California has so many government programs, they’re contradicting one another. A new contradiction stems from Assembly Bill 205 from last year. The bill advances some commendable programs, such as “expedited judicial review for litigation involving” the California Environmental Quality Act, according to the Senate Floor Analysis.
Unfortunately, the main section requires “a fixed charge to be established on an income-graduated basis with no fewer than three income thresholds, such that a low-income ratepayer would realize lower average monthly bill without making any changes in usage.”
This requirement involves the state’s three largest electricity carriers, Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric.
For “basic electricity services,” KTLA broke down the amounts to be charged by SCE. Households with annual income from $28,000 tp $69,000 would pay $20 a month. Households with an income of $69,000 to $180,000 would pay $51 a month. And households with incomes above $180,000 would pay $85 a month.
Marc Sternfield at KTLA reports, “SCE says approximately 1.2 million of its lower-income customers will see their bills drop by 16%-21%. Overall, rates will decrease by about 33% per kilowatt hour for all residential customers, the utility says.”
The problem is “fixed rate” means it doesn’t matter how much you use.
Why conserve when there’s no penalty for not doing it?
“What the state is trying to do is to end high electricity prices by declaring they’re illegal,” Robert Michaels told us. He’s an emeritus professor at Cal State Fullerton specializing in energy markets. He said that contradicts state policies advancing conservation to reduce climate change. “You know what’s going to happen. The state’s going to say, Oh my God, we’ve got to relive this new crisis. Then they’ll pass some new policy that makes it worse.”
The fixed rates are supposed to be imposed by 2025. But, Michaels said, “What’s going to really happen is there are so many things to keep this from going into effect quickly. They can’t simply announce a price structure like this and expect it to happen. That’s the story I’m hearing. There’s got to be thousands of exceptions – some legitimate, some for hardship. It’s going to be so involved.”
Then there’s the Federal Energy Regulatory Commission, which is tasked with ensuring market prices. But, Michaels said, AB 205 gets rid of market mechanisms. And California “is going to have to explain why other states still are allowed” to have competitive markets. “That’s going to bring a jungle of FERC involvement.”He compared AB 205 to the changes more than two decades ago that caused what’s now called the “2000-01 California Electricity Crisis,” when numerous rolling blackouts hit the state, and prices rose sharply. That could happen again if usage spikes, as we suspect.
To end on a positive note, Michaels said, “There could be a blessing in it. It could be that we’ll start rethinking how we do household electricity pricing. It’s going to cause a lot of talk from this crazy idea.” And, let’s hope, not too many power outages.
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April 20, 2023 at 10:00PM
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