California utilities seek higher fixed monthly rates

Two years ago, state lawmakers passed a complex energy bill with little controversy that drastically changed the way most Californians bill their electricity.

The bill is Pacific Gas and Electric Co. had requested Three months ago, the state Public Utilities Commission announced changes to electricity prices that would see households pay a fixed monthly fee in exchange for lower rates per kilowatt-hour.

Gov. Gavin Newsom filed the bill as part of a massive 2022 budget revision. Within four days, the bill passed an Assembly committee hearing without discussion, was approved by the full Assembly and Senate, and signed by Newsom.

The state’s three largest investor-owned electric utilities pushing for the change said it would encourage Californians to ditch cars and appliances that run on planet-warming fossil fuels and switch to vehicles, stoves and appliances powered by solar panels and wind energy. Heater turbine. They also said the new monthly fee would allow them to spread fixed costs more evenly among customers.

But opponents say the legislation is a financial gift to PG&E, Southern California Edison and San Diego Gas & Electric and will cause millions of Californians who live in small homes or apartments that use less electricity to pay more costs, and residents who live in homes with large electricity consumption pay more.

“If you want to design a policy to send a signal that conservation doesn’t matter, this is it,” said Ken Cook, chairman of the Environmental Working Group.

Now, as governor-appointed members of the California Public Utilities Commission prepare to approve the $24-a-month charge at their May 9 meeting, some lawmakers who voted for the original legislation are trying to overturn the bill. A alliance More than 250 environmental and community groups are also protesting the law, claiming its approval smacks of too cozy a relationship between utility companies, regulators and think tank researchers.

Opponents complain that the new law removes a $10 fixed-charge cap that has been in place since 2013 and that there is now nothing to stop utilities from raising that cap higher and higher.

“There’s a trend across the country where utilities are trying to shift the more they collect from ratepayers into flat fees because they’re going to get that money anyway,” Cook said. “It’s easy money.”

Terrie Prosper, director of strategic communications for the CPUC, said in a statement that the new rate structure “makes electric vehicles more affordable for everyone, regardless of income, location or home size.”

The commission estimates that people who use electricity to power all their home appliances and vehicles will save an average of $28 to $44 per month compared to the current billing structure. (The law does not apply to the Los Angeles Department of Water and Power or other municipal utilities.)

Prosper said customers are still encouraged to conserve electricity at night when the grid is under greatest stress because electricity bills will be higher per kilowatt-hour. She said it’s similar to how current rates change depending on the time of day.

“The flat-rate design will not increase utility revenue,” Prosper said. “The flat rate is not a new charge – it just redistributes how electricity is paid on your bill.”

Newsom spokesman Alex Stark said the flat-fee idea had been discussed repeatedly at public meetings and budget hearings “as a potential solution to managing rising electric bills” before the bill passed.

Stark did not respond to a question about whether Newsom introduced the bill at the request of the utility companies.

Prosper did not explain why Newsom’s administration introduced flat-fee language in a bill days before the governor must sign the budget and related legislation.

California’s electricity prices are already the second highest in the country. Only Hawaii has higher rates.

Michael Backstrom, Southern California Edison’s vice president of regulatory affairs, said the new flat charges will ensure “everyone who uses the grid pays for its operation and maintenance.”

“There are no additional fees,” he said. “Utility profits are unchanged.”

PG&E and SDGE executives did not respond to repeated calls and emails seeking comment.

The new law was inspired by a 2021 paper written by a professor at UC Berkeley’s Haas Energy Institute, which is funded in part by utility companies.

The paper details how the cost of building renewable energy plants, burying power lines to reduce the risk of wildfires, and compensating fire victims has pushed electricity bills so high that it is discouraging Californians from buying electric vehicles and replacing gas appliances.

The newspaper also said that the growing number of homes with solar panels means fewer households are paying these rapidly growing fees, which are used to calculate the rates utility companies charge per kilowatt-hour.

The professors recommend lowering the price of electricity per kilowatt-hour while adding a new fixed fee to bills.

Flat fees are considered regressive because it is more difficult for low-income people to pay them than for wealthy people. To do this, professors proposed a progressive flat fee that would rise based on earnings.

According to the Berkeley Haas Energy Institute, since 2018 it has received $205,000 from PG&E, $160,000 from Edison and $50,000 from SDGE.

