programs: It’s important to provide programs and services that help our customers reduce their own carbon footprint. Costs are increasing to support programs including load flexibility and load management, transportation electrification, distributed energy resources and low-income electrification.
- Inflation: Due to inflationary pressures, we’re continuing to see higher costs for many materials, services and labor that we use every day, and the impact it’s had on global supply chains.
How would the rate increase impact customer bills?
Bill impacts will depend on how much electricity customers use each month. The average residential customer will see an increase of about $7.33 per month in 2024 and an additional $7.73 per month in 2025. It’s a total of about $15 more (per month) over the next 2 years.
For an average small business customer with an average monthly bill of about $3,121, this is about a $174 increase per month on their bill in 2024 and another $184 increase per month on their bill in 2025. It’s a total of about $358 more per month over the next 2 years.
Customers on our low-income Energy Assistance Program Rate (EAPR) and the Medical Equipment Discount Rate (MED Rate) will see slightly different bill impacts than standard rate customers, depending on their discount qualification and energy usage.
What is SMUD doing to keep the proposed rate increase as low as possible?
To keep these proposed rate increases as low as possible, we focus on incorporating operational and efficiency savings into all that we do. SMUD is creating permanent cost reductions and operational efficiencies.
In 2022, we saved about $60 million from a combination of one-time and ongoing Operational Excellence efforts.
- Ongoing interest savings from refunding our bonds with lower interest rates,
- Recovering costs from the Department of Energy for our Rancho Seco Fuel Storage and
- Selling our loan portfolio to a local bank and reducing SMUD labor costs with no impact to loan customers and securing Federal grant funding for neighborhood electrification.
We’ve also developed an integrated Grant Strategy Framework, which will best position us to secure sources of funding to deliver on our 2030 Zero Carbon Plan.
SMUD is focusing on 8 primary areas when pursuing grants:
- Clean fuels
- Carbon capture
- Long-duration energy storage
- Building electrification
- Transportation electrification
- Load flexibility
- Under-resourced communities
- Climate emergency prevention
Since February 2022, we’ve pursued 23 state and federal grants, with 12 grants currently being delivered, enabling over $42 million in projects.
What is SMUD proposing in this rate process to help customers most in need?
SMUD’s Energy Assistance Program Rate (EAPR) helps keep electric service affordable for low-income customers by providing discounts on monthly electricity bills. Multiple economic variables, such as inflation and rate increases, have had disproportionately negative impacts on EAPR customers, particularly those with household incomes between 0 to 50% of the Federal Poverty Level (FPL).
To further help those most in need, we’re proposing to establish and maintain a Rate Stabilization Fund (ESF) to provide an additional discount to the electricity usage charge of customer households in the 0 to 50% FPL. This fund could create an extra benefit of up to $35 per month and has a total financial impact to SMUD at about $2 million.
Funding for the ESF will come from non-rate revenue, for example, late fees paid by non-EAPR customers.
All other EAPR customers will continue to receive a discount, helping keep electric service affordable for low-income customers.
Will the additional funding for low-income customers make the rate increase higher?
No. The funding for the additional assistance comes from non-rates revenue, such as late fees, which isn’t planned for in the budget.
Is SMUD doing anything to help customers minimize the impact of the proposed rate increase?
Yes. We offer appliance rebates, free shade trees, energy-efficiency loans, free home electrification and weatherization for low-income customers and other programs and services designed to help you manage your energy use and reduce your electric bill. We have energy-efficiency programs for both residential and business customers.
We also offer My Energy Tools online to help you see how you’re using energy and what it’s costing you. Then you can use the customized tips to help you save. Plus, you can set bill alerts to help keep you on track with your energy use and budget.
How do SMUD’s rates compare to those of other California electric utilities?
As a community-owned, not-for-profit electric utility, our rates are among the lowest in the state and will remain so even with the proposed increase. On average, our electric rates are more than 47% lower than those of neighboring PG&E.
And even after the proposed rate increases in 2024 and 2025, and assuming PG&E’s rates do not increase in the same years, SMUD rates would remain over 40% below PG&E’s rates.
Other public-owned utilities that have higher rates than SMUD include utilities in Lodi, Palo Alto, Redding, Anaheim, Riverside and the Los Angeles Department of Water & Power.
Investor-owned utilities, such as Southern California Edison, PG&E and San Diego Gas & Electric, have rates significantly higher than SMUD.
Are there other proposed changes?
There are a few additional rate changes in this year’s proposal, including:
- Aligning SMUD rate holidays to federal holidays.
- This includes removing Lincoln’s Birthday, adding Juneteenth and updating the rate holiday language to include Indigenous Peoples’ Day to the same day that Columbus Day is observed.
