Cost of Service Rate Structure

What is 3CE's Cost of Service (COS) Rate Structure?

3CE proposes to implement the first cost of service rate structure of any Community Choice Energy (CCE) program in California pending the support of 3CE’s Policy Board of Directors. The goal of implementing this new rate structure is to  benefit 3CE customers by providing predictability, simplicity, fairness and competitiveness.  
3CE launched service in 2018 based on the existing CCE program rate structure of mirroring the investor-owned utility’s (IOUs) rates and then applying a discount inclusive of relevant fees. This approach poses some problems, including frequent rate changes, subsidizing some customer segments, and complex customer plan choices. Most IOUs, including PG&E and SCE can change several times a year, and typically change their rates no less than once a quarter, often by increasing them, causing rate uncertainty across all customer segments. 

With our current rate structure 3CE also needed to adjust its rates in order to continue mirroring the IOU rates and applying our discount. The first of its kind proposed COS rate structure would among other things ensure no rate increases for three years. Read on to learn more:



What are the Benefits of Cost of Service Rates for 3CE Customers?

Predictability & Simplicity: 
3CE’s Cost of Service rate structure will provide rate benefits including improved predictability through long-term rate adoption. Under the current structure, PG&E changes its customer rates no less than 4 times a year, typically increasing them while Net Surplus Compensation rates for Net Energy metering customers change monthly. 3CE seeks to adopt a new rate structure and NSC rate for a proposed three-year term following 3CE board approval in June 2021.
Fairness and Competitiveness: 
The proposed Cost of Service changes also takes into account what it costs to serve each customer segment and helps to ensure certain customers no longer pay more as a function of subsidizing other customer segments as they do under the current IOU rate structure model. 3CE’s commitment to providing rate benefits and GHG reducing energy programs will continue as core goals of the agency.

Please review the below FAQ and view the recorded workshops below for more information: 

Learn More About Cost of Service and Provide Your Feedback

Cost of Service Virtual Workshop Videos:
Net Energy Metering (NEM)
Solar and Wind COS Workshop   
March 17, 2021 at 5pm
Commercial Customer
COS Workshop 
April 13, 2021 at 12pm
Agricultural Customer
COS Workshop 
April 20, 2021 at 12pm
Residential Customer
COS Workshop
April 27, 2021 at 5pm
Residential Customer
COS Workshop in Spanish
May 27, 2021 at 6pm
Please note: The Agricultural workshop stopped recording 30 minutes in due to loss of connection.
Ag customers, please refer to the commercial customer COS workshop for more information.
Feedback and Ideas: 
Customers are encouraged to attend the workshop and submit any feedback to in order for staff to tally relevant questions, ideas and community input. We look forward to seeing you virtually at your upcoming Cost of Service workshop. Please register in advance above.  

Cost of Service Rollout Schedule

March and April 2021 
    • 3CE is hosting customer workshops to gather input from the various customer segments. Recordings of the workshops will be made available. (see workshop links above)  
May and June 2021
    • 3CE seeks board approval for proposed Cost of Service Rate Structure with the implementation date of January 2022
July/August – September/October 2021
    • 3CE is scheduling an email and mailed notification to all customers addressing the opportunity to choose between the COS Default and Alternate Flat Rate Options. Resources will be made available including a COS rate comparison calculator
October 15, 2021 
    • If you do not want the 3CE Cost of Service Rate beginning January 1, 2022, you may choose the 3CE flat rate up through October 15, 2021. If you do not choose the flat rate, the Cost of Service rate schedule will begin January 1, 2022  
January 2022 
    • General customer transition to 3CE cost of service (3CE communities within PG&E service territory)  
All dates subject to change

How will Cost of Service Work for 3CE Customers?

