California introduces utility fees based on income, prompting opposition from 18 Congressmembers

The California Public Utilities Commission has recently introduced its proposal for income-graduated fixed-rate utility charges, as required by a law passed by California legislators in 2022. These fixed rate charges are designed to cover expenses such as transmission and distribution infrastructure, as well as wildfire costs. Under the new plan, very low income households will be charged $6, low income households will be charged $12, and moderate and higher income households will face a charge of $24.15.

For a household with four people, the fee for Tier 1 is $6 per year for incomes up to $60,000. The fee for Tier 2 is $12 for incomes up to $75,000, and the fee for Tier 3 is $24.15 for households earning more than that. To determine eligibility for discounts, existing income-verification processes for the California Alternate Rates for Energy Program and the Family Electric Rate Assistance program will be utilized. The California Alternate Rates for Energy Program offers a 30-35% bill discount for Tier 1 households, while the Family Electric Rate Assistance program provides more limited support for Tier 2 households.

Eighteen Democratic members of Congress have come together to challenge the ongoing proceedings and propose fixed charges. The letter, spearheaded by Congressmen Mike Levin, D-San Juan Capistrano, and Mike Thompson, D-St. Helena, highlights their concerns and objections.

In a letter written by Congressional Democrats, they express concern regarding the proposed solution put forth by supporters of the IGFC (Independent Grid Facilitation Commission). While acknowledging the increasing burden of electricity bills on household incomes, the Democrats question the efficacy of imposing a high monthly fixed charge, irrespective of the amount of electricity consumed, in order to address this issue and meet climate goals. They highlight that the average monthly fixed charge among U.S. investor-owned utilities currently stands at $11, and express apprehension that once California utilities secure the highest fixed charges in the country, there will be little to prevent them from further escalating electric rates.

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Most California households, with a median household income of $91,905, would be paying double the national average at $24.15 for the fixed rate.

According to the CPUC, the introduction of this new fixed cost will result in a decrease in the price of electricity for all residential customers of investor-owned utilities. This reduction in cost is expected to encourage customers to switch to electric vehicles and replace gas appliances with electric ones.

California’s energy prices are already 2.3 times higher than the national average. In fact, the California Public Utilities Commission (CPUC) has acknowledged that electricity in the state could become so costly that it might be more affordable to fuel a car with gasoline rather than charging an electric vehicle (EV) with electrons.

Both California Democrats and Republicans have put forward bills to repeal the income-graduated fixed charge. While the Republicans aim to completely eliminate it, the Democrats propose setting a fee structure and linking fee increases to the consumer price index. According to the Democratic proposal, CARE beneficiaries could pay up to $5 per month, while others would pay $10. Additionally, the fees would be subject to annual percentage increases based on the previous year’s consumer price index increase.

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