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PG&E among energy providers submitting proposal for income-based electric rates

Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric have submitted an income-based rate restructuring proposal to the California Public Utilities Commission.
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Posted at 6:33 PM, May 08, 2023

BAKERSFIELD, Calif. (KERO) — In April, the Pacific Gas & Electric Company submitted a joint proposal to the California Public Utilities Commission, along with the Southern California Edison Company and the San Diego Gas and Electric Company, to lower rates for low-income customers.

According to the director of the Energy Institute at the Haas School of Business at the University of California at Berkeley, Severin Borenstein, the proposed rate restructuring is likely to make energy cheaper for some and more expensive for others.

"It would shift how much each customer pays. Wealthy customers, on average, would pay a bit more, and poorer customers, on average, would pay less, and the very poorest would all pay less," said Borenstein.

The utility companies submitted this proposal to the CPUC in response to Assembly Bill 205.

Under this bill, PG&E says fixed infrastructure costs and the cost of electricity use will be broken out on residential electric customers' bills.

Officials explain that this will not be an additional charge, but rather a restructuring of charges necessary to deliver power.

severin borenstein
Severin Borenstein, Director of the Energy Institute at the Haas School of Business, University of California Berkeley

"Right now, we pay for our electricity by paying an amount for every one kilowatt hour we consume, and that's basically the only charge we pay, but most of the costs actually don't vary with how much we consume," said Borenstein.

According to Borenstein, most of the costs, like running transmission lines, are fixed costs, and with the new rate structure, PG&E will break down its rates into 2 components.

They will decrease the variable charge based on usage by 33 percent, then they will begin collecting fixed rates from customers based on income to cover those fixed company costs.

Low-income customers would pay between $15.00 and $30.00 in fixed charges. Moderate-income customers would pay $51.00, and high-income customers in the top 25 percent of earners would pay $90.00, meaning they could see a nearly 25 percent increase in charges compared to current rates.

"They say, 'This isn't fair. Our bills would go up,' but when they say that, they're implicitly implying that the current system is fair, and the current system is clearly not fair," said Borenstein.

skylar molina
Skylar Molina

Bakersfield resident Skylar Molina, who says he falls into the low-income bracket, welcomes any assistance from PG&E to reduce his bill and help him get back on his feet.

"I feel like it's a good thing for everyone that's in lower income, you know? It will help out with everybody," said Molina. "Food's expensive. Everything is more expensive now. Gas… I mean, everyone is struggling, so I think it'd be a good thing to do."

Another Bakersfield resident, Maria Evangelista, says she lives with her family in a home without insulation or air conditioning and her monthly energy bill totals $400.00. She's concerned the restructuring could increase those charges.

"I mean, I'm going to start worrying right now because we're already paying enough. More than enough, and then now we have to start saving even more so we can come up with the extra money that they're going to start charging," said Evangelista.

maria evangelista
Maria Evangelista

According to Pacific Gas & Electric, their introduction of this proposal to the California Public Utilities Commission will not impact anyone's energy bill right now. Current rates will stay the same. The CPUC is expected to make a decision on the proposal by July 2024, and even if it is approved, it would still require time for implementation.

IN-DEPTH: ASSEMBLY BILL 205

The joint proposal for income-based energy billing is in response to SB 205, which amended the Public Utilities Code to ensure that home energy rates are not overwhelming to lower-income customers.

SB 205 also requires that energy costs reasonably reflect the different costs related to serving small customers as compared to large customers, and that the utility companies do not take actions that would impair state incentives for conservation, emissions reduction, and other energy efficiency efforts.

The bill also requires that any fixed charges for low-income customers be set lower than those fixed charges for high-income customers.