Californians face higher electricity rates based on income
Saturday, March 16th, 2024For households earning $28K per year or more; unless state legislature reverses course; 5 local legislators voted for bill
By Allen D. Payton
Bill Votes – AB-205 Energy. (ca.gov)
In 2022, the California legislature passed and Governor Gavin Newsom signed AB205 – Energy into law, which requires that the Public Utilities Commission (CPUC) “shall, no later than July 1, 2024, authorize a fixed charge for default residential rates.” As a result, the CPUC is currently reviewing proposals for a tiered, fixed-price structure, as directed by the bill.
According to FOX Business, the state’s three main, investor-owned utilities – Pacific Gas and Electric (PG&E), Southern California Edison (SCE) and San Diego Gas and Electric (SDG&E) – proposed a tiered rate plan: “Households earning $28,000-$69,000 would be charged an extra $20 to $34 per month. Those earning $69,000-$180,000 would pay $51 to $73 per month, and those earning more than $180,000 would pay a $85-to-$128 monthly surcharge.”
According to California Energy Markets, “The first version of the income-graduated fixed charge, or IGFC, could be implemented by SDG&E and SCE by 2026, according to Freedman. PG&E is in the process of changing its billing system, he said, so its implementation would likely be in 2027.”
That’s on top of the 13% increase for both electricity and natural gas rates for PG&E customers approved by a unanimous vote of the CPUC last November that went into effect on January 1, 2024. Plus, another vote on March 7 for $4-$6 in additional monthly fees for the typical ratepayer that will take effect in April, was approved for PG&E to recover $516 million in costs for wildfire mitigation, gas safety and electric modernization.
According to a Canary Media report, “The utilities are also proposing to significantly lower the per-kilowatt-hour charges that customers pay to counterbalance the big increase in fixed charges, and to structure both fixed and volumetric charges in a way that allows lower-income customers to save money overall. Still, the proposal, if enacted, would instantly make California the home of the nation’s highest monthly utility fixed fees, according to analysis by clean energy research firm EQ Research.”
The IGFC would require the CPUC to evaluate every ratepayer’s income annually in order to assess the appropriate fee.
Local Legislators Voted for Bill
Five of Contra Costa’s state legislators supported AB205 on party-line votes including Assemblymembers Tim Grayson, Rebecca Bauer-Kahan, Buffy Wicks, Lori Wilson and State Senator Nancy Skinner. The first four each voted for the bill, twice.
Assemblyman Jim Frazier didn’t vote on the bill in 2021 and State Senator Steve Glazer didn’t vote on AB205 during the State Senate’s floor vote in 2022. Newsom signed the bill into law on June 30, 2022.
Details of New Law
As of July 1, 2022, the applicable portion of the law now reads as follows:
“SEC. 10. Section 739.9 of the Public Utilities Code is amended to read:
(d) The commission may adopt new, or expand existing, fixed charges for the purpose of collecting a reasonable portion of the fixed costs of providing electrical service to residential customers. The commission shall ensure that any approved charges do all of the following:
(1) Reasonably reflect an appropriate portion of the different costs of serving small and large customers.
(2) Not unreasonably impair incentives forconservation, energy efficiency, and beneficial electrification and greenhouse gas emissions reduction.
(3) Are set at levels that do not overburden low-income customers.
(e)(1) For the purposes of this section and Section 739.1, the commission may authorize fixed charges for any rate schedule applicable to a residential customer account. The fixed charge shall be established on an income-graduated basis with no fewer than three income thresholds so that a low-income ratepayer in each baseline territory would realize a lower average monthly bill without making any changes in usage. The commission shall, no later than July 1, 2024, authorize a fixed charge for default residential rates.
(2) For purposes of this subdivision, ‘income-graduated’ means that low-income customers pay a smaller fixed charge than high-income customers.”
Californians Pay 27% More for Electricity Than National Average
According to Energy Sage, California residents currently pay 31 cents per kilowatt-hour compared to the national average of 18 cents per kilowatt-hour. “On average, California residents spend about $256 per month on electricity. That adds up to $3,072 per year. That’s 27% higher than the national average electric bill of $2,426.”
Effort to Reverse Course
Now, some members of the legislature are trying to backpedal on their votes and stop the IGFC increases from being approved. As they had unsuccessfully attempted last September, on Jan. 30, Republican lawmakers tried to bring an immediate vote to repeal AB 205 to the Senate floor, but Democrats who have the majority, voted to table the motion.
That same day, Assemblymember Jacqui Irwin, (D-Thousand Oaks) and 10 others introduced a bill to repeal AB205. According to Irwin’s press release about the new bill, “The CPUC has had the authority to implement a fixed rate charge, up to $10, since 2015, but has declined to do so. I see no need to rush now. It’s time to put some reasoning back into how we charge for electricity in California.” Bauer-Kahan is listed as a principal coauthor. It was also introduced in the State Senate.
According to the aforementioned Canary Media report, “The newly introduced bill, AB 1999, would limit the CPUC to adding a fixed charge of no greater than $10 a month on customers’ bills to pay for the rising costs of maintaining the state’s utility grids, regardless of household income.”
The bill is in the committee process, was referred to the Assembly Committee on Utilities and Electricity. If approved it will then head to the floors of both houses of the state legislature for votes and if passed, the bill will head to the governor’s desk for his signature or veto.