Category Archives: Prices

SDG&E Seeking 7% Rate Increase

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By ERIC WOLFF – ewolff@nctimes.com


San Diego Gas & Electric Co. has asked regulators for its largest increase in revenue in at least 30 years as part of an initial filing to raise rates for electric and gas. In a draft application submitted Friday, the utility said it needs $310 million additional dollars, a 7 percent increase from 2010 revenue, to cover the cost of insurance premiums and anticipated growth in the number of customers. The application includes a formula based on inflation and productivity for how rates would continue to rise in 2013, 2014 and 2015. Ratepayer advocacy groups said the requested increases were too high, particularly given the poor state of the economy. If the amount is approved by the California Public Utilities Commission, the electricity bill of the average residential customer would rise $3.34 a month, and a gas customer using 33 therms a month would pay an additional $3.21, the application said.



The filing, called a “notice of intent,” is the opening stage in an 18-month regulatory process in which the PUC will gather input from ratepayer advocates and the public to determine how much electricity and natural gas rates will change for the four-year period starting in 2012. Southern California Gas Co., a utility owned by SDG&E parent company Sempra Energy, also filed a notice of intent on Friday with a request for a $310 million increase in revenue, a 7.3 percent increase from 2010. On July 19, Southern California Edison asked for $903 million in additional revenue in 2012, a 7.9 percent increase compared with 2010 income, the company said. Lee Schavrien, the Sempra executive responsible for both the SDG&E and SoCal Gas filings, said the San Diego utility needs the additional money for operations and to cover insurance costs. “The fact that we’ve had substantial increases in liability and medical insurance premiums are reflected in this case,” Schavrien said. Of the requested increase, $62 million is allocated to liability insurance for wildfires. SEC filings by Sempra Energy have said costs from lawsuits related to the 2003 and 2007 wildfires may exceed the utility’s insurance coverage, and thus the company needed to purchase more coverage. Schavrien also said $16 million was needed for increased medical insurance premiums for employees and $21 million because of inflation.



Those reasons didn’t persuade members of consumer advocacy groups, who were briefed on the applications but have not completed their analyses of the official filings. The Utility Reform Network, an advocacy group in San Francisco, said the utilities could save money by reducing the pay and perks of top executives. “They should be looking for ways to lower rates, not to raise them,” said Mindy Spatt, a TURN spokeswoman. Michael Shames, executive director of the San Diego-based Utility Consumers’ Action Network, said his analysts will pore over the application to figure out why the utility hasn’t been able to lower expenses the way so many other businesses have. “I figured there would be greater sensitivity,” Shames said. “In the midst of the Great Recession, this is not the time to be asking for more Christmas gifts from Santa Claus.” Shames, Spatt and members of the public will have plenty of time to offer input. The notice of intent starts an 18-month process in which the utilities, advocacy groups and the PUC’s Division of Ratepayer Advocates will negotiate and litigate revenue and how that revenue is collected. There will also be meetings for public input in the utilities’ service areas.



November’s gubernatorial election also could complicate the decision. The governor appoints the five members of the commission, subject to confirmation by the state Senate. The terms of two commission members will expire in early 2011, and the temporary appointment of Commissioner Nancy Ryan could expire before the Senate confirms her. “The commission that’s going to be judging this next rate case decision may be entirely new,” Shames said. “The governor will have a rather strong impact on how the utilities are regulated.”

State Incentives Expected to Come Down in April

By | Commercial, General, Installations, Prices, Residential, Solar | No Comments

Residential and commercial solar systems currently enjoy state and federal incentives that cover approximately 43% of the total system cost. While federal incentives are expected to be in place at the same level until 2016, the state incentives come down as more systems are installed on homes and businesses. In San Diego County, we moved into step 6 of the state incentive ($1.10/Watt) in October of 2009, and we expect to move into step 7 of the state incentive ($0.65/Watt) sometime in April of 2010. This means that on average, the state incentive will be reduced from 18% to 11% of the total system cost. In 2007, when the state rebate program started, incentives were $2.50/Watt. So don’t wait any longer. If you do, you will still save money on electricity bills, but you will miss out on attractive rebates.

