California unveils income-based utility fees, 18 Congressmembers file opposition

(The Center Square) - The California Public Utilities Commission unveiled its plan for income-graduated fixed-rate utility charges in accordance with a law passed by California legislators in 2022. The fixed rate charges, meant to cover fixed costs such as transmission and distribution infrastructure and wildfire costs, will start at $6 for very low income households, $12 for low income households and $24.15 for moderate and higher income households.

For a four-person household, the $6 Tier 1 fee applies for incomes of up to $60,000 per year, the $12 Tier 2 fee for up to $75,000, and the $24.15 Tier 3 fee for any household making more. Qualification for discounts would make use of existing income-verification processes for the California Alternate Rates for Energy Program, a program providing a 30-35% bill discount for Tier 1 households, and the Family Electric Rate Assistance, a program providing more limited support for Tier 2 households.

Eighteen Democratic members of Congress challenged the ongoing proceedings and proposed fixed charges in a letter spearheaded by Congressmen Mike Levin, D-San Juan Capistrano, and Mike Thompson, D-St. Helena.

“Proponents of the IGFC rightly state that electricity bills are quickly becoming a major burden on household incomes. However, we worry that their proposed solution – to impose a high monthly fixed charge regardless of how much electricity households use – is not the best tool to keep costs down and meet our climate goals,” wrote Congressional Democrats in their letter. “The current average monthly fixed charge across U.S. investor-owned utilities is $11 per month … And there is little to stop [California] utilities from continuing to increase electric rates once they secure the highest fixed charges in the country.”

At $24.15 for most California households — which have a median household income of $91,905 — the fixed rate would cost double the national average.

The CPUC claims creating this new fixed cost “reduces the volumetric price of electricity (in cents per kilowatt hour) for all residential customers of investor-owned utilities” and thus “will encourage customers to adopt electric vehicles and replace gas appliances with electric appliances.”

California energy already costs 2.3 times the national average, and the CPUC itself has admitted that electricity in the state could soon be so expensive it could be cheaper to fill up a car with gas than an EV with electrons.

California Democrats and Republicans have both proposed bills to repeal the income-graduated fixed charge, with Republicans proposing to repeal it entirely and Democrats proposing to set a fees and tie fee increases to the consumer price index. Under the Democratic proposal, the fees could be up to $5 per month for CARE beneficiaries and $10 for everyone else, with annual percentage increases up to the prior year’s consumer price index increase.