CPUC voting soon on $24 fixed monthly charge for California electricity bills

Proposal before the California Public Utilities Commission would lower electricity rates — but customers would also pay a flat, monthly charge each month

By Rob Nikolewski | San Diego Union-Tribune

The California Public Utilities Commission will soon vote on one of the most contentious pieces of legislation that recently passed through the state legislature — Assembly Bill 205, which lowers rates but also establishes a monthly fee on residential electricity bills paid by customers of the state’s investor-owned utilities.

Under a proposed decision issued last month by one of the commission’s administrative law judges, electricity rates would be reduced by roughly 15 percent, but most customers would pay a monthly flat charge of $24.15.

The vote is scheduled for May 9. To pass, the proposal needs the approval of the majority of the five voting members of CPUC.

A pair of bills introduced in the current legislative session in Sacramento seek to repeal the section of AB 205 that creates a fixed monthly charge, but both pieces of legislation were put on ice last week.

Senate Minority Leader Brian Jones, R-San Diego, appeared before the Senate Energy, Utilities, and Communications Committee touting Senate Bill 1326, which would overturn the fee. The legislation included an urgency clause, meaning his bill would go into effect immediately if it passed through both chambers and became law.

All four Republicans on the committee voted for the bill, but 14 Democrats refused to cast a vote. Since bills require at least a majority of “aye” votes to move forward, the bill died.

“The way the AB 205 is written and now with my bill failing to get through, the CPUC can approve $24 per customer now, but there’s nothing to say that next year it’s not (going to be raised to) $50 or $100” per month, Jones said. “The Legislature has abdicated our responsibility to the CPUC.”

Assemblymember Jacqui Irwin, D-Thousand Oaks, filed a similar piece of legislation, AB 1999, but last week the bill was quietly put on hold by Assembly Speaker Robert Rivas, D-Salinas.

According to CalMatters, Rivas’ leadership team earlier this month rerouted Irwin’s bill from a scheduled committee meeting hearing and then said AB 1999 will not move forward in its current form, although talks with Irwin are still ongoing.

Right after the bill was reassigned last week to the rules committee, Irwin said in a statement that “we will continue to push for a legislative off ramp from this runaway process” at the CPUC.

AB 205 passed through both chambers late in the 2022 session under what could be described as murky circumstances, at best. Signed into law by Gov. Gavin Newsom, AB 205 was part of a massive omnibus, or “trailer” bill that ran 21,633 words and covered a host of other items.

At the time, most of the floor debate focused on a section of the bill that created a strategic reliability reserve to be overseen by the California Department of Water Resources, and the portion establishing a fixed monthly charge on residential electricity bills was overlooked.

AB 205 aims to help lower-income customers who have been particularly hard hit by soaring utility bills. The CPUC was assigned the task of coming up with the specifics to implement it by July 1.

The proposed decision that administrative law judge Stephanie Wang released last month calls for reducing electricity rates by 5 to 7 cents per kilowatt-hour.

The thinking goes that the rate cut will encourage all utility customers regardless of income to adopt electrification measures in their homes. That includes buying electric vehicles and replacing their natural gas appliances with electric appliances, such as heat pumps. California has set a goal to derive 100 percent of its electricity from carbon-free sources by 2045.

At the same time, a fixed monthly charge would be created.

Currently, monthly utility bills include not only the cost, transmission and distribution of the electricity itself but also the dollars that investor-owned utilities spend on other programs — such as reducing wildfire risk, “public purpose programs” like the California Alternative Rates for Energy (CARE) and the Family Electric Rates Assistance (FERA) that help low-income customers pay their utility bills, and the myriad clean energy programs aimed at reaching the state’s decarbonization goals.

Under AB 205, the idea is to separate the costs of many of those programs not directly related to the price of electricity and put them into a fixed charge.

Under CPUC’s proposed decision, residential customers would pay $24.15 per month. Customers enrolled in CARE would pay $6 each month while FERA customers would pay $12.08. The commission insists the new billing structure does not generate new profits for utilities — “it simply reallocates how existing costs are shared among customers.”

The $24.15 monthly fee is much lower than proposals the big investor-owned utilities suggested to the CPUC — SDG&E initially called for monthly charges as high as $128 and then revised the figure to as much as $73 per month — but some critics remain steadfast in their opposition.

Some groups opposed to AB 205 have formed a coalition called Stop the Big Utility Tax. “A utility tax of $24 a month would unfairly raise utility bills even for anyone with a small energy footprint, disproportionately harming most people who live in an apartment or small home,” Richard Skaff, executive director, Designing Accessible Communities, said during a coalition briefing on April 16. “This would be devastating to renters and households that are already struggling.”

But the proposal has received favorable reviews from organizations that include The Utility Reform Network, a San Francisco-based consumer group that frequently weighs in on CPUC decisions, and the Public Advocates Office, the independent arm of the commission.

“Reducing the volumetric rate is going to help with affordability for those people who live in the hottest climate zones in the state,” Public Advocates Office interim director Linda Serizawa said when the proposed decision came out. “They can’t change their usage … Our fear is that they are doing without (air conditioning), which is untenable.”

It’s important to note the proposed decision, if passed, would be merely the first iteration of AB 205. The CPUC plans to review the effects of the monthly flat charges, so the monthly fees may change in the future and brackets based on income levels can theoretically be added.

If adopted, the new rules would go into effect in the fourth quarter of next year.

Since the fixed monthly charge deals with the costs of transmitting and distributing electricity, the rule would apply to customers enrolled in community choice energy programs, including the two in the San Diego area — San Diego Community Power and the Clean Energy Alliance.

The fee would also apply to residential customers with rooftop solar.

The fixed charge impacts residential utility customers only, not commercial or industrial accounts. It does not pertain to the natural gas portion of customer bills — just electricity.

This story originally appeared in San Diego Union-Tribune.