Some state Senate Republicans say the proposed utility billing changes would make living in California less affordable and could discourage energy conservation. If energy bills are based on someone’s income and not on how much electricity they use, customers would little incentive to turn off the air conditioner during peak hours, they argue.
Del Mar resident Rosanna Alvarado Martin said she and her husband are both budget and environmentally conscious, so they recently signed contracts to install solar panels on both their Del Mar and University City residential properties.
Now Martin worries her electricity bills will go up no matter how much energy she saves with solar.
“This was really a kick in the gut. The whole thing is just really frustrating,” she said. “We’re looking to retire soon. So we’re looking to have some control over what our expenses are going to be in retirement, and this solar, to me, was one way we could do that.”
On the other hand, Leah Jacobson, a sociology grad student at UCLA, said she’s in favor of the proposed changes because they might bring stability to her monthly bills. A few times her bill has shot up to more than $400 a month, she said.
“There have been a couple times in the last year where our bill has jumped up a couple hundred dollars and we haven’t been able to figure out why,” Jacobson said.
“Thankfully, we were in a position where the amount is usually affordable when it doesn’t jump up like that. But I would hate to think about people who are not using their air conditioning or fans during the summer because they can’t afford it. That’s no way to live.”
Another major issue: data collection. To implement the changes, the state will have to categorize approximately 14 million households into income brackets, and a third-party administrator probably will have to verify their incomes, state and utilities officials say.
Because California’s Employment Development Department and the state’s long-time debit card contractor Bank of America have been plagued by cases of fraud, some critics worry the state won’t be able to keep people’s financial information confidential.
“The proposed fixed charges, without clarity on how Californians’ income will be verified, are not only questionable but also raise concerns about data privacy,” Senate Minority Leader Brian Jones, a Republican from El Cajon, told CalMatters. The utilities “are not set up to do income verification, nor should they be, as this is a major privacy concern.”
So far Democrats, who passed the bill with the fee-structure changes, have not spoken in a unified way about the proposed changes.
Why are California energy rates so high in the first place?
California’s average retail electricity price is nearly double the national average.
While the state has been at the tip of the spear of the green energy movement with early adoption of wind and solar, it lags behind other states in replacing aging and failing power lines, according to a 2022 audit report to the California Legislature.
And because the state is so spread out geographically, it costs more to build and connect its infrastructure for energy generation, maintenance, distribution and wildfire mitigation. Those costs don’t vary by how much electricity customers use, but they are driven up by climate change as California becomes hotter and drier.
Nevertheless, all three utility companies showed gross profit gains last year. PG&E reported a 3% bump to $16.8 billion in gross profits, which subtract the costs of production from revenues. Similarly, Edison’s $10.9 billion in gross profits was 15% better than the prior year, and SDG&E parent Sempra’s profit, at $9.9 billion, was a 3% improvement. Once all other expenses are accounted for, including such things as lawsuits, depreciation and taxes, both PG&E’s and Edison’s net incomes shrank for 2021.
As more Californians replace their gas-powered vehicles with electric ones, consumption of electricity is expected to increase. Under new state regulations, 35% of new 2026 car models must be zero-emissions, ramping up to 100% in 2035. State officials say the 12.5 million electric vehicles expected on California’s roads in 2035 will not strain the grid.
Are there other proposals?
Among several alternatives, one comes from the Utility Reform Network (TURN), a nonprofit consumer advocacy organization headquartered in San Francisco.
Its proposal, filed with the regulatory agency, also calls for an income-based fixed charge, but at fixed fees much lower than what the utilities want.
The group says the utilities already profit enough from customer fees.
“The (utility commission) has to work out all those details and the devil is in the details,” said TURN’s Executive Director Mark Toney.
The public will have a chance to weigh-in on the proposals by submitting comments online or attending a commission meeting.
Though the state set a 2024 deadline for the commission to establish fixed monthly fees based on customers’ incomes, an administrative judge in the proceedings wrote in a recent filing that the earliest the change could be implemented is the end of 2026.
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