To help customers understand their residential Lodi Electric Utility rates, the city of Lodi is proposing reducing its current five-tier structure to three tiers.
The Lodi City Council discussed changing the tier structure at a study session Tuesday morning.
The three-tier structure is revenue neutral, and the change will not significantly affect how much customers pay each month for electricity, Utility Director Liz Kirkley said. Some customers might notice at most a $0.50 increase or decrease if their tier changes, she said.
"We are going to simplify our bill so people can say, 'This is what I am paying and this is why,'" Kirkley said.
So how do the tiers work? All residential customers are grouped into tiers depending on how much electricity they use in a month. When customers use more electricity, they are placed in a higher-priced tier.
This encourages customers to conserve electricity, Kirkley said. It also prevents the city from having to buy unexpected electricity on the market, which is usually more expensive, she said.
Lodi adopted the current five-tier structure in 2006. Since then, the trend in the electric industry is to simplify rates, Kirkley said.
Also, staff said they can consider a three-tier structure because the Lodi Energy Center, a natural gas power plant, will be up and running later this year. The city will not have to buy as much electricity on the market because they will be able to rely on energy from the new plant, Kirkley said.
But at least one council member feels that by changing the tiers, it will actually confuse residents.
"For six years, they've had this tier. Why change it?" Councilman Alan Nakanishi said. "We should work more on essential things."
The council will consider whether to reduce the number of tiers at a future meeting.