The California Public Utilities Commission (CPUC) approved a fixed monthly charge on electricity bills. Most customers of investor-owned electric utilities will pay an extra $24.15 on their monthly bill, beginning in 2025 or later.
The CPUC states that the new billing structure “more evenly allocates fixed costs among customers” and asserts that it will “encourage customers to adopt electric vehicles and replace gas appliances with electric appliances because it will be less expensive to charge electric vehicles and operate electric appliances.”
Income-Based Fee
In 2022, the legislature passed AB 205, which required utility companies to established fixed charges on an income-graduated basis. (California Energy Bill Expedites Green Energy Project Approvals) In response, Southern California Edison (SCE), Pacific Gas & Electric (PG&E), and San Diego Gas & Electric (SDG&E) filed a joint proposal for a two-part monthly bill of a fixed rate based on income and a reduced usage charge based on consumption. The fixed charge based on income is intended to reduce electricity rates for lower income residents. (Utilities Propose Fixed Fee Based on Income Level.)
Recently, the fixed charged became a controversial issue with opposition from residents concerned about the high cost of electricity in the state. Earlier this year, lawmakers introduced AB 1999, which would repeal the CPUC’s authority to implement the new fee. (Lawmakers Propose to Repeal Income-Based Electricity Charge.) The bill was recently amended to prohibit increases to the fixed charge that exceed inflation and to end the charge in mid-2028.
Approved Cost Structure
The new rate structure imposes a fixed fee while reducing the price per kilowatt hour that customers of investor-owned utilities will pay. The change is intended to shift the recovery of a portion of fixed costs from volumetric rates to a fixed amount without changing the total costs that utilities may recover from customers.
The CPUC decision allows large electric utilities to adopt billing structure changes through a three-tiered system with most customers falling to the third tier.
Tier 1: Customers enrolled in the California Alternate Rates for Energy program will pay approximately $6 per month.
Tier 2: Customers enrolled in the Family Electric Rate Assistance program or who live in affordable housing with restricted incomes will pay approximately $12 per month
Tier 3: All other customers will pay a fixed amount of $24.15 per month.