I sure hope it won’t happen but let’s think the unthinkable. What will happen if the proposal is approved in July 2024?
- Low income customers will immediately see their bills go down. Large users in that income group will see greater savings than low users but they will all benefit. My guess is that the 35% discount they get today through the CARE program will rise to 50%.
- Middle income consumers who are low users will see their bills go up. Many live in smaller homes, many have frugal lifestyles, many live in temperate climates such as the coastal and mountain areas and in cities such as San Diego and San Francisco. That's why they have low bills. Many live in warmer climates and have invested thousands of dollars in energy efficiency and tens of thousands in solar and in solar+storage. That’s why they have low bills. All these people, who I am sure number in the millions, will see their bills rise dramatically. Their investment will be laid waste.
- Middle income consumers who use energy generously will see their bills go down.
- If the CPUC approves the IGFC proposals put forward by the utilities, it will legalize the biggest redistribution of wealth caused by rate redesign in California’s history. This will happen before a single heat pump is installed or a single EV purchased or leased. It will probably be the most unpopular decision to come out of 505 Van Ness Avenue and will probably be challenged in court since it requires data on customer incomes. If the income graduation provision is removed and a uniform fixed charge of $53 a month is applied to all customers, the coalition supporting the IGFC will collapse.
- Over the long run, say over the next 10-15 years, customers may well start buying heat pumps and EVs at a faster rate than they would have otherwise havedone. But moving energy charges into fixed charges is akin to rearranging the deck chairs on the Titanic. What's looming ahead of us is the issue of energy affordability, not just for low income customers but also for middle income customers. My EV2-A rate is rising at 15% a year.
The CPUC needs to focus on the bigger issue: Rate Shock. I.e., why are rates so high in California for the investor-owned utilities (my off-peak rate is 27 cents/kWh, much higher than the peak rate of other utilities) and why are they accelerating as if there is no tomorrow?
Yes, rate design can play a role in encouraging electrification IGFC is not the way to go. A better approach is to only apply marginal cost pricing where it matters -- for new purchases. That way it will not raise bills for millions of customers and lower bills for millions of customers, unleashing a commotion never before seen in any CPUC proceeding.
#cpuc #igfc #ratedesign #fixedcharges #gradualism #rateshock