The California Public Utilities Commission last week (May 9) adopted a sweeping new statewide electric rate design, imposing a $24.15/month fixed customer charge aimed at recovering fixed utility costs combined with lower volumetric rates for customers of the state’s three large investor-owned electric companis. The new rate design, the CPUC stressed, is based on the rates at the Sacramento Municipal Utility District and other public power systems in the Golden State.
The rate plan implements a new state law, 2022’s Assembly Bill 205, which calls for rates based “on an income-graduated basis with no fewer than three income thresholds so that a low-income ratepayer … would realize a lower average monthly bill without making any changes in usage.” While opponents billed it as a graduated tax like the federal income tax, that’s not in the cards. CPUC President Alice Reynolds stressed, “This does not require anyone to verify their income.”
The fixed charge will apply to all customer but would be less for two classes of lower-income customers who already get reduced utility bills, $6/month for those in the California Alternate Rates for Energy (CARE) program and $12/month for those in the Family Electricity Rate Assistance (FERA) program.” Volumetric rates – based on how much electricity a customer uses – will fall by five cents per kilowatt-hour.
Reynolds said, “This new billing structure puts us further on the path toward a decarbonized future, while enhancing affordability for low-income customers and those most impacted from climate change-driven heat events. This billing adjustment makes it cheaper across the board for customers to charge an electric vehicle or run an electric heat pump, which will spur greater uptake of these technologies that are essential to transitioning us away from fossil fuels.”
The state’s investor-owned utilities had proposed a much greater fixed charge based on verifiable annual family income, much more like a classic income taxation plan. Under the utilities’ joint proposal with households making above $180,000 annually paying $85/month in Southern California Edison territory, PG&E customers paying $92/month, and SDG&E customers paying $128/month, in addition to all also paying volumetric rates. Income verification would be “managed by a qualified, independent state agency or third party; the utilities would not manage nor have direct access to such data.”
Instead, the CPUC adopted SMUD’s $24.15 charge with discounts for customers already in lower-income plans. The vote was 4-0, with Commissioner Matthew Baker recusing himself.
The CPUC at last Thursday’s meeting also unanimously rejected Pacific Gas & Electric’s 2022 plan, and by implication its multi-billion-dollar deal with publicly traded hedge fund KKR, to spin off 49.5% of its non-nuclear generating assets to a new subsidiary, Pacific Generation. A CPUC administrative law judge recommended rejecting the plan. The commission agreed.
The commission was not persuaded that the spinoff would significantly lower what are the highest electric utility rates in the continental U.S. (Hawaii’s are higher) but would reduce the regulators’ ability to oversee company operations and could result in higher prices to its customers.
The PUC said the PG&E proposal failed to meet “even the minimal public interest standard” that guides utility regulation. The spinoff would have included 3,848 MW of hydroelectric, 1,400 MW of natural gas, 152 MW of solar, and 182 MW of battery energy storage. The Federal Energy Regulatory Commission gave the plan a conditional approval a year ago, subject to further filings once state regulators acted.
PG&E expressed disappointment at the CPUC rejection of the deal. Spokesman Paul Moreno told Bloomberg, “We continue to believe it would provide a path to lower rates and support the state’s clean energy goal.”
–Kennedy Maize