The controversial plan to require California’s three biggest utilities to start charging their customers based on how much money they make has been shelved by state regulators — at least for now.
Instead, the California Public Utilities Commission is proposing a less radical — if not necessarily less controversial — approach to complying with a state law demanding that it examine new rate structures to reduce the burden of rising electricity rates, a problem that will only deepen as the state further embraces electrification.
That proposal? Reduce per-kilowatt-hour rates but institute a fixed charge of $24.15 per month for most customers of utilities Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric.
The proposal would add smaller fixed monthly charges of $6 per month or $12 per month to customers who are signed up for two different special rate programs for low-income earners. This carveout for low-income ratepayers is distinct from the income-graduated proposals that were under consideration.
Fixed charges are common features of utility bills across the country, the CPUC noted in a fact sheet accompanying the release of its proposed decision on Wednesday. That’s because utilities pay for a lot of fixed costs that aren’t tied to how much electricity customers use, and fixed charges are one way to recoup those costs.
In California, these fixed costs, which include the maintenance and expansion of distribution and transmission grids, energy-efficiency programs, low-income bill-assistance programs and more, account for roughly half the costs paid by customers. But California’s big three utilities have been barred from instituting fixed charges under previous CPUC decisions, forcing them to recover those costs by increasing the rates that customers pay for the electricity they consume.
CPUC’s proposal would reduce these rates, known as “volumetric” charges, by 5 to 7 cents per kilowatt-hour. That will make electricity cheaper for California residents. But the CPUC hopes it will also make it easier for customers to afford the increased electricity consumption of electric vehicles, electric-powered heat pumps and household appliances, which Californians must start buying en masse to meet the state’s clean-transportation and building-decarbonization policy goals.
This fixed-charge proposal will now be open to comment before the CPUC decides either to approve it or alter it. If approved, it would start going into effect for Southern California Edison and San Diego Gas & Electric in 2025 and for Pacific Gas & Electric in 2026.
The CPUC’s Public Advocates Office, which is tasked with protecting consumers, issued a statement in support of the proposal. “It allows for the implementation of a flat rate, which will reduce electric bills for low-income customers and cut the price of electricity for all customers,” Linda Serizawa, the agency’s interim director, said in a prepared statement.
But the new proposal is already drawing fire from some groups who say it’s the wrong approach to dealing with California’s skyrocketing electricity costs — and those critiques are coming from both sides of the debate over income-based rates.
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March 29, 2024 at 02:30PM
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California regulator takes income-based electric bills off the table - Canary Media
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