COVID-19 May Cost CA Customers $1.2 Billion in higher energy bills

Increase in residential bills only one of the large changes we are seeing in energy use.

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Curtis Tongue
March 30, 2020

As can be seen below, COVID-19 has undoubtedly made an indelible mark on demand for electricity across California. Since the SIP (shelter-in-place) orders rolled out across the state, system demand has declined, particularly during the 2 - 6 PM window.

Source: CAISO

So, does this tell us the whole story? Will California continue to see a decline in energy demand across the board? 

No. This top-down, system-level view belies more nuanced changes, and just like COVID-19, the impacts are more acute for some segments than others. While commercial and industrial demand declined, residential electricity surged 9.4%. Extrapolating this increase to the roughly 80 billion kWh California residents consume every year could amount to $1.2B more in annual electricity costs. This figure doesn’t take into account seasonality or weather-adjustments, so take it with a couple of grains of salt. Nevertheless, this figure begs the question, “Are California ratepayers ready for higher electricity bills due to COVID-19?”

A sample of approximately 160,000 California residents, across all climate zones, have all seen significant average increases. PG&E use is up about 11%, SCE is up 9%, and SDG&E is up 5%.

Source: OhmConnect

Sharing the COVID-19 Electricity Relief Fund

That enormous cost burden will most likely hit disadvantaged communities and CARE customers particularly hard. Texas is exploring ways to ease the burden of low-income customers through a ‘COVID-19 Electricity Relief Fund,’ which, among other things, will place an exemption on service disconnects due to non-payment. This program could soften some short term pain, but it’s essential to keep in mind that before the pandemic took hold of the nation, nearly one-third of Americans already struggled to pay their energy bills. This struggle will only amplify in the coming months and years. Californians will need tools and programs to alleviate or even defray the inevitable increased costs. 

The most significant residential energy behavioral shift in decades is fueling both an increase in total use and flexing the shape of the average resident’s load profile. People are now:

  1. Staying at home at all times (hopefully)
  2. Doing desk jobs remotely
  3. Children staying at home
  4. Evening or weekend socializing and excursions have ceased

Afternoon use has expectedly ballooned, and people appear to take more time in the morning to get started.

Source: OhmConnect

Luckily, the surge in residential demand is occurring when renewables are at peak production and is offset by softened commercial and industrial demand, so California is not at risk of being short on generation. The lights will stay on. However, these surges are most likely occurring in highly localized and residential areas. These local surges could place the distribution grid under strain and drive high nodal energy prices, particularly during the summer months. 

While the shelter-in-place order will probably not last the entire year, many workers and companies have now tasted the benefits of working from home. Some may decide not to go back to their old, central-headquartered, pre-COVID-19 ways of the past. 

If true, that means California’s residential load profile has seen a lasting and consequential change. 

So what are our “known knowns” at the moment? Residential electricity use has risen and changed, most likely permanently.

What’s our “known unknown?” The lasting magnitude and extent of those changes.

What’s our “unknown unknown?” How I wish I could tell you. 

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