Cost of Service Rate Structure

What is 3CE's New Rate Structure?

3CE’s new rate structure was approved by the Policy Board of Directors on June 16, 2021 following extensive community engagement and feedback since March 2021. The goal of implementing this new rate structure is to benefit 3CE customers by providing predictability, simplicity, fairness and competitiveness while basing rates on 3CE’s cost to serve customers and decoupling our rate setting from PG&E. 


3CE launched service in 2018 based on the existing Community Choice Energy (CCE) rate structure model of mirroring the investor-owned utility’s (IOUs) rates and applying a discount inclusive of relevant fees. This approach poses multiple problems, including frequent rate changes not based on our cost to serve customers, subsidized customer segments, and complex customer plan choices. Most IOUs, including PG&E and SCE can change their rates several times a year, typically no less than once a quarter, often through increases which causes rate uncertainty across all 3CE customer segments. 

3CE’s proposed rate structure is the first of its kind amongst California CCEs and would among other things provide rate stability through a goal of no rate increases for customers for three years.




What are the Benefits of the New Rate Structure for 3CE Customers?

Predictable & Simple: 
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.
Fair and Competitive: 
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 customer workshops and presentations below for more information: 

Learn More About Cost of Service and Provide Your Feedback

Cost of Service Virtual Workshop Videos and Presentations:
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 26, 2021 at 6pm
Understanding Your 2022 CCCE Energy Choices Workshop Registrations:
Register for the upcoming workshop to learn about your energy rate choices and how to find out which is best for you:
 Understanding Your 2022 CCCE Energy Choices Workshop (English)   
Tuesday August 17, 2021 
from 6pm-7pm
 Understanding Your 2022 CCCE Energy Choices Workshop (English)   
Thursday September 16, 2021 
from 6pm-7pm
Please note: 
– The residential and NEM workshops reference a monthly fee which was recommended for the board to not include in COS.
There will be no monthly fee for residential and NEM customers with either COS rate options. 
– The Agricultural workshop stopped recording 30 minutes in due to loss of connection. Ag customers may refer to the commercial customer COS workshop for more information.

Cost of Service Rollout Schedule

March – May 2021 
    • 3CE hosted customer workshops to gather input from the various customer segments. Recordings of the workshops and slide are available above. 
May and June 2021
    • 3CE held a special joint board meeting in May and received board approval in June for the Cost of Service Rate Structure 
July – September 2021
    • Customers have the opportunity to choose between the COS Default Rate Option and the Seasonal Flat Rate Options. Resources will be made available including a rate comparison calculator during the evaluation period.
October 15, 2021 
    • Deadline to choose flat rate option. If you prefer the transitional flat rate option, please choose it online during the evaluation period and before October 15, 2021. If you do not choose the flat rate, the Cost of Service rate schedule will begin on January 1, 2022  
January 2022 
    • General customer transition to 3CE cost of service (3CE communities within PG&E service territory)
    • Customers are able to go back to the default COS rate from the alternate flat rate if they choose 
All dates subject to change

How will the New Rate Structure 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:

Goal of 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 
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 rate goal is to set rates for 3 years beginning January 1, 2022 
through December 31, 2024 applied to new Time of Use (TOU) periods

Seasonal Flat Rate Option:
Seasonal flat rate goal is to set rates for 3 years 
beginning January 1, 2022, through December 31, 2024. If customers choose the alternate option, they are able to return to COS default option after January 1, 2022

Exempt Customers: 

Customers exempt from the mandatory transition to Time of Use (TOU) will have the following options: 
Default Option:
Cost of service rate goal is to set rates for 3 years beginning January 1, 2022 through December 31, 2024 applied to new Time of Use (TOU) periods

Seasonal Flat Rate Option:
Seasonal flat rate goal is to set rates for 3 years through December 31, 2024. Beginning January 1, 2025, customers will then be enrolled in the Default Cost of Service Option. If customers choose the alternate option, they are able to return to COS default option after January 1, 2022
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 Seasonal Flat Rate Option through a deadline date to be announced. A cost comparison calculator will be made available for customers to evaluate their rate options. 
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. 3CE will transition existing NEM 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.