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SDG&E Wins Approval to Eliminate High Usage Charge

Company filed an application in 2018 to ask regulators to get rid of the state-mandated charge to provide bill relief to customers


Last updated 3/8/2021 at 10:33am

San Diego Gas & Electric customers will no longer have to worry about getting hit with the state-mandated High Usage Charge (HUC) – a substantially higher price for electricity that kicks in for customers once their energy usage exceeds a certain threshold.

Today, the California Public Utilities Commission (CPUC) voted to eliminate the HUC –originally established by the state as a way to encourage energy conservation. This decision comes two years after SDG&E filed an application with the CPUC to remove the charge, which caused tens of thousands of customers’ bills to spike during hot summer months when air conditioning is used.

Eliminating the HUC is one of several initiatives that SDG&E has been pursuing to help stabilize bills for customers. Last year, the CPUC approved SDG&E’s request to eliminate seasonal changes in energy pricing for some customers as a way to make bills more predictable year round.

“We heard from our customers loud and clear that they felt strongly the High Usage Charge was punitive and unfair, particularly for those who live in hotter climate zones and by necessity, use more energy for cooling during summer months,” said SDG&E’s Chief Customer Officer Scott Crider. “By eliminating the charge, our customers have one less thing to worry about during these difficult times and can get some relief.”

The HUC is expected to be removed ahead of summer, pending the filing of an advice letter with the CPUC and programming of the billing system. This change applies to about 312,000 customers who are on the traditional tiered pricing plans, which charges customers solely based on the amount of energy they use, not when they use energy. Last year, about 25,000 SDG&E customers were impacted by the HUC. Customers on Time of Use pricing plans (the vast majority of SDG&E customers) are not subject to the HUC, as the TOU pricing structure already has built-in incentives for customers to conserve during peak hours, 4-9 p.m., when the cost of electricity is the highest.

The HUC was incorporated into SDG&E’s billing structure in late 2017 per state requirements to encourage energy conservation. Residential customers incur the charge after using 400% or more of their baseline allowance. In an effort to provide bill relief to customers last year, SDG&E made a second request to eliminate the HUC, which was denied. However, in today’s decision, the CPUC determined that the HUC was failing in its original purpose to signal to HUC customers that they should conserve electricity. Data shared in the HUC regulatory proceeding showed the charge does not have a substantial impact on conservation by individual customers affected by the HUC.

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