Three of California’s largest electricity providers are proposing a new billing system that would charge customers according to their income.
Pacific Gas and Electric (PG&E), Southern California Edison, and San Diego Gas and Electric submitted a joint application to the California Public Utilities Commission (CPUC) April 10.
“This proposal aims to help lower bills for those who need it most and improves billing transparency and predictability for all customers,” said Marlene Santos, executive vice president for PG&E, in a statement.
The program, if approved, would divide customer utility bills into a fixed infrastructure charge based on income plus a usage charge based on consumption.
The per-kilowatt hour electricity rate would be lowered by about one-third for all customers, according to the companies.
Low-income and disadvantaged customers—about 30 percent of customers—would be helped the most with the new program, according to PG&E. The proposal calls for the monthly fixed charge for low-income customers to be as low as $15, and no greater than $30.
On average, PG&E estimates the company’s lowest-income customers would get a 21 percent lower electricity bill.
Moderate-income households would pay a fixed charge of $51 and get about 6 percent lower bills.
High-income customers—the state’s top 25 percent of income earners—would pay about $92, seeing an increase of about 24 percent, according to PG&E.
“As California rapidly advances to a future of electrification, this proposal will help to limit the impact on disadvantaged communities, as Californians transition to electrification in support of the state’s clean energy goals,” Santos said.
The state’s aggressive climate action plans include switching over to renewable energy sources and drastically cutting fossil fuels by 2045. One major component of the state’s climate goals is to accelerate electric vehicle use by banning the sale of gas-powered cars by 2035.
The utilities were required by the state to create a new billing plan after the state’s Legislature passed Assembly Bill 205 (AB 205) in June 2022.
The law requires utilities to structure their billing programs using income levels and provides state funding to help utility customers with past due bills from the pandemic, according to a Senate analysis.
The measure also mandates state agencies to prioritize clean energy sources over fossil fuel sources and accelerates clean energy projects.
When signing AB 205 in June 2022, California Gov. Gavin Newsom said the law will also help stabilize the energy grid by creating a “strategic reserve” that will only be used in the case of extreme weather events.
“Action is needed now to maintain reliable energy service as the State accelerates the transition to clean energy,” Newsom said in a letter.
To implement the low-income program for customers, electricity companies will need credible information about household income, according to a report issued by the University of California-Berkeley and the Energy Institute at Haas called “Ensuring Affordability for California’s Electricity Customers.”
The report suggests allowing government agencies, such as the Franchise Tax Board and the U.S. Census, to share personal data with the utilities.
Customers can leave comments for the CPUC about the proposed fixed-charge rate program on the commission’s website. So far, the commission has only received two.
In one comment, Sherry Listgarten of Palo Alto said the program would not do enough to stop rising costs, especially with renewable energy sources.
“Finally we are ditching net metering for net billing, but this ruling does not do nearly enough to stop the cost shift, which is enormous and getting bigger every time more solar is installed,” Listgarten said Nov. 23, 2020. “It is grossly unfair to low-income and renters. There needs to be very clear guidance from this proceeding … about the problem we are looking to be solved, for example by creating a substantial fixed charge.”
The CPUC is expected to make its decision on the program by July 2024, commission spokesperson Terrie Prosper told The Epoch Times.
This will establish the general structure of the income-graduated fixed charge, program guidelines, and details about the income-verification process, Prosper said.
Meanwhile, utilities will provide testimony to the commission June 2 and then work together to provide recommendations and issue a management statement by July 14. If needed, hearings will be held to gather more information, Prosper said.