Three of the biggest electric utility companies in California came up with a plan to adopt fixed-rate billing, with higher rates for the rich than for the poor.
This summer, California’s Democratic governor, Gavin Newsom, signed a bill that will add a “rate component” to utility bills to pay for upgrades to the state’s energy infrastructure. The Los Angeles Times says that the rule calls for “a fixed monthly charge based on household income.” In California, utilities have recently started asking the wealthy more to cover the cost of lowering rates for the rest of the population. The California Public Utilities Commission needs to decide on this plan by the middle of the year.
Caroline Winn, the CEO of SDG&E, has said, “We have heard from our customers that they need fundamental changes to help them pay their bills.” When making the new plan, the needs of customers who “lived paycheck to paycheck” and “struggled to pay for things like energy, housing, and food” were “at the top of our minds.”
The plan calls for low-income Californians (those who make $28,000 or less per year) to pay an extra $5 on their power bill every month. The average monthly bill for energy from SDG&E is $24. People who make between $28,000 and $69,000 a year pay the least with PG&E ($30), then SCE ($20), and then SDG&E ($34). Customers who make between $69k and $180k a year would pay $73 at SDG&E, but only $51 and $52 at SCE and PG&E, respectively.
Local sources say that people who make $180,000 or more a year would have to pay the highest monthly fees. In areas served by SCE, these homes would cost $85/mo, in areas served by PG&E, $92/mo, and in areas served by SDG&E, $128/mo.
In a second statement, SCE CEO Steven Powell said, “We know that all kinds of costs are going up for our customers, and we’re working to keep their bills as low as possible.” SCE thinks that if they base their rates on a customer’s money, they can help a lot of people, especially the poorest ones. This means that more Californians will be able to buy products that are better for the environment.
The bill says that California’s grid problems are caused by “extreme events from climate change, such as heat waves, wildfires, and drought, combined with other factors, such as supply chain disruptions,” even though California is “a leader in driving the affordable and fair transition to a clean, reliable energy system.”
The Tax Foundation says that California’s real tax rate of 13.5% is one of the highest in the United States. A study from the Institute on Taxation and Economic Policy says that the state’s income tax system is fair. This means that people with higher incomes will pay more of the state’s taxes.
During the last midterm elections, voters in California rejected a measure that would have raised taxes on the rich. The sale of some very expensive homes, called “mansions,” is now subject to a so-called “mansion tax.” Everyone in California, whether they live there or not, would have to pay a “worldwide wealth” tax based on their total assets. This group includes stocks, retirement funds, savings accounts, and even art collections that are used as investments.