The Fixed Charge Battle Has Just Begun

For many of us, it seemed that the days of dramatic fixed charge increase proposals peaked in 2015, when utilities in two-thirds of the country sought drastic fee hikes. Some wanted to more than double what they were already charging customers. While most of these proposals were significantly scaled back by the regulators in those states (yay!), most utilities did receive some increase. See Consumer’s Union “Caught in a Fix.”[1]

One of the major challenges of increasing monthly fixed costs is their regressive nature. Customers that use the least amount of energy are often lower or fixed income customers and are the least able to afford increased fixed fees. Yet these same customers have some level of control over their energy use, which is diminished by the commensurate decrease in energy rates.  Ironically, customers who consume the most amount of energy are the beneficiaries of these utility proposals.

In 2016 and 2017, the utility strategy appears to have shifted from the big bang to death by a thousand cuts. Rather than seek increases that don’t pass the front page test, more moderate increases were sought with modest but continual results.  Here we summarize the results.

  • Fixed fee hike proposals are not subsiding. There are 43 monthly customer charge hike proposals in the 2017 analysis. In 2016, there were 33.
  • Commissions rarely approve fixed charge increases at the levels utilities propose, but 2017 saw an uptick in cases where some increase was allowed.
    • Commissions fully approved just 12% of the customer charge increases utilities proposed in 2017 (15% in 2016), while three-quarters rejected or scaled back the rest.
    •  However, last year commissions approved some level of increase more than half the time (63% of cases) whereas in 2016 they did so less than half the time (46% of cases).
  • The average approved customer charge crept upward. In 2017, the average residential fixed charge approved by commissions was $11.19 a month, one dollar higher than in 2016. The average fixed charge proposed by utilities in 2017 ($15.30) was over two dollars higher than the year before ($13.10).

These results from 2016 and 2017 can be visualized on the following chart: Fixed Charge chart.png

Clearly, the fixed charge fights are not over. Indeed, these charges continue to grow incrementally but relentlessly, like a cancer that is unlikely to stop any time soon.

We urge regulators to get “back to basics” and return monthly fixed charges to their original construct – to reflect the cost of the customer connecting to the grid, including metering and billing.

Information herein was sourced from Findings of a 2016-2017 analysis of investor-owned utility proposals to increase mandatory fixed fees on residents developed by NRDC, NCLC, and Vote Solar.

[1] Whited, M, Woolf, T, Daniel, J, Caught in a Fix: The Problem with Fixed Charges for Electricity, February, 2016.

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