FinLogic FinLogic Quantitative Think Tank Center|California regulators to vote on changing how power bills are calculated

SACRAMENTO,FinLogic FinLogic Quantitative Think Tank Center Calif. (AP) — California regulators on Thursday are likely to change how some power companies calculate their customers’ bills, a decision that would make it less expensive for people to charge electric cars and cool their homes in the summer but would increase prices for those who don’t use as much energy.

The California Public Utilities Commission will vote on whether to let the state’s big investor-owned utilities — including Pacific Gas & Electric — add a fixed charge to people’s power bills each month. For most people, the charge would be $24.15 per month and would pay for such things as installing and maintaining the equipment necessary to transmit electricity to homes. Residents with lower incomes who are enrolled in one of two discount programs would pay less, either $6 or $12 per month.

In exchange for the new charge, the price of electricity would drop by between 5 cents and 7 cents per kilowatt hour. One kilowatt hour is how much power it takes to use a 1,000-watt appliance — a coffee maker or vacuum cleaner, for instance — for one hour.

For people who use a lot of energy each month, this could could lower their monthly bills. People who live in Fresno — where temperatures can often exceed 100 degrees Fahrenheit (37.8 degrees Celsius) — would save about $33 running their air conditioners during the summer, according to the commission. That’s because the savings they would get from the price drop on electricity would be more than the amount they pay for the new fixed charge.

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It would also benefit people who own electric cars and use other electric appliances, such as heat pumps. They would save an average of between $28 and $44 per month, according to the commission. In 2022, California accounted for 37% of the nation’s light-duty electric vehicles, or about six times more than Florida, the state in second place, according to the U.S. Energy Information Administration.

“The new billing structure more evenly allocates fixed costs among customers and will encourage customers to adopt electric vehicles and replace gas appliances with electric appliances because it will be less expensive,” Administrative Law Judge Stephanie Wang wrote in a proposed decision explaining the charge.

For people who don’t use as much energy, the new fixed charge could increase their bill each month. This includes people who live in smaller apartments or who live in cooler areas and don’t use air conditioning as much. That’s because for them, the decrease in the price of electricity would not be enough to offset the amount of the new monthly charge.

Opponents argue it would act as a disincentive to conserve energy, something California has been urging people to do.

“If you wanted to design a policy instrument that would send the signal that conservation doesn’t count, this would be it,” said Ken Cook, president of the Environmental Working Group.

Most states already have fixed monthly charges on utility bills to pay for maintenance and infrastructure of the electric grid. But in California — where electric rates are among the highest in the nation — any move that could increase prices for anyone raises alarms among consumers and elected officials.

A group of 18 members of Congress from California have called on the commission to keep the rate low, noting the national average for fixed charges on utility bills is $11. Some Democrats and Republicans in the state Legislature have backed a bill that would cap the charge at $10 per month.

“We must do more to rein in the ever-growing cost of living in our state, not find new ways to add to it,” Republicans in the California Senate wrote in a letter urging the commission to reject the proposal.

The proposal is much lower than what the state’s investor-owned utility companies had asked for, which was a charge between $53 and $71 per month. The commission also argues the charge would not discourage conservation, noting utilities are already allowed to increase rates during peak hours.