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How the Saga of California’s Contentious Income-Based Utility Charge Began
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By Dan Walters, CalMatters Commentary
Published 2 weeks ago on
April 3, 2024

A look into the controversy surrounding California's proposed fixed utility charges based on income levels. (Shutterstock)

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A year ago, California’s three big investor-owned electric power utilities – Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric – proposed new fixed charges on their residential customers that would vary by income.

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Dan Walters

CalMatters

Opinion

Households making less than $69,000 a year would pay $20 to $34 a month, while those earning $69,000 to $180,000 would be charged $51 to $73. The charge would be $85 to $128 on customers with incomes over $180,000.

Fixed utility charges separate from usage volume are nothing new. They offset costs for utility companies to maintain the power grid. However, basing utility charges on customer incomes would be a new step that touched off a spirited ideological debate that spread beyond the state’s borders.

It drew fire from those on the right because of its class-based underpinnings but also from those on the left who said even small charges would put more stress on low-income families struggling to pay rent and utility bills.

A New CPUC Proposal

Recently, the California Public Utilities Commission offered a less contentious proposal: a flat $24.15 per month fixed charge for most customers, lower $6 or $12 charges for low-income households, and lower overall rates tied to usage.

By downplaying the income redistribution aspects and promising lower overall bills for most ratepayers, the PUC has quieted some, but not all, criticism.

Assemblywoman Jacqui Irwin of Thousand Oaks is leading a group of Democratic legislators who think the proposal is still too onerous and back a different proposal, Assembly Bill 1999, that would cap the fixed charge at $10 a month for most customers and $5 for low-income families. Irwin complained in a social media post that the PUC is “completely out of touch.”

The merits of the PUC’s plan notwithstanding, the issue is also a classic example of how the annual budget process is misused to enact major policy changes without fully airing their impacts.

The 2022 legislation that authorized the CPUC to enact income-based fixed charges was an omnibus energy-related measure drafted as a “trailer bill” to the state budget – measures that are very long, very complicated, and receive only cursory attention as they move through the legislative process at warp speed.

The possibility of an income-based utility charge was briefly mentioned in the first version of the measure, Assembly Bill 205, one of dozens of proposed trailer bills Gov. Gavin Newsom submitted with the budget in January of that year.

As with other trailer bills, it was hustled through the Assembly on a pro forma floor vote a few weeks later and then sat in the Senate for the next four months.

Income-Based Surcharges OK’d Without Debate

On June 26, 2022, AB 205 was amended into its final form, including language that authorized the CPUC to adopt income-based fixed charges, and was approved by the Senate Budget Committee the following day with virtually no discussion. Three days later, after the obligatory 72-hour waiting period, AB 205 whipped through both houses of the Legislature and a day after that, on June 30, Newsom signed it.

At no point did either legislative house conduct a real hearing on the issue, nor did either debate its merits before passage. Assemblywoman Irwin was among those who voted for it.

Unfortunately, AB 205 is not an isolated case. Each year, the Legislature passes dozens of budget trailer bills, many containing far-reaching policy changes that have little or nothing to do with the budget, and are often enacted with little or no public exposure.

If Irwin and other legislators are unhappy with what AB 205 wrought, they have only themselves to blame for enabling the blatant misuse of budget trailer bills.

About the Author

Dan Walters has been a journalist for nearly 60 years, spending all but a few of those years working for California newspapers. He began his professional career in 1960, at age 16, at the Humboldt Times. CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters. For more columns by Dan Walters, go to calmatters.org/commentary.

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