News Article

California's future with income-based flat-fee utility bills is getting closer

california power lines

SAN FRANCISCO -

Electricity bills in California are likely to change dramatically in 2026.

The California Public Utilities Commission (CPUC) is in the midst of an unprecedented overhaul of the way most of the state’s residents pay for electricity.

Utility bills currently rely on a use-more pay-more system, where bills are directly tied to how much electricity a resident consumes.

California lawmakers are asking regulators to take a different approach. Some of the bill will pay for the kilowatt hours a customer uses and a monthly fixed fee will help pay for expenses to maintain the electric grid: the poles, the substations, the batteries, and the wires that bring power to people’s homes.

The adjustments to the state’s public utility code, section 739.9, came about because of changes written into a sweeping energy bill passed last summer, AB 205.

A stroke of a pen, a legislative vote, and the governor’s signature created a move toward unprecedented income-based utility fees.

“This was put in at the last minute,” said Ahmad Faruqui, a California economist with a long professional background in utility rates. “Nobody even knew it was happening. It was not debated on the floor of the assembly where it was supposedly passed. Of course, the governor signed it.”

Faruqui wonders who was responsible for legislation that was added to the energy bill during the budget writing process. That process is not transparent.

“It’s a very small clause in a very long bill, which is mostly about other issues,” Faruqui said.

But that small adjustment could have a massive impact on California residents, because it links the size of a monthly flat fee for utility service to a resident’s income. Earn more money and pay a higher flat fee.

That fee must be paid even before customers are charged for how much power they draw.

Regulators interpreted legislative change as a mandate, but Faruqui is not sold.

“They said the commission may consider or should consider,” Faruqui said. “They didn’t mandate it. It’s worth re-reading it.”

In fact, the legislative language says the commission “may” adopt income-based flat fees for utilities. It does not say the commission “should” adopt them.

Nevertheless, the CPUC has already requested and received nine proposals for how a flat fee should be implemented.

The suggestions came from consumer groups, environmentalists, the solar industry and utilities.

Related News

us electricity generation graph 2021

Annual U.S. coal-fired electricity generation will increase for the first time since 2014

WASHINGTON - We expect 22% more U.S. coal-fired generation in 2021 than in 2020, according to our latest Short-Term Energy Outlook (STEO). The U.S. electric power sector has been generating more electricity from coal-fired power plants this year as a result of significantly higher natural gas prices and relatively stable coal prices. This year, 2021, will yield the first year-over-year increase in coal generation in the United States since 2014.

Coal and natural gas have been the two largest sources of electricity generation in the United States. In many areas of the country, these two fuels compete to supply electricity based…

READ MORE

Investigation reveals power company 'gamed' $100M from Ontario's electricity system

READ MORE

dubai energy meeting

Dubai Planning Large-Scale Solar Powered Hydrogen Production

READ MORE

graph

Florida PSC approves Gulf Power’s purchase of renewable energy produced at municipal solid waste plant

READ MORE

solar panel worker

Avista Commissions Largest Solar Array in Washington

READ MORE