California's Electric Bills are About to Get More Expensive

In this photo illustration – A bill for electricity consumption, on 10 September, 2021 in Madrid, Spain. Californian residents will see higher electric bills in May when a $24 flat-rate price hike goes into effect.

California residents could see an extra $24 added to their electric bills starting in May, based on a new monthly fee adopted by the California Public Utilities Commission (CPUC), and a finance expert spoke to Newsweek about how this could affect families.

The CPUC, which controls California’s largest utility companies Pacific Gas and Electric Co, Southern California Edison, San Diego Gas and Electric Co, has implemented the additional $24 fee for everyone who does not get their power from Los Angeles Department of Water and Power (LADPW), which is separate from the CPUC.

California already faces some of the most expensive utility rates in the country, and many residents have quickly come out in opposition to the upcoming price hike.

CPUC said the added fee will be offset by the agency lowering electricity rates by 5 to 7 cents per kilowatt hour, and that ultimately, low-income residents will see cheaper monthly bills.

The 240 community organizations that have banded together against the hike don’t believe this is the case, though.

“The utilities are offering a really small one time drop in the amount that’s paid per unit of electricity, but it doesn’t cancel things out because people living in apartments or small homes use very little electricity. Even a $24 a month utility tax will wipe out any savings and cause their bills to go up,” Ken Cook, president of the nonprofit Environmental Working Group, said at a press conference this week, as reported by Mercury News.

The Stop the Big Utility Tax Coalition is hoping a new law AB 1999 will prevent CPUC from adding on the extra charge on California homeowners and renters.

“Our constituents have had enough and so have we,” Assemblymember Jacqui Irwin said in a press conference when she introduced the bill. “It’s time to put some reasoning back into how we charge for electricity in California.”

As Californians battle some of the highest rates nationally, the $24 fee would bring rates to double the national average, according to Stop the Big Utility Tax Coalition.

Those who are already enrolled in California’s assistance programs—like the California Alternate Rates for Energy and Family Electric Rate Assistance Program—would get a discount under the new rate, but that’s limited to a small number of low-income families.

Altogether, the new fee is believed to bring an increase of between $64 and $225 for Californians living in apartments and duplexes, the coalition said. Those who live in larger homes could see hundreds of dollars in bill decreases because the electricity rates are going down based on kilowatt usage.

“This bill increase attacks the lower usage consumer, those in small houses and multi-family housing,” Kevin Thompson, a finance expert and the founder and CEO of 9i Capital Group, told Newsweek. “This is indeed a tax on the lower usage consumer because the majority of their bills are usually delivery charges and fees, not just kilowatt hours.”

Thompson said because the high energy usage customer is the one that gets savings, the new fee goes contrary to any effort for energy preservation.

“In theory, this could make power more affordable for many households,” Michael Ryan, a finance expert who runs michaelryanmoney.com, told Newsweek. “Especially those with higher usage due to factors outside their control, like living in a hotter region.

Ryan added: “A one-size-fits-all fee even with discounts for some may still hit the most vulnerable the hardest.”

Last month, Representatives Ted Lieu, Brad Sherman and Katie Porter called out the new rates for their possible implications on Californian residents.

“We worry that their proposed solution—to impose a highly monthly fixed charge regardless of how much electricity households use—is not the best tool to keep costs down and meet our climate goals,” the letter said.

AB 1999 will soon reach discussion in the Assembly Utilities and Energy Committee, but the fee is set to go into effect beginning May.

“The passage of this new fee is going to come down to how well the energy lobbyists do in convincing the legislative committee that this fee is necessary,” Thompson said. “I truly believe if enough people get upset about this, then they have a chance to reverse it, but it is all about everyone being on the same page because the high-end users will actually see a discount and they may want this to be approved.”

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