Example of 3kW Residential System (Before April 2010)
Total System Cost $18,000
State Rebate $3,300
Federal Tax Credit $4,410
Net Cost $10,290

Example of 3kW Residential System (After April 2010)
Total System Cost $18,000
State Rebate $1,950
Federal Tax Credit $4,815
Net Cost $11,235

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Solar Panel Prices at All-Time Low

By | Commercial, Government, Installations, Prices, Residential, Solar | No Comments

Solar panel prices are at an all-time low. Please read article below from Paula Mints.

Module pricing: Rational, or just plain nuts?
by Paula Mints, Navigant Consulting, Palo Alto, CA USA;

In 2009, the market for solar products continued to soften, and by September, prices had crashed by 32% to 42%. This was great for the system integrators and installers who could source cheaper modules, (hard to resist at these prices!), but not so good for technology manufacturers who experienced squeezed margins and downward sloping revenues.
(In fairness, system integrators have felt pressure to provide ever-lower system prices.)

2006 was a particularly auspicious year for price increases, with average module prices rising by 30% for the small buyers, 7% for mid-range buyers, and 12% for large-quantity buyers. The significant turnaround in pricing of 2009—which could be described as an overcorrection—does not mean that an efficient market price was arrived at. Rather simply, the market was willing to pay more at one point than it was at another.

In 2009, soft demand because of the loss of a major market (Spain), a global recession, and problematic debt markets (among other reasons) drove prices down, while significant levels of inventory on the demand side allowed a vibrant secondary market to develop. Suddenly, there were daily, always-downward pricing changes. The global market for cells and modules pseudo-corrected because it crashed—not a healthy situation for anyone.

On the manufacturer side (supply), the module business was unprofitable for more than 30 years, up until the boom; average pricing during some of these years was below cost. During the boom, margins swelled along with profit, and the industry behaved as if the party would never end.

The PV industry remains in start-up mode with applications, business models, marketing strategies, and technologies continuing to mature. As the high-growth grid connected application remains incentive-driven, it is hard to drape solid economic theory over industry pricing behavior. Moore’s Law (the doubling of transistors per square inch on an integrated circuit doubles every 12 to 18 months) does not apply perfectly to pricing. Over the long term—and only in the long-term—there is clearly a systematic reduction in the price of cells and modules. In the near- to medium-term, though, there are many hiccups (up and down) in cell and module prices, and a smooth line cannot be observed. Until there is true, un-incentivized pull in the market for solar products, wild swings in demand and pricing will continue.

Efficient market theory holds that the market will establish (with the occasional correction) a rational and correct price for a good. This is great in theory; however, the market is an organism that reacts to market pressures by often inflating prices (supply side) when market conditions are good, and madly deflating them when market conditions turn in the other direction. It does this for any good, often regardless of its manufacturing cost.

With easy access to information these days, the overload of constant module price updates can and does trigger much anxiety. Market drives price, and also value, and people are the market. Understanding this does not exactly help manufacturers ameliorate pricing anxiety, particularly when all around prices can be observed dropping like stones into a pond.

So, accepting that the market is not logical or efficient when it comes to pricing, what does this mean for solar? It means that there are no set rules for market pricing, but some understanding of the triggers might slow panicked selling.

In the case of cost reduction, the PV industry can be proud of the significant progress it has made in reducing manufacturing cost and increasing efficiency. In this arena, there is some logic—and in an industry with downward price pressure (live by the incentive, die by the incentive), lower costs are a necessity.

Lowering costs. Now there is a rational war worth fighting.

This article is from Photovoltaics World

SDG&E to Raise Baseload Rates

By | Prices, Residential | No Comments

California Senate Bill 695 (Kehoe) was signed into law in October of 2009. This law repeals a previous law that prohibited SDG&E and other investor owned utilities in the state from raising baseload rates to residential customers for electricity charges. The new law allows SDG&E and other investor owned utilities in the state to increase the electricity charges for residential customers for existing baseline quantities by 3 – 5% per year.

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