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Climate and Environment

A Radical Solution To High Power Bills: Base Them On Income

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LADWP's Shared Solar program is designed to close that gap by prioritizing low-income Angelenos and renters. (Photo by David McNew/Getty Images)
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Your monthly home electricity bill pays for a lot more than just the energy you use. You’re likely also paying for things like:

  • wildland fire prevention
  • electric vehicle charging stations
  • solar roof subsidies and much more

Those extra charges can amount to double or even triple the cost to produce electricity, according to UC Berkeley professor Severin Borenstein, who analyzed the costs in a report to state regulators.

He’s advocating for a potential solution: basing bills on household income.

“Charging very high rates for each kilowatt hour of electricity, it's really unfair, it's a very regressive tax,” Borenstein said.

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Power bills from state-regulated utilities like Southern California Edison, PG & E and San Diego Gas and Electric are higher than in many parts of the country, including within the city of Los Angeles, whose municipal utility LADWP charges lower rates.

Borenstein is presenting the concept of income-based energy bills on today to the state Public Utilities Commission, which regulates big utilities.

No decision would come out of the workshop itself, but it could shape the commissioners’ thinking on future rounds of rate-setting.

Borenstein says income-based power bills could have two parts, one for the energy that’s used, while the other would be a flat fee based on income. He proposes five different income tiers to determine how high the flat fee portion of the bill would be.

That could reduce power bills for lower-income households and it might raise what the highest earners pay, he said. Such a shift, he said, would result in the utilities still collecting the same amount of money to build and maintain their power grids, and to generate and transmit electricity.

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In California, upper-income people have been the early adopters of solar roof panels, and electric cars because they can afford to make the investments in cutting-edge energy and transportation. But for California to meet its goals to end the use of polluting fossil fuels, the state needs to get lower-income people to also shift to electric appliances and transportation.

Borenstein said that lower power rates would encourage a shift among those lower-income households to cleaner electrical appliances.

One key factor cited by those participating in the PUC meeting: Having power is a necessity, not a luxury.

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