California is experiencing an extraordinary affordability crisis with working families struggling to make ends meet due to the rising costs for housing, water, energy, food, and other essentials.
On top of everything else, efforts to address the ongoing climate crisis have required fundamental changes in how we use energy and make investments to upgrade the electric grid to ensure safety and reliability. Electricity costs in California are among the highest in the nation just as local and state policies call on residents to transition to electric homes and cars.
Given these circumstances, the California Legislature took action to help address these inequities with the passage of Assembly Bill 205 last year.
This bill requires the California Public Utilities Commission to approve a new electricity rate structure to provide some economic relief for working families, promote greater equity in the way households are charged for electricity, and lower rates so it becomes more affordable for Californians to drive electric vehicles and install electric stoves and heat pumps.
With the volatility in monthly electric bills becoming more common partly due to the worsening climate, such as the record heatwave around Labor Day in 2022, equitable rate reform is needed to bring greater stability to household budgets.
This new law will help stabilize electricity bills for working families by requiring a portion of the bill to remain flat month-to-month regardless of how much electricity a customer uses. This part of the bill will be based on household income and provide working families across the state greater predictability and transparency in their monthly electric bills.
Like a monthly service charge that the telecommunications industry, water and wastewater utilities charge today for access to their infrastructure, this portion of the electric bill will pay for electric infrastructure, such as the poles, wires and transmission lines.
This flat monthly grid service charge is not a new cost. It simply changes the methodology that utilities use to collect certain costs from customers, so it’s done in a more predictable and progressive way.
Under equitable rate reform, the portion of the electricity bill that is based on electricity usage — the actual rate that customers pay — will be lower than what it is today by up to 40%. This is the plan that California’s utilities filed with the CPUC last Friday.
There’s no question that California’s existing residential electricity rate structure is broken. It’s regressive and unfairly burdens working families who use too much of their take-home pay to cover their electricity bills.
Thanks to the equitable reform introduced by the state Legislature, the CPUC now has a clear path forward to correct this inequity while also bringing greater bill stability and lowering electricity rates for all Californians.
The times we live in may be unprecedented, but the outcomes don’t have to be. We are thankful the Legislature recognized the electricity affordability challenges and that a new equitable rate structure is necessary.
We hope the CPUC works swiftly to institute this change so that working families across the state can feel some financial relief.
Ellen Nash is chair of the San Diego chapter of the Black American Political Association of California. Doug Moore is executive director of United Domestic Workers Local 3930, an AFSCME affiliate.
