As California’s residential utility rates soared to second-highest in the nation, the state’s utility regulators Thursday approved a fixed-fee billing plan for customers of PG&E and two other utility behemoths aimed at shielding the poorest consumers while promoting electric car and appliance use to meet climate goals.
The California Public Utilities Commission voted 4-0 to allow a fixed charge of up to $24.15 a month for customers of Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric.
Critics blasted what they described as a plan to impose even higher costs on many consumers while rewarding high electricity consumption in a state that has struggled to keep the lights on during peak-demand summer months and punishing frugal energy misers.
“This will hurt PG&E customers and other utility customers,” said Loretta Lynch, a former member of the commission and a harsh critic of the state regulatory agency and of PG&E. “A lot of customers are going to be paying more.”
The fees are slated to go into effect in late 2025 for customers of San Diego Gas & Electric and Southern California Edison and in early 2026 for PG&E customers.
“Nothing will happen immediately,” PUC Commission President Alice Reynolds said before the vote.
But consumers whose lower household earnings qualify them for reduced utility rate programs would pay lower fees.
Here’s a breakdown:
— $6 a month for those in the California Alternate Rates for Energy (CARE) program, typically for people at low-income or poverty levels.
— $12 a month for those in the Family Electric Rate Assistance (FERA) program. This is for people of modest incomes with three or more people in a house. As an example, a three-person family would qualify if their annual household income ranges from $49,721 to $62,150.
Oakland-based PG&E and supporters note that the CPUC decision also includes a 5 cents to 7 cents per kilowatt-hour reduction. The amount of savings on utility bills from this component depends on how much electricity people use each month. In theory, the lower usage cost could offset some of the effects of the fixed fee.
“A monthly fixed charge will not increase the amount PG&E and other utilities collect from customers,” PG&E stated in comments the utility emailed to this news organization. “It changes how residential electric customers are charged for their electric service by separating some fixed infrastructure costs from electric use costs.”
But advocates acknowledged the plan will raise bills for many. Some residential customers will pay more, some will pay less, and some will pay the same, CPUC officials estimate.
“About 4 million out of the 11 million customers served by the three utilities will see higher bills,” said Ahmad Faruqui, a Danville-based economist and energy expert who has consulted for all three of the state’s major utilities.
PG&E stated that the change will help the state meet its climate goals as “the fixed charge will reduce the per-kilowatt cost of electricity for all customers, making it more appealing for everyone to power their homes and cars with electricity instead of fossil fuels.”
But critics such as state Sen. Kelly Seyarto, of Murrieta, one of the Republican leaders in the Senate, said that “all this does is put a bigger burden on working families that are already dealing with the repercussions of unrealistic energy policies that make California unaffordable.”
Thursday’s vote capped a months-long dispute over a controversial proposal for progressive income-based utility billing to ease the burden on the state’s poorer residents from the rising costs of the state’s efforts to reduce use of fossil fuels such as coal and natural gas blamed for raising global temperatures.
A 2022 state energy bill, AB 205, included a provision that directed the utility commission to study income-based fixed charges and then decide on their implementation by no later than June 30 of this year.
Proposals called for billing consumers based on household size and income — one plan would have PG&E customers pay a fixed fee ranging from $13 for those earning up to $30,000 to $51 for those earning $75,000 or more.
But that idea ran into bipartisan opposition in the Capitol where lawmakers said consumers would be uncomfortable having to share their income information and that the plan would discourage low energy use.
The approved plan attempted to salvage some of the income-based concept to ease the burden on poorer customers.
But most consumers probably wouldn’t meet the requirements for the lower fees.
According to the CPUC, about 27% of the 11 million PG&E, Edison and SDG&E residential customers are enrolled in CARE and eligible for the $6 fixed charge. The FERA program currently has around 80,000 enrolled customers, though additional customers would be eligible for the $12 fixed charge through the inclusion of customers who live in deed-restricted affordable rental housing, the CPUC said.
Among PG&E’s 5.5 million customers in Northern and Central California, 1.39 million, or 25%, are in the CARE program, and about 38,600, or 0.7%, are in the FERA program as of April.
In early January, PG&E residential customers who receive combined electricity and gas services from the utility were jolted with an increase in monthly bills that jumped higher by more than 20% compared to early January 2023 — far above the increase in the Bay Area inflation rate.
“We recognize that electricity bills in California are high,” PUC Commissioner Darcie Houck said before the vote. Commissioner Houck added, “This is a relatively modest charge.”
California utility customers are already paying sky-high bills. In February 2024, California residential utility customers were paying the second-highest amount for electricity in the United States. Hawaii residents were paying the most, according to a report released by the U.S. Energy Information Administration.
On April 22, in an interview with this news organization in Richmond, PG&E Chief Executive Officer Patricia Poppe held out hope that customers in the next few years could see lower bills.
“We see a future where customers’ bills can start to come down,” Poppe said in the interview.
Numerous people spoke before the PUC vote to denounce the new fee, which was made possible by a law that was approved quietly by the state Legislature a few years ago and signed by Gov. Gavin Newsom.
“For millions who live paycheck to paycheck, the impact of the utility tax would be devastating,” said Yvette DeCarlo, who represents a coalition of groups that opposes the new fixed fee.
