2019 business rate change proposal

SMUD’s 2019 Chief Executive Officer & General Manager’s Report and Recommendations on Rates and Services proposes changes to SMUD’s rates, including an increase in rates, a restructure of commercial customer rates and other changes.

Residential customer? Learn more about our proposed residential rate changes.

Customer resources

   

Overview

Based on feedback received through public outreach, an updated draft rate resolution includes proposed rate increases of 3.75% on Jan. 1, 2020, 3% on Oct. 1, 2020, 2.5% on Jan. 1, 2021 and 2% on Oct. 1, 2021. The proposed increases apply to energy charges, the System Infrastructure Fixed Charge, Site Infrastructure Charge, Summer Peak Demand Charge and other rate charges.

Why is it needed?

SMUD works hard to control costs and operate as efficiently as possible. The proposed increase in rates is mostly driven by external factors, including:

  • Wildfire mitigation, including the increased cost of wildfire insurance and additional vegetation management.
  • Additional capacity to provide electricity to ensure we can reliably serve customers’ energy needs during times of peak demand.
  • New and enhanced technology solutions to support cyber security, customer experience, improved reliability and distributed energy resources.
  • Investments to meet carbon reduction goals through transportation and building electrification, investment in renewable energy and increased energy efficiency.

How will this impact my bill?

Bill impacts will depend on how much electricity customers use each month. Below are sample 2020 bill increases. 

Small (20 -299 kW)  $117 on an average monthly bill of $2,598 
Medium (500 – 999 kW)  $1,019 on an average monthly bill of $22,675
Large ( >1,000 kW)
 $3,881 on an average monthly bill of $85,937
Agriculture (Ag & Pumping)
 $15 on an average monthly bill of $329

How do SMUD's rates compare?

As a community-owned, not-for-profit electric utility, SMUD’s rates are among the lowest in California and are on average about 33% lower than those of neighboring PG&E. See how they compare to other utilities.

Additional proposed changes

  • Similar to business customers, the proposal includes the same rate increase for residential customers and a new charge for customers who generate their own power, such as customers with rooftop solar, and provide it back to the grid.
  • Updates to language in the green energy rates to allow them to be updated more frequently as legislation changes.
  • Updates to language related to the Time-of-Day Rate (TOD) to reflect the completed transition to TOD as the standard rate for residential customers.
  • Clarifying language regarding the Power Factor Waiver.
  • Miscellaneous language updates to certain Rules and Regulations.

Public workshops and hearings

Members of the public can ask questions and provide feedback about the Rate Proposal at the following meetings to be held at the SMUD Customer Service Center, Rubicon Room, 6301 S Street, Sacramento. To participate in the process please find more details in our rate ordinance 15-1

Public workshops
Tuesday, April 23 | 10 a.m.
Download the transcript

Thursday, May 9 | 6 p.m.
Download the transcript

Public hearing
Tuesday, June 4 | 6 p.m.
Download the transcript

Accommodations are available for the disabled public.  If you need a hearing assistance device or other aid, please call 1-916-732-7143 in advance of the public workshop or hearing.

To find out when rate proposal items are being discussed at an upcoming Board meeting, sign up for Board notifications.

How to submit your comments

Comments may be submitted by emailing contactus@smud.org or by mailing written comments to:
SMUD
P.O. Box 15830, MS A451
Sacramento, CA 95852-0830

View comments

If you have questions about the public input process, please read our FAQs.

Rate restructuring

The proposal includes a recommendation to restructure the rates for commercial customers to better align with the cost of providing electricity when it is used and the fixed costs of maintaining the infrastructure and service that supports a reliable grid. The proposed rate restructure includes:

  • Changes to the Time-of-Day time periods to better reflect the cost of providing service, which fluctuates based on the time of day.
  • Adjustments to the fixed charges to ensure enough collection of the fixed costs for providing service to all customers.
  • Consistency of bill components across all commercial rate classes.
If approved, the restructure will start in 2021 with a up to 8 year transition plan, depending on customer rate class, to minimize bill impacts.

Time periods

While SMUD commercial customers have had time-based pricing for many years, the existing time periods no longer align with SMUD’s costs to serve electricity. An accurate time-based rate structure has a higher price per kWh when electricity is most expensive to provide and a lower price when it costs less to provide.

Aligning rates to costs gives customers the opportunity to manage their usage and bills, while helping reduce peak energy use and the need to buy power from less environmentally sustainable and more expensive sources.

Proposed Time-of-Day time periods

Chart showing commercial rate time periods for summer and non-summer seasons

Consistency across rate classes

To improve consistency of bill components for commercial rate classes, the proposal includes increasing the System Infrastructure Fixed Charge, the Site Infrastructure Charge and the Summer Peak Demand Charge, which will be offset by a decrease in the energy charges per kWh.

The proposal also recommends adding the Summer Peak Demand Charge to several rate categories, as well as gradually introducing a monthly demand charge to customers who use less than 20 kW per month, such as small offices and strip mall stores (GSN_T rate class).

Time-of-Day

While SMUD commercial customers have had time-based pricing for many years, the existing time periods no longer align with SMUD’s costs to serve electricity. An accurate time-based rate structure has a higher price per kWh when electricity is most expensive to provide and a lower price when it costs less to provide.

We’re adjusting the time periods to better align with the cost of providing electricity as shown by the image to the right.

Aligning rates to costs gives customers the opportunity to manage their usage and bills, while helping reduce peak energy use and the need to buy power from less environmentally sustainable and more expensive sources.
 

Chart of proposed fixed charges

Fixed charges

The proposal includes an increase in fixed charges, including the System Infrastructure Fixed Charge, Site Infrastructure Charge and the Summer Peak Demand Charge. These increases are offset by a decrease in energy charges.

 

Grid Access Charge Update

After careful consideration, SMUD has withdrawn the Customer Renewable Self-Generation Grid Access Charge proposal, including the July 1, 2019 grandfathering deadline and the Net Energy Metering (NEM) 2.0 rate schedule from our current rate proposal.

As a community-owned, not-for-profit electric utility, SMUD is committed to making rates and fixed cost recovery fairer and more equitable for all customers as soon as possible. We’ll launch a separate public stakeholder process in 2019 to examine NEM and other customer self-generation, and develop additional analysis addressing the costs, benefits and subsidies related to these systems.

We’ll use feedback from our customers and stakeholders and the additional analysis to further explore a successor NEM rate related to customer self-generation and appropriate assignment of costs and benefits.

The other proposals in the CEO & General Manager’s Report and Recommendations on Rates and Services dated March 21, 2019 are still in effect and the established public workshops and public hearing schedule will continue as planned.

Read the addendum