By Judie Mancuso
Many Californians are unaware that their electric bills could jump substantially next year. The reason is that in 2022, the state legislature adopted a law with a provision that directs the California Public Utilities Commission (CPUC) to add an income-based Utility Tax to the monthly electric bills of residential ratepayers of PG&E, SCE, SDG&E and CCAs starting in 2025.
This new fixed charge, to be paid on top of use charges, would vary based on household income. Current proposals call for a monthly fixed charge of between $30 and $125 (!), the highest in the country and well above the national average of $10.
Investor-owned utilities and their allies supporting the proposals claim the new charges would encourage electrification and save money for lower-income households thanks to a decrease in kilowatt-hour rates. Energy economists, environmentalists, tenants’ rights groups and tax advocacy organizations all disagree.
Even a $30 monthly Utility Tax would mean higher bills for almost everyone living in homes of less than 1,200 square feet unless they qualify for CARE or FERA discount programs.
Those who strive to manage their household budget and protect the environment by using energy efficiently and installing technologies like rooftop solar would also see their bills increase, no matter what they did. The economic incentive to conserve energy would be gone.
The only people who would benefit (besides the utilities) are ratepayers who consume a lot of electricity. Because of the reduction in kWh rates, they would be rewarded for their high consumption, while the rest of us would be penalized.
The proposed Utility Tax also raises serious privacy concerns. How would income be determined and reported? Would we have to provide the data to our utility or to a third party? Would the tax need to be recalculated annually? What entity would take on the enormous administrative burden the new tax would create?
Bottom line: The Utility Tax is unfair, environmentally counterproductive, and not ready for prime time.
With high living costs putting pressure on so many Californians, workers and seniors who are struggling to keep up with rising costs but do not qualify for energy assistance programs should not suddenly have to pay more for a basic necessity.
And with the climate crisis worsening, now is not the time to discourage energy conservation and encourage consumption.
The CPUC’s recent cuts to home solar payments have already caused demand for residential solar to drop by almost 80%, costing California tens of thousands of clean energy jobs and undermining its climate goals. The Utility Tax would constitute another attack on solar power, the last thing our state needs. Solar is key to sustainability. It is also a way for households to invest in a residential technology that will benefit them financially over time while helping save the planet.
Legislators should focus on solutions that actually encourage electrification (such as solar), actually benefit lower-income households (expansion of discount programs), and actually address the root cause of our state’s sky-high electricity rates: long-distance power lines that are costly to build and maintain and pose a risk of wildfires, as we know all too well.
Conservation, efficiency and clean technologies like solar and batteries can help reduce the amount of investment long-distance lines and infrastructure require. The Utility Tax would undo progress made in all these areas.
Note that the CPUC does not have a good track record when it comes to keeping costs down, and utilities are not shy about raising rates. There’s no guarantee the Utility Tax wouldn’t increase further over the near and long terms, or that utilities wouldn’t soon tack additional charges onto our bills. Based on past experience, those things would be pretty much guaranteed to happen.
Assemblywoman Jacqui Irwin (D-Thousand Oaks) joined other lawmakers this week to introduce Assembly Bill 1999, which will strike out the Utility Tax mandate and keep in place the existing cap of $10, or $5 for those eligible for the CARE discount. My nonprofit, Social Compassion in Legislation, has been working with a broad and bipartisan coalition to stop this harmful tax before it takes effect. I encourage you to contact your local officials today and tell them you support AB 1999 to repeal the Public Utilities Code Section 739.9, aka the Utility Tax.
Judie Mancuso is founder, CEO and president of Social Compassion in Legislation. She served on the California Veterinary Medical Board for eight years and has been vice chair of the Laguna Beach Environmental Sustainability Committee for five years. She is currently a candidate for Laguna Beach City Council.