The Solar Rights Alliance, a nonprofit that represents homeowners and businesses that use solar energy, said the institute’s work advising the government while receiving funding from utilities “suggests a serious conflict of interest.”

Lead author Severin Borenstein, an economics professor, said no organization should be allocated more than 2% of an institute’s budget. He said the power company had no impact on the 2021 paper.

“We will not take orders from any of these people,” he said.

Utilities like the paper’s recommendations. In a March 2022 filing, PG&E argued for “rapid adoption” of flat charges similar to those proposed by the professors.

Two months later, on May 13, 2022, Newsom issued 175 page revised version his proposed budget. In a paragraph on page 63, he says he is proposing legislation “to adjust electricity rates to a predetermined fixed fee.” He said the change would “strengthen broad electrification efforts.”

The state’s legislative tracker shows the proposed language first appeared on June 26, 2022. A measure, Assembly Bill 205, Modifications have been made and a page on proposed energy legislation has been added. Part of the bill allows the state to purchase power from the aging Diablo Canyon nuclear power plant and approve solar and wind farms over the objections of local governments.

It also contains language to lift the $10 cap and order the Public Utilities Commission to set fixed charges based on “income brackets.”

AB 205 is being called a trailer bill for the state budget in Sacramento. The towing bill seeks to enact legal changes required by the governor’s proposed budget.but politicians sometimes misuse them Passing complex or controversial legislation with little public attention.

Lawmakers’ use of trailer bill surges after voters pass it Proposal 25Passed in 2010 by Democrats and public employee unions, it said the budget and any related legislation would require only a majority vote, not two-thirds. Democrats now dominate the state Legislature.

When AB 205 was introduced, one Democratic lawmaker called it “Bad towing bill These were thrown at us late Sunday night.

The next day, AB 205 and 28 other teaser bills were introduced at an Assembly Budget Committee hearing on issues ranging from marijuana regulation to reproductive rights.

According to the transcript, committee leaders limited public discussion to one hour. There is no mention of fixed electricity bills.

“Unfortunately, this hour-long hearing was held just hours after the budget bill was enacted, and it is certainly not enough,” Assemblyman Vince Fong, a Bakersfield Republican, said at the hearing.

Two days later, the full House and Senate passed the bill. Newsom signed the agreement the next day.

Last year, the three major power companies said they would recommend monthly charges of up to $128 for households making more than $180,000 under AB 205. Those making between $69,000 and $180,000 will pay a flat monthly fee of up to $73. Those making less than $69,000 will pay between $15 and $34, depending on which company provides their electricity.

The three companies said they would seek to increase fixed charges if “revenue imbalance” reaches 10%. This imbalance may arise if their estimate of what they charge on a fixed fee does not make up for what they lose in the reduced per-kilowatt-hour rate.

The companies’ proposals have angered some lawmakers.

a letter to the committee Eighteen Democratic members of Congress noted that average electricity use per California resident has remained virtually unchanged since the 1970s due to energy efficiency efforts.

“Implementing high flat fees could undermine decades of progress by forcing people to pay utility companies before turning on a light switch,” the California representatives wrote.

In January, Rep. Jacqui Irwin, D-Thousand Oaks, introduced a bill called AB 1999 to reverse much of Newsom’s bill.

As criticism grew in late March, the committee said it proposed lowering the monthly flat fee to $24.15. Low-income earners pay $6 or $12 per month, depending on their circumstances.

But the commission’s proposal didn’t stop complaints from families across the state or coalitions opposed to the new rate structure.

In an analysis for the coalition, Flagstaff Research’s Josh Plaisted estimated that households that use more than 6,000 kilowatt hours of electricity per year will save more as their usage increases. For example, a 2,500-square-foot home with a pool could save more than $300 a year, he said.

“I think this is a surprise to most people,” Plaisted said. “Low energy users subsidize current high energy use.”

The opposition was even more outraged when House Speaker Robert Rivas (D-Hollister) and other congressional leaders halted debate on Irving’s bill late last month and took procedural action to table it until the legislative session.

Cynthia Moreno, the speaker’s press secretary, disputed the suggestion that Assembly leaders vetoed the bill.

“We will continue to address this issue this year, including possible revisions, to ensure that any changes to fixed charges are revenue neutral for the utility and not a means to increase profits,” she said.

Moreno said Rivas appreciates the “legislative review of the Public Utilities Commission and the governor’s plan, and this oversight will continue.”