- These changes mean customers will pay a low off-peak price, just like weekends on the SMUD rate holidays.
- Clarifying language for facilities that only use SMUD for back up service (e.g. microgrids).
- This change will not impact customers that qualify for NEM1 or SSR because they are exempt from the charge.
- Adjusting our hydro generation stabilization fund and measuring station.
- This includes adding the Western Area Power Administration (WAPA) hydro generation to SMUD’s Hydro Generation Adjustment (HGA) tariff.
- Making other rate language clean-ups.
Where can customers get more information or comment on the rate proposal?
We’ll work closely with customers and other stakeholders — including community groups, service organizations, business groups, elected officials and more — to discuss these changes. Customers can:
- Read the Chief Executive Officer and General Manager’s Report on smud.org/RateInfo.
- Email questions or comments to ContactUs@smud.org or call 1-855-736-7655.
- For commercial customer service, call 1-877-622-7683.
- For residential customer service, call 1- 888-742-7683.
The Board will decide on the proposed Rate Action at the Sept. 21 SMUD Board meeting.
Customers can learn more about the process and comment on the proposed changes at the following meetings. All meetings will be held at the SMUD Headquarters Auditorium, 6201 S Street, Sacramento and virtually via ZoomGov/Granicus.
- Thursday, July 13 at 10 AM
- Thursday, Aug. 3 at 5:30 PM
- Wednesday, Aug. 30 at 6 PM
What happens at the public workshops?
We’ll hold workshops to obtain feedback from the public about the 2023 Rate Report. Although members of the Board may attend these public workshops to observe, they are not scheduled Board meetings and the Board members will not participate in the discussion. The 2 public workshops will focus on the same topics and are scheduled as follows:
- Thursday, July 13 – 10 a.m.
- Thursday, Aug. 3 – 5:30 p.m.
What if I have questions about the rate proposal?
Members of the public may ask questions at any of the public workshops. Questions may also be submitted in writing to ContactUs@smud.org. SMUD staff will typically respond to such written questions within 5 business days (questions received after 5:00 p.m. will be considered received on the next business day). However, SMUD staff will notify the customer if complex questions require additional time.
Because we engage in a significant amount of public outreach, it is not feasible to post every question received throughout this rate process. However, we’ll compile a list of frequently asked questions and post them on smud.org/RateInfo.
Is there a deadline for submitting questions?
Questions may be submitted in writing up until 5 business days before the Public Hearing scheduled for Aug. 30.
How can I provide written comments on the rate proposal?
Written documents, including alternative rate proposals, on the rate proposal in the 2023 Rate Report may be submitted to ContactUs@smud.org at any time until Sept. 21, 2023 (the Board is scheduled to make its final decision at the Board Meeting on this date). On Aug. 30, we expect the Board to issue a draft resolution containing its proposed rate resolution and the basis for that decision. The release of the draft resolution will open a formal comment period. Unless otherwise instructed by the commenter, we’ll post any written documents received that are directly relevant to the rate proposal on smud.org/RateInfo.
What happens on Aug. 30, 2023
On Aug. 30, beginning at 6 p.m., the Board will conduct a Public Hearing on the rate proposal. The Board will also consider any written alternatives to the rate changes proposed that are submitted by any member of the public. After the Public Hearing, the Board will vote on whether to issue a draft resolution containing its proposed rate decision and the basis for that decision. If the Board issues a draft resolution, the resolution will be made available for public review and comment for at least 10 calendar days.
How can I participate at the Aug. 30 hearing?
Any member of the public may speak on the draft proposal for up to 3 minutes, unless the Board President in his or her discretion extends the speaking time. You may present non-duplicative comments, recommendations and alternatives for the Board’s consideration.
Those with presentations on alternatives to the rate changes proposed that need longer than 3-minutes must notify SMUD in writing at least 10 calendar days prior to the Aug. 30 hearing if they require additional time and indicate the amount of time requested.
To ensure adequate time for all interested persons to provide public comment, the Board President may, in his or her discretion, grant additional time up to 20 minutes. Written materials must be submitted five days prior to the hearing.
What happens at the Sept. 21 meeting?
The Board is scheduled to vote on the proposed rate resolution on Sept. 21 at its regularly scheduled meeting which begins at 6 p.m. If the Board approves the rate resolution, the rate process is concluded. The rate changes will become effective for the period beginning January 2024.
What if the Board proposes material modifications (i.e., modifications which would change customer rates or billings) to the proposed resolution?
If the Board proposes material modifications to the proposed rate resolution, the revised resolution will be made available for public review and comment for at least an additional 10 calendar days. The public will have an opportunity to provide public testimony on the modified resolution prior to any Board action.