California has set an ambitious path to increase the use of clean energy, clean cars, and clean homes as a means of reducing pollution and addressing climate change. These goals are particularly important to disadvantaged communities that our organization represents that historically have borne the brunt of dirty air and the fallout caused by climate change. But as we pave the path to a cleaner, carbon free future, it is vital that we promote policies that ensure we are not leaving lower-income and disadvantaged communities behind.
That’s why the Greater L.A. African American Chamber of Commerce is a strong proponent of a proceeding currently taking place at the California Public Utilities Commission (CPUC) – named the “Fixed Charge” Proceeding – that will determine how the electric bills for millions of Californians will be structured in the future. If done correctly, this proceeding will accomplish the important goals of accelerating the transition to cleaner energy, cars and homes for all customers, while providing extra assistance to families most in need.
The Fixed Charge proceeding being considered by the CPUC is being done at the direction of the Legislature and Governor Newsom who passed Assembly Bill 205 in 2022 to restructure the way our electric bills are presented.
Today, customer bills are made up of several parts that are bundled together. One part is the fixed infrastructure cost associated with safely building, maintaining, and operating the electric grid. The second part is the cost of electricity use, which can vary month to month. Utilities mostly buy power on the open market and, by law, pass those costs directly to consumers without a markup.
As mandated by AB 205, these two costs will be broken out in separate line items on customer bills. These are not new costs or new revenues for utility companies, but a simple restructuring of the components needed for providing and delivering power.
Under this proceeding, every customer will pay a standard Fixed Charge for the infrastructure and other grid investments, with lower-income customers paying a reduced amount. California has provided bill assistance to low-income customers for decades, and this proposal to provide assistance on the Fixed Charge is an equitable and fair continuation of that policy.
According to a February 2021 study from researchers at UC Berkeley’s Energy Institute at the Haas School of Business, “fixed monthly charges that are the same for all residential customers are also highly regressive; they take a much larger share of household income or expenditures from lower-income households than from wealthy customers.”
Furthermore, by separating the cost of power and lowering the per kilowatt price for electricity, this proposal will help all customers more affordably transition to a cleaner future including electric vehicles and homes. It will especially help lower income and disadvantaged families that are lagging behind in the transition to electric cars and homes.
A Fixed Charge would also increase transparency by more clearly separating out the costs of electricity consumption – allowing consumers to more clearly see how much energy they are using so they can conserve and better manage energy use.
It is no secret that low-income households and people of color are disproportionately burdened by California’s high cost of living. The Fixed Charge proceeding is an opportunity to continue our commitment to equity and ensure we’re not leaving any families behind as we move aggressively forward to a cleaner energy future.
