California Proposes Revamping Electricity Billing to Cut Costs

By Jose Cervantes

The California Public Utilities Commission (CPUC) has recently introduced a new plan to tackle the issue of high electricity bills, particularly during the summer season. 

This proposal aims to reform the current billing system for residential customers, reducing costs, promoting electrification, and providing relief to disadvantaged populations.

The proposal introduces a “flat rate” billing structure, which involves separating infrastructure-related expenses from the unit price of electricity. 

This means that instead of paying for infrastructure costs through the variable electricity rate, customers will pay a fixed monthly fee regardless of how much power they use.

The proposed flat rate is set at $24.15 per month. This is comparable to the flat rate charged by the Sacramento Municipal Utilities District (SMUD) and significantly lower than the $73-per-month proposal put forward by some stakeholders.

The usage rate would be reduced by five to seven cents per kilowatt-hour, and the rate would continue to vary throughout the day to promote conservation.

By separating infrastructure costs from the usage rate, the proposal effectively lowers the unit price of electricity for all customers, regardless of income or location.

According to the CPUC, customers who electrify their homes and vehicles could save an average of $28-$44 per month under the new billing structure.

In areas like Fresno, where summer temperatures routinely exceed 100 degrees Fahrenheit, customers could save about $33 during the peak months.

The proposal strongly emphasizes affordability and equity. Customers enrolled in the California Alternate Rates for Energy (CARE) program, designed for low-income individuals, will receive a discounted flat rate of $6 per month. 

Similarly, customers who participate in the Family Electric Rate Assistance Program (FERA) and those who live in affordable housing subject to deed restrictions and have incomes below 80% of the area median income will be eligible for a discounted flat rate of $12 per month.

The proposal does not require customers to verify their income to streamline the process and ensure accessibility. 

Eligibility for discounted rates will be based on existing programs like CARE and FERA, which have established income-verification mechanisms through programs like MediCal and SNAP.

While the proposal has garnered support from consumer advocates who believe it will result in more affordable utility bills, it has also faced some opposition. 

Some state and federal lawmakers, including Assemblymember Jacqui Irwin and several members of the California congressional delegation, have expressed concerns that the fixed charge could ultimately lead to higher rates.

Despite the concerns raised, the proposed flat rate structure aligns with billing practices in most other states. California is one of the few states where investor-owned utilities do not have fixed rates for infrastructure costs.

The proposal to implement a flat rate is part of Assembly Bill 205, passed in 2022. 

This bill mandates a flat rate structure proposal by July 1, 2024.

The proposal is expected to be presented to the CPUC’s Voting Meeting agenda on May 9, 2024. 

If approved, the new billing structure will go into effect in late 2025 or early 2026.

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