The Public Speaks on the Income Graduated Fixed Charge Proposal of the Utilities

The three California investor-owned utilities filed a proposal to institute an income graduated fixed charge proposal on April 7, 2023 with the California Public Utilities Commission. It prompted a statewide outcry because many customers who use electricity more frugally than the others would see their bills go up. They would be charged a substantial monthly fee before they consumed any electricity. While the energy charge will be lowered by a third, the electric bill will still go up for customers who have low monthly bills.

Newspapers wrote editorials and covered the story. It was also featured on several talk shows. Here are some links:

In addition, customers sent in a volley of letters to the editor of the newspapers. Here are some of the letters that were published, organized by newspaper.

Los Angeles Times

To the editor: When will people with higher incomes stop having to support those with lower incomes everywhere they turn? (“A new charge is coming to your electric bill. Will it make California rates more affordable?” April 11) 5/1/23, 12:07 PM Is it fair for utilities to charge a fee based on income? - Los Angeles Times https://www.latimes.com/opinion/letters-to-the-editor/story/2023-04-15/utilities-charge-a-fixed-fee-based-on-income 2/3 Soon, private utilities in California will charge customers with larger incomes a higher fixed fee. So, a household with $28,000 in annual income would pay a $15 monthly fee to Southern California Edison, while one earning $180,000 would pay $85. How is that reasonable? What right does the electric company have to know our incomes? Upper income earners already pay more in fees and taxes. Enough, California — quit penalizing the middle class (and yes, $180,000 is middle class with this state’s cost of living). Clark Woodford, Mission Viejo

To the editor: Scott Crider, a senior vice president at San Diego Gas & Electric, says “this is not a rate increase” when referring to the planned fixed charges for California electric bills. I beg to differ. My annual electric bill is $75 due to my solar installation. The fixed charge for me would be $73 per month, an increase of $801 per year. This fixed charge destroys the financial benefit of using solar power. Mark Chipman, San Diego

To the editor: There is another thing for regulators to consider.

If the difference between an income-based bill and actual usage becomes too great, it will make sense for people with rooftop solar to consider installing a backup battery and cutting the cord completely.

That will leave electric companies facing the same competition that cable companies are now dealing with.

Hal Drake, Santa Barbara

To the editor: The plan for utilities to levy income-based fixed charges is unlikely to encourage electrification or efficiency. (“California shouldn’t let power companies get their way on our electric bills,” editorial, April 27)

The charges will penalize customers who use small amounts of electricity and reward those who use large amounts. People living by themselves in small homes or those who have spent thousands of dollars to enhance the efficiency of their homes will see higher bills.

Since there is no empirical evidence that lowering energy charges by a third and introducing significantly high fixed charges will accelerate electrification, the state should conduct pilots to see if the theory holds. It did pilots for two decades with time-of-use rates before moving all customers to those rates.

The utilities have proposed fixed charges that are orders of magnitudes higher than those being charged anywhere else. Most are less than $25, and the national average is less than $11 a month. They could offer rates with fixed charges in the $25 range for those who are shopping for heat pumps or an electric car.

Ahmad Faruqui, Danville, Calif.

The East Bay Times (an affiliate of Mercury News)

Utility rate plan amounts to rate hike
Re: “Customers deride electricity bill plans” (Page B1, April 22).

The proposed PG&E rate plan is a boondoggle.

The named economist, Ahmad Faruqui, says, “In just about every case, if you are a low electricity user today, with a relatively low bill, you are going to see a higher bill once this plan is in place. … If you are middle- or upper-income, you will see a higher bill.”

My average monthly PG&E electric bill, excluding energy rebates, was $50.64 over the last 12 months. My household income is $69,000-$189,000 per year. I do not have solar. According to the figures in the article, my minimum bill would be $51. If I use electricity, my bill would increase by 50-70%. I am asked to subsidize big users.

PG&E claims they need solar owners to pay their fair share, but they really want a large to a massive rate hike for most customers.

Patricia Coffey Orinda

San Diego Union-Tribune

https://www.sandiegouniontribune.com/opinion/letters-to-the-editor/story/2023-04-14/opinion-electricity-fixed-rate-payment-plan-based-on-income-comes-as-a-shock-to-many-ratepayers

New fee structure will erase solar incentives

Re “A fixed monthly charge is coming to your electric bill. Will it make CA rates more affordable?” (April 10): The California State Legislature is on a mission to address the multitude of issues facing the poor. Tops among these are the costs for housing and basic utilities. Meanwhile, San Diego Gas & Electric is forever on watch for ways to nullify the cost benefits for owners of rooftop solar systems.

Assembly Bill 205, presents an opportunity for the two groups to join forces and SDG&E and other utilities have been quick to devise a reformulated fee structure that will (when combined with NET 3.0 changes) virtually eliminate any savings for those who have made large investments for solar. In fact, under the proposed pricing structure, I would be paying $1,536 a year without using a single kilowatt hour. With my normal usage (200 kilowatts a month after solar), my annual bill will more than double.

Harvey Levine
Rancho Bernardo

It’s clear that San Diego Gas & Electric, Pacific Gas & Electric and Southern California Edison, which are losing money to residential solar power users, support yet another plan to increase their profits. If the current proposal for only income-based electrical usage is enacted, why would anyone conserve electricity? How is the state going to verify the income of a household? Match all income tax returns for a given address?

If the state truly wanted to fight climate change and help poor people, California would offer substantial discounts and loans to homeowners to install insulation, residential solar panels and batteries. This would create good paying jobs and reduce power bills. The application would require a one-time check on income and not a yearly check which will be required for an income-based power service.

Alternatively, the state could just give poor people money and let them decide how best to spend it.

Gary Powell

Encintas

Payment plan based on income is not right

Re “A fixed monthly charge is coming to your electric bill. Will it make CA rates more affordable?” (April 10): San Diego Gas & Electric apparently wants to look at our tax returns to determine how much people will pay and who will be subsidized by taxpayers.

Will the Metropolitan Water District of Southern California also look at tax returns to determine how much people will pay and who will be subsidized by taxpayers? Leftism is a policy based on the political and economic theory of socialism.

Gary Ritzman
La Jolla

Will the shareholders share in this burden?

Electricity bills are currently based on consumption. That model encourages conservation and investment in rooftop solar systems, which can reduce electricity bills or eliminate them entirely.

San Diego Gas & Electric and other utilities are now proposing a different billing model that is based in part on their customers’ ability to pay. They argue that electricity bills should include fixed, progressive, unavoidable fees that correspond with household income (“from each according to their ability, to each according to their needs”).

If fairness requires that electricity bills be based in part on customers’ ability to pay, will the owners of the means of production (Sempra’s shareholders), who have more ability to pay than most utility customers, agree to limit their profits in the proposed new billing model?

Rick Benes
Sunset Cliffs

Basing utility rates on income is unjustifiable

First thing that came to mind upon reading this article was “socialism.” Adopting socialist policies is sheer madness.

Allowing utilities like SDG&E to dictate how much we each pay based on income is grossly discriminatory and inexcusable. This is a form of punishment. Isn’t this what they do in China and Cuba? The audacity of SDG&E to even entertain this idea is a travesty. However, much gas and electricity a household uses, that is what they should pay for regardless of income. Incomes are becoming targets to be chipped away at in order to fund others in a tier system. This is unethical, partisan, unjustifiable and just plain wrong.

Nicoline Richardson
Mission Hills