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State utility regulators have proposed reducing the cost of residential electricity bills for lower-income Californians and those living in parts of the state most impacted by extreme weather — mainly heat. The changes would also incentivize electrifying personal cars and in-home appliances.
A big reason for the proposal is how California’s largest power companies currently calculate rates. The more power you use, the more money you pay — not just for electricity but also for things like maintaining the grid and reducing wildfire risk. When the temperature spikes, so do electricity bills, leaving some customers with monthly payments over$500.
Why do we need this?
Proponents of the changes say customers with low income are paying more than their fair share of the costs of maintaining the electricity grid, and this will change that.
California is one of the only states that doesn’t already have a fixed charge for its largest utilities, and the state Legislature ordered regulators in 2022 to implement one by July 1 of this year. Since then, power bills have only gotten more expensive. Regulators approved an average increase of $32 per month for Pacific Gas & Electric Company customers just last year. The average price per kilowatt hour of electricity for California’s big three utilities — Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric — is about 36 cents, compared to the national average of 17 cents.
The changes will shrink the price per unit of electricity for everyone and, therefore, encourage electrification, reducing fossil fuel emissions.
“Customers need to want to electrify,” Chhabra said from the NRDC. “Currently, when they electrify their homes, they wouldn’t necessarily reduce their household energy bill. With this change, they will start saving money.”
The proposal will bring California investor-owned utilities in line with publicly-owned utilities and utilities in other states.
The proposal will be up for a vote on May 9. In the meantime, members of the public can comment online.
Reactions for — and against
The prospect of a new charge that could raise some people’s rates has prompted backlash from some state and federal lawmakers. In the state Legislature, a group of Democrats led by Assemblymember Jacqui Irwin has introduced legislation that would cap the fixed charge at $10 for most people and $5 for people with low incomes. Irwin said the California Public Utilities Commission “is out of touch with consumers.”
“We need to prioritize driving down consumer’s overall bills, not redistributing the ever-increasing (investor-owned utilities) electric rates,” Irwin said.
The Predictable Power Coalition, which includes the big three utilities, called the fixed rate “vital” and said the proposal “is a step in the right direction.” Some of the state’s most well-known consumer advocates, including The Utility Reform Network and the California Public Advocates Office, support the proposal because they say it would make utility bills more affordable.
Others, including the solar industry, worry that if electricity rates are cheaper during peak hours, people won’t conserve as much energy. California has struggled at times to have enough electricity during these periods, especially during extreme heat waves, which caused some rolling blackouts in 2020.
If approved, the new billing structure would go into effect in late 2025 or early 2026.
This story includes reporting by Adam Beam from The Associated Press.
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