Nearly universally loathed: An income-based fixed service charge on electric bills.

It could have exceeded $100 a month for the wealthiest folks, according to early proposals, but “progressive” apparently only goes so far, even here in California.

Electric transmission lines in Chino in January. (Photo by Watchara Phomicinda, The Press-Enterprise/SCNG)

Once lawmakers realized they had approved this provision — a handful of paragraphs stuck into a long, last-minute trailer bill in 2022 — howls of rage erupted from Democrats, Republicans, and an irate public-at-large. Lawmakers backed away in nearly stampede-like fashion. Bills to repeal it were floated by legislators from both parties. Flurries of competing proposals were filed with the California Public Utilities Commission.

None of the bills survived. And now, after much gnashing of teeth, tearing of hair and high theatrics, a $24.15 flat, fixed, monthly service charge for all residential customers except the lowest-income Californians goes to the PUC for approval on May 9.

Folks in cool coastal climes would likely see bills increase, while folks in hot inland climes would likely see them decrease, according to the PUC’s in-house Solomon-the-Wise, charged with protecting the little guy.

Opponents call it a “utility tax” and say it’ll inflate costs for working and middle-income folks, with no cap to keep it under control going forward.

Here everyone might stop and take a breath. This is not a rate increase, the PUC insists, trying to raise its voice above the angry din. It is not a tax. It does not impose any new fees. It does not generate new profit for utilities.

“It simply reallocates how existing costs are shared among customers,” the PUC said in its primer when the proposal was announced in March.

“In fact, almost all publicly owned utilities in the state, and most utilities nationwide, use a similar billing structure. This proposal brings California in line with state and national trends.”

A mixed bag, the Sierra Club calls it. While the plan could shave some 10% off of electricity prices, low-income customers with bills below $120 a month could actually end up paying more, its analysis suggests.

The plan also lumps customers making $50,000 a year in with multi-millionaires, all paying that same $24 monthly charge. That  cuts against the income-graduated demand approved by the Legislature to begin with.

The deets

California utilities have been historically weird about how fixed charges are billed.

The burden for keeping the lights on — paying for transmission wires, transformers, poles, towers, the whole upkeep of the electrical grid that makes modern life possible — has been baked into rates for electricity itself.

So the more power you use, the more you pay for grid upkeep. And the less power you use, the less you pay for grid upkeep.

Conundrum: It costs just as much to get electricity to folks who use little — say, rooftop solar owners who only need grid power at night — as it does to get it to folks who use gob-loads, the thinking goes. Those costs should be spread more evenly, and that’s what this change is all about, officials say.

Under the plan the PUC will vote on May 9, the price of electricity would drop 5 to 7 cents per kilowatt-hour.

That would reduce bills for lower-income folks and those living in hellishly hot parts of the state, the PUC says. It also would advance clean energy goals (by cutting the kilowatt-hour cost, which makes it cheaper to electrify homes and vehicles). If you power your home and vehicles with electricity, you stand to save some $28 to $44 per month, according to the PUC.

If approved, this new “flat rate line item” would kick in in late 2025 and early 2026 for customers of the Big Three investor-owned utilities — Southern California Edison, San Diego Gas & Electric and Pacific Gas & Electric.

Lower-income Californians would pay lower flat rates of $6 or $12 a month.

In a joint filing, the Big Three said the plan can “generally be seen as a positive first step” towards achieving the Legislature’s goals.

A monthly residential bill from San Diego Gas & Electric. (Rob Nikolewski/The San Diego Union-Tribune)

Yes!

The aforementioned PUC Solomon-the-Wise supports the change.

“The current electric rate structure penalizes households that have less control over their electricity use, such as those that live in a hotter region or have more residents under one roof,” said the Public Advocates Office in its analysis.

“Without a flat rate, these households would continue to pay more than their fair share of costs that do not vary by usage, such as costs for utility customer service, energy efficiency programs and activities related to providing basic service. It would also mean that electrifying the transportation and building sectors would be more difficult, as households currently have a disincentive to shift their energy use from fossil fuels to electricity due to high rates.”

The overall impact is modest, its analysis says.

Workers install solar panels on a house in Mission Viejo in 2016 (File Photo by Michael Goulding, Orange County Register/SCNG)

Lower income customers of PG&E would see average savings of some 60 cents to $18.09.  For everyone else, it could range from savings of $6.79 to an increase of $11.50 per month.

Folks in coastal cities in Orange and Los Angeles counties can expect to pay more, as bill increases will be concentrated in cooler climate zones, which already see lower bills compared to statewide averages.

The $24.15 per month flat rate mirrors that of the Sacramento Municipal Utility District, one of the nation’s largest public electric utilities.

That compares to $12 at the Los Angeles Department of Water and Power; $18.21 at the city of Burbank’s electric utility; $30 at the city of Roseville’s electric utility; and $36.09 at the city of Riverside’s utility.

No!

Scores of local officials and consumer groups brand the proposal to restructure bills a “utility tax” and say it will raise costs for millions of working and middle class families.

“Overall, the Utility Tax would increase electricity bills for any Californian who does not use a lot of electricity because they live in an apartment or small home, conserve energy, or have solar,” Stop the Big Utility Tax, a coalition of some 240 groups, said in a prepared statement.

“A Big Utility Tax will keep growing over time, and does nothing to control the high cost of electricity. The Utility Tax is uncapped, which means it will keep rising, along with rates. A big Utility Tax simply adjusts who pays what, but does nothing to address the root causes of high electricity prices.”

Amen to that.

It’s important here to understand how utilities make their money.  As we told you in our recent story about the watchdogs who watch the watchdog that watches the PUC that’s supposed to watch the utilities, electric companies don’t make money from selling electricity. They make money from the return they’re allowed on capital investments. So there’s an incentive for utilities to spend more money on infrastructure than they have to.

“As a former commission president, I know what keeping energy prices down requires,” wrote Loretta Lynch, now an attorney in San Francisco, in a recent essay in the San Francisco Chronicle. “(A) sharp pencil to control relentless spending requests from utilities that allow them to generate more profits, adherence to legal mandates that require it to protect ratepayers and allow only ‘just and reasonable’ costs, and the backbone to just say no to the utilities’ unceasing demands that customers pay for programs that are ineffective or unnecessarily expensive.

“None of this is happening, and Californians should be outraged,” she wrote. “It is up to the state Legislature to inject sanity into the regulatory system and protect California families and businesses from ruinous, undeserved rate increases.

Change!

Consumer groups and the utilities themselves beseech the PUC to adjust the fixed charge proposal in myriad ways.

Some want low-income customers to pay nothing.

Some want more tiers at the top, so wealthier Californians pay more than their middle-class brethren.

Some want the fixed charge to be higher.

Some want this or that to be factored in to the fixed charge.

Some want this or that to be excluded from the fixed charge.

There have been dozens upon dozens of “exparte communications” between PUC officials and interested parties — who are trying to convince regulators that their position is the right one — over the past few weeks.

Many hundreds of public comments have poured in as well. Solar panel owners are particularly incensed.

“Any fixed charge is a breach of contract, for those of us who purchased solar panels and use no net electricity from the grid,” said Randall Stolaruk of Huntington Beach. “This completely changes the cost tradeoff for those who have already made the solar investment to protect against these escalating costs and to help the environment. If you go through with this, I sure hope it’s hauled into the courts….”

Expect fireworks on May 9 — and for a long time thereafter.

Related Articles