Energy Socialism: California electric companies to charge households based on their income

According to the San Fransisco Chronicle, three major utility companies in California have proposed to charge their customers based on their household income. The measure, which was drafted in response to a new California state law, would potentially save low-income families on their power bills while charging higher-earning families more.

The Plan

Under the plan, monthly bills would be broken into two parts: a fixed infrastructure charge, tiered by customer income level as required by the law, and an electricity use charge, which would vary based on consumption.

Under the proposals, the monthly fixed charge for Pacific Gas and Electric (PG&E) customers would be as follows for a four-person household:

• 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.

The companies estimate that the electricity use charge, called a rate from hereafter, would initially fall by a third as more of the costs of providing electricity service are rolled into the fixed charges.

However, PG&E has also proposed a four-year plan that would increase utility rates by about 16 percent in year one — about $35.40 more each month for the average customer compared with 2022 — that state regulators are considering.

The Takeaway

California’s income-based fixed utility charges are a stunning departure from the classic tenets of utility rate-making, which stress that customer expenses should be just and reasonable and based on the cost of providing the service to that customer.

American Experiment has been a vocal critic of wind and solar mandates precisely because they lead to skyrocketing electricity prices that harm low-income families the most.

In a Substack article called California Screamin’ Robert Bryce details how more than a third of Californians are living in or near poverty, and electricity prices in California have increased three times faster than the national average since 2008, contributing to the enormous income inequality in the most “progressive” state in America.

Despite skyrocketing prices, California’s electric grid has grown increasingly unreliable. The state has shut down too many natural gas power plants since 2013 and has become overly reliant upon weather-dependent wind and solar generation and electricity imports from neighboring states.

Unfortunately, this strategy is doomed to fail because neighboring states are shutting down their reliable coal and natural gas plants, too, meaning they won’t have enough power to bail out the Golden State in the future.

Margaret Thatcher once quipped, “The problem with socialism is that you eventually run out of other people’s money.” The problem with California-style electricity policy is that you eventually run out of other people’s electricity.

California appears to be racing to run out of both other people’s money and electricity, making its energy policy a shining example of what not to do.

Instead of making the cost of electricity low so that everyone can afford it, California appears committed to mandating unreliable wind and solar technologies that will increase electricity costs and trying to correct it on the back end. It is difficult to see how this new proposal helps in slowing the exodus from the Golden State.