Baseline provides residential electric and natural gas customers with an energy allowance for basic energy needs at a lower rate. The rate is designed to promote conservation such that the greater the usage, the higher the rate. Baseline values have been modified and updated over the years, with a complete revision for all utilities occurring in June 2002, .
Based on altitude and temperatures for summer and winter, utility service territories are divided into climate zones that reflect the average energy consumption within each zone. Baseline allowances account for 50% to 70% of the average residential consumption within a baseline zone. Additional baseline allowances are available for customers with special medical requirements. Also, a benefit program for lower-middle income, large households has been approved for PG&E, SCE and SDG&E to insure the affordability of basic electricity needs for customers whose usage reaches into the third rate tier. Individual household usage can vary above the average baseline residential consumption within a baseline region due to extra appliances or equipment, such as a water pump. Baseline allowances only consider the average usage within a baseline zone.
Most California residential electricity rates have four or five rate levels and those for natural gas have two levels. The first level for both electricity and natural gas is called the baseline, or Tier 1. Two seasonal changes are made to the baseline allowances during the year. Most utility baseline seasons change May 1st and November 1st.
Six factors determine the residential baseline allowance and total bill amounts:
- The current residential rates for each tier.
- The climate zone in which the customer lives. Different climates create different energy needs, so allowances vary.
- The seasonal time of the year (summer or winter).
- The average energy usage of residential customers in specific climate zones.
- The fuel source for the space heating system installed in the residence (gas, electric, or other).
- The number of days in the billing period.
An example formula below, using PG&E's regional baseline territory "T" for a Summer, All-Electric customer using 575 kWh over a 30-day billing period, demonstrates how a bill is calculated, using a current Baseline Allowance of 10.4 kWh/day:
10.4 kWh X 30 days = first 312 kWh X 0.11430 = $35.6616;
Plus 101% To 130% of Baseline = next 94 kWh X 0.12989 = $12.20966;
Plus 131% to 200% of Baseline = next 169 kWh X 0.21314 = $36.0266;
Total Bill = $35.66 + $12.21 + $36.02 = $83.89