CPUC changes electric bill charges

Thursday, March 28, the California Public Utilities Commission (CPUC)
issued a proposed decision on how large, investor-owned utilities may
charge for electricity in California.

In the future, the utility bills will include two charges. One will be a
flat rate for the cost of the electric grid, for example, building and
maintaining the industry’s infrastructure, such as power lines. The
other charge will be for actual usage.

The hearing for this proposed decision is scheduled for the CPUC’s May 9
business meeting. If approved, the new rate structure will go into
effect in late 2025 and early 2026.

If approved, the CPUC estimates that a customer who powers their home
and vehicle with electricity would save an average of $28 to $44 monthly
compared to under today’s billing structure.

The Administrative Law Judge is proposing the statewide flat rate of
$24.15 for fixed costs. The Solar Energy Industries Association
recommended a flat rate of $9.72, the lowest of eight recommendations.
San Diego Gas and Electric suggested a flat rate of $73, the greatest
recommendation. Southern California Edison, and Pacific Gas and Electric
recommended a rate of $51.

Public electric utilities in California such as the Los Angeles
Department of Water and Power (LADWP) have flat rates in its billing
structure. At LADWP, the rate is $12. Riverside City Department of
Public Utilities has a flat rate of $36.09. Most other states use this
form of billing.

By separating the fixed costs from the usage charges, the expected
electric rate decline is 5 to 7 cents, according to the CPUC. This will
not change the utilities’ ability to impose time-of-day charges.

This change in the rate structure is the result of Assembly Bill 205,
which became law June 30, 2022. It gave the CPUC until July 1, 2024, to
develop a new rate structure.

The text of the bill, in section (3) of the introduction states, “… The
bill would eliminate the cap on the amount of the fixed charge that the
PUC may authorize. The bill would require the fixed charge to be
established on an income-graduated basis, as provided, with no fewer
than 3 income thresholds so that low-income ratepayers in each baseline
territory would realize a lower average monthly bill without making any
changes in usage …”

The new rate provisions still maintain both current income-based
discounts for electricity customers.

The California Alternative Rates for Energy (CARE) low-income assistance
program enrollees will have a $6 reduction applied to the flat rate on
their bills. Currently, CARE offers a 30 to 35% discount in rates based
on income and family size. For example, a family of four with an income
of less than $60,000 would qualify for some reduction. About 30% of the
customers of large independently owned utilities qualify for these
reductions.

Also, customers who are part of the Family Electricity Rate Assistance
(FERA) program will receive a $12 reduction for their flat rate.
Families in this program live in deed-restricted, affordable housing
with incomes at or below 80% of the area median income.

In January , during the period when comments could be submitted to the
CPUC, 10 state senators strongly urged the CPUC “… to adopt a fixed
charge that does not drastically impact customers, including those who
are already struggling to pay for their rising electricity bills.”

At the time, they were very concerned about the proposed flat rates of
$51 or $73 recommended by the largest publicly owned state utilities.

The CPUC stressed that the proposed decision does not include any income
verification requirements. The existing programs like CARE and FERA
already establish income eligibility through enrollment in programs like
MediCal and SNAP or through a voluntary income self-attestation process
followed by audits, according to the press release.

The proposed decision applies to all residential customers, including
those with rooftop solar. They also will transition to flat rates and
usage rates. Rooftop solar customers consistently rely on grid
infrastructure to use electricity from the grid and to send electricity
back to the grid.

And the CPUC said, this is not a hidden, profit-making scheme for the
utilities. There are no new fees. The proposal redistributes costs
associated with running the electrical grid and is not a profit
increase.

“This proposal brings California in line with state and national
trends,” the CPUC opined.