Cost of Service rate structure has been designed to base rates on the cost to serve different customer segments including clean energy procurement, administration,  energy programs, and rate stabilization funding over a period of time. 3CE staff has collaborated with its rate consultant to design rates to meet the following criteria and goals:

Fixed rates ($/kWh) from January 1, 2022 to December 31, 2024 allowing for price stability and predictability in light of constant changes in electric rates
Simplifying the number of rate schedules
Ensuring all customers pay the same 3CE rates across the 3CE service area within PG&E service territory 
Maintaining the Time-of-Use (TOU) schedules to support California’s clean energy goals 
Fairly balancing costs to serve customers based on 3CE’s costs not the IOUs 
Removing unnecessary demand charges for commercial and agricultural businesses that aren’t applicable to 3CE model; a load serving entity without infrastructure costs 
Encouraging financial equity for all customers by transitioning NEM customers to monthly billing 
Implementing monthly customer charge for general residential and NEM residential to recoup fixed costs related to serving customers  regardless of their electric consumption
Goal for rates to be 1% lower than PG&E across all customer segments; some may receive greater rate benefits based on costs associated with each customer segment

The underlying goal for 3CE’s Cost of Service rate structure is for every customer segment to be as competitive as possible compared to PG&E’s unbundled electric generation service inclusive of fees.  

Please note: Not all customers will experience the same discount and some customers on certain rate schedules and TOU periods may pay more. Rest assured, all 3CE customers benefit from access to energy program funding, supporting the growth of clean and renewable energy including 3CE’s Pathway to 100% Clean and Renewable by 2030, and having a seat at the table of a publicly accountable Central Coast agency. 

Rate options for 3CE customers:

All Customers: 

The following options will be available to all customers except for those who are exempt: 
Default Option: Cost of service rates applied to new Time of Use (TOU) periods through January 1, 2025 
Alternate Option: Seasonal flat rates for 3 years beginning January 1, 2022, through December 31, 2024. 

Exempt Customers: 

Customers exempt from the mandatory transition to Time of Use (TOU) will have the following options: 
Default Option: Cost of Service rates applied to old TOU periods for 3 years through December 31, 2024 
Alternate Option: Seasonal flat rates for 3 years through December 31, 2024. Beginning January 1, 2025, customers will then be enrolled in the Default Cost of Service Option.
Exemptions: Some examples of exemptions include Medical Baseline customers, CARE/FERA customers living in a hot climate zone and customers with less than 12 months of energy usage. To find out if you are exempt from the TOU transition we recommend you contact PG&E.  
Customers will have a chance to evaluate the Default Option and the Alternate Option through a deadline date to be announced. All customers will have the option between Cost of Service rate or a fixed seasonal flat rate $/kWh through December 31, 2024 unless 3CE identifies a need to re-calibrate its rates based on unforeseen market conditions. Customers must make their rate choice by October 15, 2021. Board approval will be required for any rate changes between January 1, 2022  and December 31, 2024 .   
Dates subject to change

Simplification of
Rate Classes

Currently, IOUs have dozens of rate classes to identify residential, commercial, agricultural, standby, street lighting and traffic controls. 

Since 3CE is only charging for electric generation service, there is an opportunity to help simplify the classification by reducing the number of rate classes.

Changes to Net Energy Metering (NEM) Service

3CE currently serves close to 400,000 customers of which roughly 32,000 are NEM solar and wind customers and 5,600 NEM customers currently receive Net Surplus Compensation (NSC) payments. These customers span our three principal customer segments: Agricultural, Commercial and Residential. Currently, residential and small to medium non-residential NEM customers are still invoiced by 3CE annually. 
3CE will will transition enrolled NEM residential customers to monthly billing beginning January 1, 2022. The switch will initiate a true up of 3CE electric generation service so in an effort to minimize negative customer impacts, 3CE will transition existing customers over a 12-month period, moving accounts over to monthly invoicing in the month immediately following the true-up month of record so customers retain their existing annual-true up month for the purposes of calculating Net Surplus Compensation. With monthly billing, NEM customers will retain their annual true-up allowing them to build up NEM credits throughout the year. 

Net Surplus Compensation

The Net Surplus Compensation calculated at the end of the annual true-up period, is then applied to the customer’s energy statement in the form of a bill credit that can be applied to against transmission and distribution charges in addition to future generation charges. Customers have the option to receive a check in lieu of a bill credit provided that the Net Surplus Compensation due to the customer exceeds $200 for a residential account or $500 for a commercial account. NSC will be calculated using the wholesale market price adjusted for losses unless NEM customers choose the Seasonal Flat Rate option.