Hundreds of thousands of Southern California Edison’s business customers will see their bills change in coming weeks and months, thanks to two major rate alteration programs.
The utility on March 1 shifted the hours of peak energy rates to later in the day for nearly 300,000 businesses in Los Angeles County. The shift comes as Southern California Edison is producing more solar energy, which is abundant during the middle of the day but tapers off as the sun goes down.
“The idea is to make our business customers more responsive to fluctuations in cost to procure energy throughout the day,” said Russ Garwacki, director of pricing design and research at Southern California Edison, a subsidiary of Rosemead-based Edison International.
The second major change starts June 1 and will impact roughly 120,000 L.A. County business customers who will be automatically enrolled in a summer surcharge program. The program could see power bills double on 12 “heat-wave days” during the summer months, offset by slight discounts off the peak rate on other summer days. Businesses in Edison’s service areas can opt out.
Shifting peak periods
Garwacki said solar power production is now highest during midmorning and in the early afternoon on most days, with so much solar power coming online on some days that it has to be exported out of state because there’s a limited capacity to store it for later use.
On hot summer days, residents come home and crank up their air conditioners, causing demand to spike until about 9 p.m.
As a result, Edison moved the peak rate period to between 4 p.m. and 9 p.m. from between noon and 6 p.m.
The morning and early afternoon period of 8 a.m. to 4 p.m. is now the cheapest rate tier.
Garwacki said businesses that tend to keep banker’s hours of 9 a.m. to 5 p.m. will see their power bills go down, as will K-12 schools. But businesses that operate chiefly in the early evenings — such as dinner-only restaurants, or sports and concert venues — could see their power bills spike sharply unless they take steps to shift their power use or reduce overall energy consumption.
The changes don’t impact businesses served by municipal power utilities, such the Los Angeles Department of Water and Power.
Mixed impact
Mike Yager, development manager for Pasadena-based Lawry’s Restaurants Inc., said he has a lot of questions for Edison about the changes.
“This is the first I’m hearing about this peak rate shift,” Yager said. “I am obviously concerned about what this would do to our bill. … I’m just not sure how this will play out,” he said.
Among the five restaurants the Lawry’s chain operates in Southern California is the famed Lawry’s Prime Rib in Beverly Hills, which is a dinner-only establishment in Edison territory. The company also owns the dinner-only Five Crowns steakhouse in the Corona del Mar neighborhood of Newport Beach, which is also in Edison territory.
For some businesses, the shift could cut their power bills.
Among the potential winners with Edison’s peak rate shift is Aquarium of the Pacific in Long Beach.
“Our peak power usage is generally between 1 p.m. and 4 p.m., when we have the most visitors,” John Rouse, the aquarium’s vice president of operations, said in an email response. Under the rate shift, power charges for that time frame have dropped.
Rouse said that besides using power to maintain the marine tanks, dining establishments within the aquarium park as well as the animal exhibits also have their maximum power draw in the early afternoon.
The bill savings won’t be as much as it might have been had the shift occurred two or three years ago. That’s because last month, the aquarium finished installing three large natural gas-powered fuel cells that have reduced its external power usage by almost 80 percent, Rouse said. With the aquarium’s overall Edison bill now much lower, the savings from the peak rate shift make less of an impact.
One Edison small-business customer who expects to reap some bill savings from the peak period rate shift is Mike Fuerte, owner of Montebello Speaker Repair Center Inc.
Fuerte said that upon receiving notice of the rate shift, he contacted Edison, and a representative came out to his Montebello shop to explain the program in more detail.
“I generally keep 9 a.m. to 5 p.m. business hours though sometimes I stay a couple hours late to finish a job,” Fuerte said. “This program will now provide extra motivation for me to close up and go home as close to 5 p.m. as possible.”
Fuerte said his electric bill ranges between $75 and $130 per month for his 1,700-square-foot shop, depending on the season and the hours he works. He estimated the rate shift will save him between $20 and $30 per month.
Surcharge program
Businesses like Fuerte’s have the option to opt out of the summertime surcharge program, which goes into effect June 1.
For that program, Edison will assess on a daily basis the energy-demand forecast for the coming 24 hours and determine whether to impose a surcharge on commercial customers, effectively doubling their rates during the peak 4 p.m. to 9 p.m. period.
Businesses can sign up to receive notice 24 hours in advance of the surcharges, giving them time to figure out how to reduce electricity use. In exchange, the participating businesses will get discounts on their bill for electricity used at other times during the summer.
Fuerte said he plans to participate in the surcharge program when it kicks in. “The discounts would help me, and it would provide me with further motivation to close up by 5 p.m.,” he said
The surcharge program has been around since 2008, starting with the largest industrial power users. Now, Garwacki said, it is being applied to small-business customers that use less than 200 kilowatts of electricity at peak demand.
