Several weeks ago, SCE was asking the CA Public Utilities Commission for approval of a new rate structure that would put more emphasis on a standby charge. We learned this week that the PUC has a proposed decision available, which would approve the request. Here is some information from the SCE Public Affairs folks:
As you may know, the California Public Utilities Commission (CPUC) is considering significant changes to residential customer electric bills. I am writing today to share the latest developments in this proceeding and correct misinformation you may have heard in the news.
First, some background. In 2022, the state enacted a law mandating the CPUC consider restructuring electric bills for residential customers to show the amount dedicated to fixed costs—like the costs to operate the electric grid and implement state required programs—and variable costs based on individual household energy use. Currently, these existing costs are comingled, causing some customers to pay a disproportionate share of fixed costs. The ongoing CPUC proceeding seeks to remedy the problem by establishing a flat rate, otherwise known as a “fixed charge,” paid equally by all customers on their monthly bills. This practice is not new; a small, fixed charge already exists on Southern California Edison (SCE) customer bills and almost all publicly owned utilities in the state, and most utilities nationwide, have flat rates.
Recently, the CPUC released a Proposed Decision that would cut the price of residential electricity for many Californians, reduce electricity bills for lower income households and those living in parts of the state most impacted by extreme weather, while also advancing the state’s clean energy goals. The proposal recommends a standard fixed charge of $24.15 per month, which would be offset in part by reducing usage rates for all residential customers by approximately 10% from current rates. Customers enrolled in the California Alternate Rates for Energy (CARE) low-income assistance program would qualify for a reduced fixed charge of $6 per month, and those in the Family Electric Rate Assistance Program (FERA) would pay a $12 fixed charge per month. While the Proposed Decision recommends a fixed charge lower than proposed by SCE and the other investor-owned utilities, we believe it is a step in the right direction.
Other important information about the CPUC’s Proposed Decision to be aware of include:
• The fixed charge is not an additional fee on customer bills; it simply moves some costs customers already pay in the usage rate to a separate line item called a flat rate.
• Utilities will not earn any additional revenue or profits as a result of a fixed charge.
• Electric bills will not be based on household income and no income information will be collected by utilities. The only exception is customers who participate in income-qualified bill discount programs (CARE and FERA) will need to provide income information to determine their eligibility, just as they do now.
• Customer who electrify their homes and vehicles will save on average $28-44 a month compared to today’s rates. Another important feature of the CPUC’s Proposed Decision is that it would reduce the amount of money that customers without rooftop solar pay to subsidize electric bills for households with rooftop solar. According to a recent report by the California Public Advocates Office, statewide non-solar customers will pay $6.5 billion in subsidies in 2024 alone, representing more than 15% of the average household’s electricity bill. The CPUC proposal would require all customers who rely on the grid to pay their fair share of the costs to operate it, reducing the financial burden on households without rooftop solar.
If the Proposed Decision is approved by the CPUC, the changes would go into effect in late 2025 at the earliest. By statute, the CPUC must approve a final decision by July 1, 2024.