Don’t know about you, but our painful January electric bill left us cursing those cheerful December holiday lights.
It’s no secret that California electric bills are among the highest in the nation. Changes are coming that may make the monthly ritual less painful for some — and more painful for others (say, folks who aren’t in low-income programs and solar panel owners).
The California Public Utilities Commission is in the throes of establishing a “fairer” fixed monthly service charge, and it has become a bloody political battle (surprise surprise). Presently, the cost of delivering power is largely baked into the rates we pay for electricity itself. One of the ideas behind the coming changes is to divorce infrastructure costs from actual power costs, on the theory that it’s as expensive to get energy to homes that are highly efficient as it is to get it to homes that consume gob-loads of power.
While critics denounce this as a “utility tax” — including Irvine’s Vice Mayor Larry Agran, who’s organized a public information session on it from 6:30 to 8 p.m. Thursday, Jan. 25, at Irvine City Hall — officials bristle at that language and stress that the proposals do not change the amount of money that utilities collect.
Utility profits are set by the CPUC at roughly 10%. Think about the proposed changes like this: Under the old method, the utility collected $100. Under the new method, the utility will still collect $100 — but who pays that $100, and how, will shift.
How much?
Many plans are being bandied about.
The utility companies’ latest proposal is for a flat $51 a month for all residential customers who are not in lower-income programs. Folks in low-income programs would pay a lower fixed charge of $10 or $15 a month.
The Public Advocates Office — the CPUC’s in-house Solomon-the-Wise, charged with protecting the little guy — favors more evenly spreading infrastructure and maintenance costs among grid users, but proposes smaller fees. It favors a monthly charge of $30 for most customers, and $4 or $7 for those in low-income programs. “The bill impact will be partially or fully offset by resulting reductions in average electricity rates,” the Advocate says in its primer.
Other proposals are floating around as well, from solar groups, consumer groups, environmental groups. Suffice to say that commission folks are being bombarded with messaging and are supposed to make decisions by July, which will take effect in 2025 or 2026.
The CPUC has no choice on this one. This change comes thanks to a budget trailer bill passed with little public comment or debate in 2022: Assembly Bill 205. It repealed the existing cap on fixed charges — a wee $10 a month — and required the CPUC to develop fixed charges “on an income-graduated basis with no fewer than three income thresholds, such that a low-income ratepayer would realize lower average monthly bill without making any changes in usage,” says a Senate analysis of the bill.
Suffice to say that the income-based bit has been wildly unpopular and is going the way of the dinosaur.
‘Utility tax’
Agran is among hundreds of critics urging the Legislature to repeal the “utility tax” by June. They maintain that, while customers on low-income programs may see decreases in their monthly bills, millions of working people who don’t qualify for those programs will see bills increase.
“A high Utility Tax would increase electricity bills for anyone with a small energy footprint, and will hit particularly hard for working class and low-income people who live in an apartment or small home just because they live in a small space,” Agran’s flyer for the session says. “Even a $30/month Utility Tax would increase bills on all (non-low-income) ratepayers who do not use much energy.”
Hundreds of officials and activists have signed letters objecting to “the un-democratic and opaque way in which the Utility Tax was enacted, passed in three days without any public hearings or discussion,” the letter says. “The people of California deserve a voice in any major policy change with such wide-ranging consequences.”
A monthly fixed charge entrenches the problem of high electricity prices rather than solving it, they say.
“Electricity prices are too high mainly due to the increasing costs of unnecessary long-distance power lines, liability when those lines create wildfire risks and generous utility profits that drive this spending. A Utility Tax does not fix that underlying problem because it just rearranges who pays what — harming millions of working-class people in the process. The true solution to stabilizing the high cost of electricity is to reduce our overdependence on long-distance power lines through greater conservation and local clean energy.”
‘False’
The utilities bristle at the “utility tax” language.
“This is false,” said Southern California Edison spokesman Jeff Monford. “The proposed fixed charge would not be an added fee above customers’ energy charges. Instead, it is a restructuring of the electricity bill, which would lower the cost of each kilowatt-hour customers use.”
The utilities’ current proposal does not include an income-based fixed charge, other than the lower charge for customers participating in low-income programs, he said.
The Public Advocate, for its part, thinks the approach is the right one.
“A monthly fixed charge on customers’ electricity bills will cover some or all of the electric grid’s fixed costs (e.g., power line maintenance & wildfire prevention) that do not vary based on electricity usage,” it has said. “The fixed charge is intended to reduce power bills for lower-income customers and decrease electricity rates for all customers.”
Many rooftop solar owners, long insulated from the rate pain felt by their on-the-grid neighbors, would find themselves having to shoulder a good deal more of the infrastructure costs than they do now. Since most depend on the same infrastructure as everyone else for power once the sun goes down, they should also pay for its upkeep, the thinking goes.
The Public Advocate says its fixed charge proposal is a relatively small portion of total bills, so customers would still be able to “significantly reduce” their energy bills with solar investments.
The fixed charge would apply to customers of Edison, San Diego Gas & Electric, Pacific Gas & Electric and community choice power programs. Panelists at the Irvine session are slated to be economist Ahmad Faruqui, Chapman University post-doctoral fellow Ariane Jong-Levinger, Flagstaff Research principal Josh Plaisted, and Solar Rights Alliance advocacy and development director Cailey Underhill.
Folks can register for the Irvine session at https://www.vicemayorlarryagran.org/informational-briefing-new-utility-tax.