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STATE OF THE UNION

California’s New Electricity-Income Tax Is Only Weeks Away – HotAir

In a couple of weeks, California’s Public Utilities Commission will vote on whether or not to adopt a new fixed charge for electricity, one that will likely be based on income.

When I first wrote about this proposal a year ago, the utilities were suggesting that fee could be as high as $85 a month for some households. That’s not including whatever the utilities charge for actual usage of electricity. The new fixed fee as proposed was essentially an income tax being paid via your electric bill. Since then, the proposal has been scaled back quite a bit but some version of it now seems likely to pass.

Most utilities across the country already collect fixed charges. But this proposed regulation comes with a distinctly California twist: The fixed charges would vary by income, with higher earners paying a $24 fee and lower-income households paying either $6 or $12.

The proposed charges are significantly less steep than ones proposed by the utilities themselves last spring, which topped out at $128 per month for the highest earners. But with a national average of roughly $11 per month, the $24 fee under consideration is still on the high end. Though most households will be compensated, at least partially, through lower rates, that sticker shock has engendered plenty of political outrage.

The other aspect of this change is that in order to offset the fixed charge, which as noted would start around double the average in other states, is that utilities would have to cut the price of electricity by volume. In other words, the income adjusted flat fee would allow utilities to charge a little less per kilowatt hour.

Under the proposed change, people who use less electricity will pay a bit more as a result of the fee, while those who rack up large power bills will save thanks to the lower usage rates…

“Those who consume more electricity, such as a single family home with (a) pool, will receive a discount at the expense of a low electricity user, such as an apartment renter,” wrote Jacqui Irwin, an Assemblymember from Thousand Oaks, along with 21 of her fellow Democratic colleagues last fall.

Cutting the rate for usage does make sense given that California already has the highest electricity rates in the contiguous US. A former head of the Public Utilities Commission says rates are so high because the PUC is not doing its job.

California now holds the ignominious prize for the highest electricity rates in the nation, except Hawaii. How did we get into this predicament? 

Because the California Public Utilities Commission — the five-member agency appointed by Gov. Gavin Newsom that regulates the prices, service and reliability of private energy utilities — has failed to do its job…

Fixed fees are the start, not the end, of more rate increases because the commission doesn’t prohibit the fixed charge from increasing whenever PG&E wants. The plan lacks safeguards against utility double-dipping, so it will be hard to tell whether the costs embedded in this new fixed charge are duplicated in other cost-recovery requests…

The Public Utilities Commission’s rubberstamping of unproven, unwarranted, unjust electricity costs must stop. It is up to the state Legislature to inject sanity into the regulatory system and protect California families and businesses from ruinous, undeserved rate increases.

This is my guess for what happens next. Some version of the fixed fee will get adopted next month and then a year or so from now, the utilities will increase that fee, more than offsetting whatever change is made to the cost per kilowatt hour. In other words, this plan which is being sold as a way to reduce sky high electricity costs will quickly result in higher costs for nearly everyone within a few years. Democrats opposed the original plan because the rates were so steep and the whole idea came as a shock to rate-payers. But the shock will wear off and, like the frog in the heating pot, once people get used to it the utilities will start cranking up the rates and the PUC will continue to rubber-stamp those requests. The only way to avoid the new electricity income tax is to leave the state.

SNL GOT IT RIGHT

Now reality pic.twitter.com/sTHsnvk35X

— Mark R. Levin (@marklevinshow) April 23, 2024

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