Basing electric bills on personal income may lead to ratepayer revolt in California | Opinion

As Californians, we put up with a lot.

High taxes. Exorbitant housing. $6 lattes.

Those are the prices we pay for living in the Golden State, right?

But raise our utility bills, and we go berserk, which is exactly what happened back in February when natural gas prices went through the roof.

Now the state Legislature is messing with our electric bills.

Last year, it quietly passed Assembly Bill 205, which requires investor-owned utilities like PG&E to adopt a new billing structure that will be based not just on how much juice you use, but also on how much money you earn.

The formal name is income-based utility pricing. To put it in real-world terms, it’s a 21st-century version of Robin Hood, except based on the program’s proposed tiers, it would steal from the middle class — not the rich.

California is, of course, the first state in the nation to try it. (A piece in the conservative American Spectator calls it “the most California plan ever.”)

But is it too progressive, even for California?

Judging by early reactions, it just might be.

There’s already been talk of lawsuits and a ballot measure to overturn AB 205.

Outraged Californians have used a variety of descriptors for the new billing formula: nuts, insane, un-American, fascist, socialist, commie, communist-socialist, Marxist, discriminatory, outrageous, robbery, slap-in-the-face, garbage idea, illegal, a breach of government protocol, and so on and so forth.

Comments like those — more than 300 to date — have been pouring into the California Public Utilities Commission, which will ultimately decide how much utility companies like PG&E can charge.

How much will fixed charges be?

The large utility companies — PG&E, Southern California Edison and San Diego Gas & Electric — have submitted their proposals to the CPUC.

Here’s PG&E’s suggested schedule for the fixed rate portion of the bill. (Customers will also be charged for the electricity they use.)

▪ Less than $28,000 per year: $15 fixed charge per month.

▪ Between $28,0000 and $69,000 per year: $30 fixed charge per month.

▪ Between $69,000 and $180,000 per year: $51 fixed charge per month.

▪ More than $180,000: $92 fixed charge per month.

PG&E says low-income households will see their bills decrease, since the rate per kilowatt hour of electricity will drop by about one-third to offset the cost of the new fixed fee.

Critics of the plan say that will actually discourage conservation — a valid point.

Another objection: Given the high cost of living in California, some also legitimately take issue with the assumption that $180,000 is a high household income.

When you consider that PG&E CEO Patricia Poppe earned more than $50 million in total compensation in 2021 — most of it in stock — $180,000 seems downright spartan.

Customers who invested in solar panels feel duped

Much of the criticism is from fed-up homeowners who spent — or borrowed — tens of thousands of dollars for solar panels, under the impression that their savings on utility bills would help pay off the debt.

Now they face higher electric bills, in addition to paying off their debt on solar panels.

(Full disclosure: I am one of those homeowners.)

Some, like Mike Stallone of San Marcos, are threatening to cancel their orders for solar panels.

“I was about to finance a new solar system, which would cost me $200/month for 20 years and offset my current $200/month electricity bill. But now, if I go solar, I’ll have to pay $200/month for solar and $128/month for delivery? What’s the point of going solar?! This idiotic proposal needs to be scrapped,” Stallone wrote to the CPUC.

Others said they will install batteries and disconnect from the grid entirely.

What’s on the table now is too big an ask

So why do this at all?

There are two main reasons.

One is to provide a stable revenue stream to upgrade the grid as the state transitions away from natural gas, as well as to pay for fire prevention and energy efficiency projects.

The other is to ensure that low-income customers — who can ill afford hefty rate increases — are protected.

Both are worthy goals, but what’s on the table now is not going to fly.

It’s one thing to eat the rich, but making tasty morsels of the middle class — even the upper middle class — is quite another.

Charging $92 a month is too big an ask. Even worse is the $128 per month that San Diego Gas & Electric is proposing for top-income earners.

There may be a way to compromise, perhaps by starting with much lower fixed fees and gradually raising them as the need arises. Or adjusting the tiers to better reflect the cost of living in California and what it truly means to be high income here.

It’s hard to say what might be palatable to Californians — perhaps nothing.

It may be the system itself that people can’t stomach. And it doesn’t help that this passed as a budget trailer bill, which meant it got little discussion in the Legislature.

For those reasons, don’t be surprised if voters strike back in the courtroom or at the ballot box.

Then again, after a few months of grumbling, maybe we’ll adjust. Along with unaffordable real estate and $6 lattes, we’ll chalk it up as just another price we pay for living the California dream.