California regulators approve new residential electric bill fixed charges

The California Public Utilities Commission (CPUC) voted May 9 to approve a controversial $24 monthly fixed charge on residential consumers who get their electricity from PG&E, SCE and SDG&E.

The CPUC’s proposed decision recommending a $24 fixed charge for most households was released earlier this year. Under the proposed decision, consumers who are on California Alternate Rates for Energy (CARE) or Family Electric Rate Assistance Program (FERA) would pay a lower tax ranging between $6 and $12 a month respectively. The fixed charges cannot be avoided or reduced.

In exchange for the fixed charge, the per-kilowatt-hour rate consumers are charged for the electricity they use would get a one-time reduction of 5 to 7 cents. However, the new fixed charge would be so high that overall electricity bills would still increase on four million of working and middle class families.

The fixed charge essentially re-arranges the overall costs of electricity bills, picking winners and losers along the way based on how much electricity they use, according to an analysis by Flagstaff Research.

Households with higher energy usage, often those with higher incomes and living in large homes, can expect to see a decrease in their overall electricity bills. The electricity bills for households near the statewide average in the energy usage are expected to stay about the same. Households that use less than the statewide average — totally around 20% of California households — will see their electricity bills increase by hundreds of dollars a year.

Both the fixed charge and per kilowatt rates are uncapped and could increase over time. PG&E, for example, increased their rates by 13% this year alone. Language referring to the fixed charge as a “phase one” in the proposed decision makes it clear the $24 amount represents a floor on the charge, not a ceiling. Utilities originally proposed fixed charges as high as $70 a month.

The CPUC and big utilities say the monthly fixed charge will accelerate California’s clean energy transition, but according to the Stop the Big Utility Tax coalition, there is zero proof it will encourage more people to go electric. With a $24 fixed charge, it is still cheaper for people to stick with their gas appliances, despite the reduction in per kilowatt rates.

A bill to cap utility fixed charges at $10 a monthly — A.B 1999 (Irwin) — was recently denied a committee vote despite having nearly two dozen co-authors. Legislators continue to push for legislative solutions to protect low energy users who tend to be low- and moderate-income.

“While the final charges are lower than what investor-owned utilities wanted, these are still new costs coming out of the pockets of California families that are already struggling with the high cost of living in the state,” said Stephanie Doyle, California state affairs director for SEIA, in a press statement. “Any future changes to the fixed charges must thoroughly consider the impact to rooftop solar and storage adoption and electrification measures that are critical to meeting the state’s climate goals. It’s clear that there are better ways to reduce California’s extremely high utility rates and encourage electrification, and SEIA will continue to push for those policies going forward.”

News item from the Stop the Big Utility Tax coalition