Dive Brief:

  • The California Public Utilities Commission on Wednesday proposed a $24.15 monthly flat fee for customers of large investor-owned electric utilities Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric. The fixed charge aims to make electrifying homes and transportation more affordable.
  • The change would represent a major shift in how residential customers are billed for infrastructure-related expenses, and regulators said the new system would reduce the price of electricity by 5 cents/kWh to 7 cents/kWh.
  • Lawmakers in 2022 passed AB 205, requiring the CPUC to implement an income graduated fixed charge. The commission’s proposed order says it has taken a “gradual, incremental approach” to implementing the bill’s requirements, with discounts based on utilities’ existing income-verification processes.

Dive Insight:

Commissioners could vote on the new billing structure at the CPUC’s May 9 open meeting, and if approved the charges would go into effect in late 2025 and early 2026, the commission said.

According to the proposed decision, customers enrolled in the California Alternate Rates for Energy program will “automatically pay the lowest discounted fixed amount,” approximately $6/month. Customers enrolled in the Family Electric Rate Assistance program, or who live in affordable housing restricted to residents with incomes at or below 80% of the area median income, will pay a fixed charge of about $12/month.

“This reallocation of the way costs are billed means that the price for a unit of electricity will be lower for all customers, making it more affordable for everyone to electrify homes and vehicles, regardless of income or location,” the proposed decision said.

The fixed charge proposal “brings California in line with state and national trends,” moving existing fixed costs like maintaining power lines and other equipment into a flat rate line item on customer bills, according to the proposed decision.

The $24.15/month most customers would pay is the same as a fee charged by Sacramento Municipal Utility District and significantly lower than some stakeholders proposed. According to commission documents, SDG&E proposed a $73/month fixed charge; while PG&E and SCE proposed a $51/month charge. The Utility Reform Network and Natural Resources Defense Council proposed a $30.64/month charge, while the Solar Energy Industries Association, which opposed the change, recommended a $9.72/month charge.

According to the CPUC, the proposal means “all customers, regardless of income or location, will see financial benefits if they electrify. For example, a customer who powers their home and vehicle with electricity would save an average of $28-$44 per month compared to under today’s billing structure.”

Some lawmakers, however, have expressed concern that the fixed charges will reduce the incentive to invest in energy efficiency or renewables.

“We are further concerned that a high fixed charge could increase the electricity bills of millions of Californians, especially those who live in small homes, condos and apartments. Such setbacks could harm our progress on federal and state clean energy, climate, and equity goals,” 18 members of the California congressional delegation wrote in a Wednesday letter to CPUC President Alice Busching Reynolds.

State lawmakers in January introduced AB 1999, to significantly limit fixed charges.

Correction: A previous version of this story gave the wrong number of California congressional delegates who signed a letter expressing concern over fixed electric charges. Eighteen members signed the letter.