The CPUC is slated to decide on new fixed income-based utility fees under AB 205 to be implemented in California on bills starting in 2025.
Assembly Bill 205 the California Public Utilities Commission to utilize at least three tiers of income-graduated fixed charges as a monthly charge for all residential rates.
What is AB 205
This bill was created to implement the required changes to the energy-related items of the 2022 Budget Act. According to the write-up analysis of Assembly Bill 205, the two main components that affect residential customers are as follows:
- Initiates the California Arrearage Payment Program (CAPP) at the Department of Community Services and Development which is meant to provide prioritized help and funds to current utility customers who owe electric utility bills from the time during the COVID-19 pandemic bill relief period. This bill indicates $1.2 billion of the 2022 Budget Act shall be used for the purpose of funding CAPP. Once utilities receive CAAP funds, CAPP benefits must be distributed to residential customers within 60 days to reduce unpaid and past-due bills. More details about applicant eligibility and the crediting process can be found here.
- Introduces income-based fixed monthly fees. By repealing the previous $10 fixed charge cap as well as the requirement that it be based on usage, the bill permits the Public Utilities Commission (PUC) to use “fixed charges for any rate schedule for residential customers” and makes it necessary that the fixed charge be organized on at least a three-tiered income-graduated basis. The idea is this would allow the utilities to slightly reduce the regular rates based on usage.
Who do the fees affect most?
The utility proposal for fixed income-based utility fees would hurt residents in small homes who do not use much electricity, such as moderate-income families. On the other hand, it could potentially benefit residents with no solar in large homes that have high usage of electricity. The utilities have suggested monthly charges for the lowest income customers between $15-$24, and between $85-$128 for the highest income tier, with SDG&E requesting the highest fixed fees. The income tiers depend on family size and would be based on the federal poverty level. For instance, a family of four at the high end of the income tier would be $195,000. Although the time-of-use usage fees would be slightly reduced, the suggested reductions are only approximate values and are subject to change. Learn more about the proposed change in rates and fees here.
CAPP was a well-meaning program established at the height of the pandemic to provide relief for those most impacted. We believe the intent has shifted more to bailing out the utilities rather than providing help to its consumers. However, if it’s also able to continue to help families in need, we understand and appreciate the relief it may provide.
The income-based fixed monthly fee pushes an economic justice agenda, shifting the burden of paying for the electric system toward wealthy people, similar to the tax system. It de-incentivizes people to get solar or electric vehicles because energy consumption has less of an effect on the utility bill. Finally, we believe there may be major privacy issues in linking utility bills with personal income.
Future Fee Projections and Pushback
Even if the fixed income-based utility fees are not aimed at solar it obviously has impacts on the investments and bills for all solar customers, including those under NEM-1, NEM-2, and NEM-3. It also affects energy efficiency and conservation efforts in California. Various associations, including notable solar coalition groups, are prepared to look for ways to help Californians both navigate these changes and work towards the best utility rate option available.
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