Statement: California utility commission increases bills on millions, devalues energy conservation

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SACRAMENTO, Calif. — By a unanimous 4:0 vote, the California Public Utilities Commission (CPUC) finalized a plan Thursday to introduce fixed charges on utility bills. The charges will go into effect in late 2025 for customers of the state’s investor-owned utility companies.

The CPUC’s decision introduces a flat $24.15 monthly fixed charge — more than twice the national average across investor-owned utilities — for most customers. The decision also cuts rates for electricity usage slightly, by 5 to 7 cents per kilowatt hour. Qualifying low-income households will pay lower fixed charges of $6 or $12 per month. However, there is no limit to how much the CPUC would raise these monthly fixed charges in the future.

According to an analysis by Flagstaff Research, despite the slightly lower usage rates, the fixed charge will result in higher overall electricity bills on people who live in small or multi-family homes, or who otherwise use lower amounts of electricity. That includes many seniors, renters, working families and solar users, totaling more than 4 million households across California.  

The CPUC passed this new “utility tax” after Gov. Gavin Newsom signed into law Assembly Bill 205, which mandates restructuring electricity pricing based on income. While the CPUC argues they intend to reduce electricity rates and encourage electrification, the high fixed charge and lower volumetric rate would actually discourage energy conservation and efficiency investments including rooftop solar panels, and encourage high consumption, leading to more energy waste.

In response, CALPIRG State Director Jenn Engstrom and Environment California State Director Laura Deehan  released the following statements: 

“We’re disappointed in today’s decision by the CPUC to establish an uncapped $24 monthly fixed charge on utility bills,” said Engstrom. “The new fixed charge system will increase bills for millions of Californians, incentivize energy waste and punish those of us committed to energy conservation and efficiency. This contradicts our state’s long tradition of incentivizing behavior that benefits the public over profit. A system that promotes high energy consumption could increase the entire grid’s costs and lead to higher electricity bills for everyone. We’re looking to the state Legislature to act to reverse this bad policy and prevent more proposals like this in the future.”

“The best path to a clean, reliable and affordable energy system is to cut energy waste and lower consumption through efficiency and conservation measures, including rooftop solar and storage,” said Deehan. “By discouraging energy conservation and rooftop solar, this misguided decision sets back efforts by Californians to address the climate crisis and get to 100% clean energy as fast as we can.”