Newsom seeks ways to cut utility rates

On Wednesday, Oct. 30, Gov. Gavin Newsom issued an executive order intended to mitigate utility rate increases and possibly find ways to reduce these rates.

In his order, Newsome directed four different agencies, all of whom have some role in overseeing state utilities, to investigate possible efforts to help utility customers save money in the future. The results of this analysis and investigation are to be reported to the Governor by Jan. 1, 2025.

“We’re taking action to address rising electricity costs and save consumers money on their bills,” Newsom said in the press release accompanying the announcement of the Executive Order. “California is proving that we can address affordability concerns as we continue our world-leading efforts to combat the climate.”

According to the U.S. Energy Information Administration, the average cost of a kilowatt-hour in California was the second highest in the nation. Only Hawaii’s cost was higher.

The press release accompanying the Executive Order identified two major reasons for the growth of electric costs. The first was the cost for utilities to reduce the risk of power line failure to ignite a wildfire. The second cause of rate growth was the addition of new programs, which are paid for from utility rates.

The release stressed that these efforts do not change the Administration’s commitment to achieving carbon neutrality and 100% clean electricity by 2045.

The California Energy Commission was directed to examine programs which may be adding costs to electric bills that could be stopped going forward. These may include underperforming programs or ones which may be funded from other sources.

The CEC has two months to provide Newsom with a report of its analysis, which should include all recommendations for rate savings, including legislative as well as regulatory.

The California Public Utilities Commission was requested to examine the value of its programs, particularly those that may be increasing rates without sufficient benefits to the customers. This would also include recommendations to modify or sunset any underperforming or underutilized programs.

But the Governor stressed that these recommendations are not to compromise public health and safety, electric grid reliability, or the achievement of the State’s 2045 clean electricity goal and the State’s 2045 economywide carbon neutrality goal.

The California Air Resources Board, and the CPUC are directed to collaborate on possible options to improve the effectiveness of California’s Climate Credit. The Greenhouse Gas Cap-and-Trade Program has provided bi-annual rebates, totaling $13.6 billion, to ratepayers since 2014.

The Office of Energy Infrastructure Safety, in cooperation with CPUC, is to consider “adjustments to utility wildfire safety oversight processes, procedures, and practices” that would yield reduce their costs without affecting the public’s safety

The final directive requested the CPUC to investigate any possible federal program funding that could be used to reduce utility rates.

” Californians expect us to take a hard look at their monthly energy and electricity bills and deliver reduced costs and savings for the long-term,” said Assembly Speaker Robert Rivas (D-Salinas) in the press release. “I support increased oversight efforts, because regulators must ensure energy programs are implemented effectively and responsibly. The Governor’s action today is another step forward to lessen households’ total energy burden and lower the cost of living in our state.”

But consumer and environmental groups are concerned that many necessary programs may have funding reduced or eliminated in total.

“If a clean energy program isn’t working as well as intended, then we should fix it. Not get rid of it. Governor Newsom’s executive order takes a highly questionable approach to reducing electric rates, aiming for small, short-term savings at the expense of both our transition to clean energy and our environment,” said Steven King, Environment California Clean Energy Advocate. “The costs to society for not investing in energy efficiency and solar now are much greater than the alternatives.”