The sun shines behind electrical power lines during a heat wave.
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Patrick T. Fallon
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AFP via Getty Images
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Topline:
California state regulators have issued a proposal that would lower electricity rates and add a fixed monthly charge of about $24 to most Southern California Edison and San Diego Gas & Electric customers’ bills (though qualifying low-income households would see smaller charges of $6 or $12). The proposal marks a shift — for now — from an income-graduated fixed charge proposed last year.
What it means: The change is estimated to have relatively modest savings for the average Southern California Edison customer, though more in hotter areas where energy use is higher — for example about $30 in the summer months. For those with an electrified home with solar, an electric vehicle or other home electrification, average savings of $28 to $44 a month are estimated in comparison to the current billing structure.
Why it matters: California has some of the highest electricity rates in the nation and costs are expected to increase as the state transitions from fossil fuels to cleaner energy such as solar and wind, which requires a massive investment in electric infrastructure, while also hardening the grid against more extreme weather. A fixed charge can help lower electric rates, but some worry the savings in rates won’t be enough and that some middle-income homes may end up paying more.
What’s next: The proposed decision is expected to be up for a vote at the CPUC’s meeting on May 9. The public can submit comments on the proposal in the meantime.
California state regulators have issued a proposal that would lower electricity rates and add a fixed monthly charge of about $24 to most Southern California Edison and San Diego Gas & Electric customers’ bills.
The proposal, which also includes the other large investor-owned utility in the state, Pacific Gas & Electric, marks a shift — at least for now — from an income-graduated fixed charge proposed last year.
The proposal aims to help address rising electricity rates as we shift off fossil fuels to an electric future powered by cleaner energy sources such as solar and wind, but, there are concerns that it could raise expenses for some lower to middle-income households and that the savings for most households would not be significant enough to promote electrification.
What the proposal says
If approved by the California Public Utilities Commission, or CPUC, starting in late 2025:
Most Southern California Edison customers would see a flat charge on their bill of $24.15 regardless of how much electricity they use or what their income level is. (This is largely in the middle of previous proposals — Southern California Edison had suggested the fixed charge be $51 per month, while a solar industry trade group had proposed the lowest charge at $9.72 per month.)
Households registered with the California Alternate Rates for Energy (CARE) low-income assistance program would see a flat charge of $6.
And households registered with the Family Electricity Rate Assistance (FERA) program, as well as people who live in deed-restricted affordable housing with incomes at or below 80% of the area median income, would see a flat charge of $12. (Learn more about these low-income assistance programs here).
Electricity rates would then be lowered by 5 to 7 cents per kilowatt hour, according to a fact sheet from the California Public Utilities summarizing the 265-page proposed decision. The proposal basically rearranges how fixed costs we already pay through our rates are distributed.
The proposals for a fixed charge from various groups that have been heavily involved in the CPUC's rulemaking process.
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Courtesy of CPUC
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LAist
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What is the CPUC?
The California Public Utilities Commission is a state agency that regulates privately owned public utilities in California, including electricity providers such as Southern California Edison, natural gas companies such as SoCal Gas, as well as telecommunications and water companies. The five commissioners are appointed by the Governor. Learn more here.
What the changes mean
The change is estimated to have relatively modest savings for the average Southern California Edison customer, though more in hotter areas where energy use is higher — for example about $30 in the summer months. For those with an electrified home with solar, an electric vehicle or other home electrification, you can expect to save $28 to $44 a month compared to what you are paying now, according to the CPUC.
The fixed cost would go toward maintaining and expanding the power grid for more electrification, hardening it against wildfire and other weather, energy efficiency programs, low-income bill assistance programs, and more. Already, a large chunk of what we pay in our electric bills is for such fixed costs, unrelated to our electricity use, but utilities had previously only been able to address these costs by raising rates.
California has some of the highest electricity rates in the nation. The average price per kilowatt hour of electricity for SoCal Edison customers is about 36 cents, compared with the national average of 17 cents.
Most utilities across the nation use a fixed charge as part of their billing, with the median nationwide being about $12. For example, the L.A. Department of Water and Power has a fixed charge of $12.
The CPUC’s Public Advocate’s Office, a state agency that advocates for the public in such decisions, said in a statement that the proposed decision is “a critical step to addressing affordability and advancing electrification in California.”
They also say the current electric rate structure, which largely has those fixed costs folded into the rate, punishes households in hotter regions or with more people in the same household, and ultimately disincentivizes folks to switch to more efficient, climate-friendly electric appliances. They believe the changes will further electrification, particularly for low-income households.
Others worry that the fixed charge will only punish households that are most frugal with electricity use, and that some lower- to middle-income households could actually see their savings canceled out or costs increased. For example, according to an analysis by Sierra Club associate attorney Nihal Shrinath, a low-income customer who pays $95 or less on their bill could see higher bills from a fixed charge, since a $12 fixed charge would cancel out the savings from the reduced rate.
The Sierra Club also emphasized in a statement that the proposal charges the same fixed rate for households making $50,000 a year as those of multi-millionaires.
“Regulators need to correct course to deliver a progressive proposal that places appropriate fixed charges to high-income Californians, and delivers deeper savings to households that need it,” Theo Caretto, associate attorney with L.A.-based grassroots environmental justice group Communities for a Better Environment, said in a statement.
The income-based rate effort had faced pushback for financial privacy concerns and concerns that middle-income homes, and homes with solar panels, could also be charged more.
How to get involved
The proposed decision is expected to be up for a vote at the CPUC’s meeting on May 9. The public can submit comments on the proposal in the meantime. You can do that by going to this link, and then selecting the Public Comments tab.
You can also mail a comment to CPUC Public Advisor, 505 Van Ness Ave., San Francisco, CA, 94102. Or you can speak during the public comment period of the voting meeting scheduled for May 9, which begins at 11 a.m.
How Do Public Comments Inform Decision-Making?
CPUC Commissioners and Administrative Law Judges read public comments to gain information about the public’s concerns and needs, such as the impact a rate increase will have on their lives.
