Reliable electricity is an essential part of our lives, so making it affordable should be a top priority of California’s elected officials. Unfortunately, lawmakers keep introducing proposals that make the affordability crisis worse.
And they refuse to consider a change that could quickly cut the average customer’s annual bill by hundreds of dollars: removing mandatory extra charges that have nothing to do with the electricity they use.
A study released last summer found these fees add nearly 37% to the average Californian’s electricity bill. In addition to paying for power generation and delivery to households, electricity customers foot the bill for a collection of hidden “public purpose” programs and state mandates. Customers who get their power from investor-owned utilities such as Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric pay about $820 a year for these programs.
Examples of these extra charges include subsidies for rooftop solar, bill discounts for low-income customers, energy efficiency programs, upgrades to school air conditioning and plumbing, and forest and tree management throughout the state.
The goals of these mandates may be noble, but the method of funding them is regressive. Simply put, it is unfair and inequitable to make some electricity customers pay for programs that benefit society at large and are largely unrelated to the cost of providing electric service. In many other states, people pay for these items through their taxes, not their utility bills.
Nowhere is this inequity more glaring than in the state’s rooftop solar subsidies. For years wealthier homeowners have installed rooftop solar to lower their electric bills, while costs are quietly shifted onto everyone else.
Utilities are required to pay solar households for the excess power they send to the grid. They spread the cost of those payments across everyone else’s electricity bill. Meanwhile, solar customers pay far less toward maintaining the grid that everyone relies on. The result is higher electricity bills for renters, lower-income families and others who couldn’t afford solar.
According to a different study by the California Public Advocates Office — a consumer agency at the California Public Utilities Commission — customers without rooftop solar pay more than $8.5 billion each year on their electric bills to subsidize customers with rooftop solar systems. That adds about $440 per year, or 20%, to every non-solar customer’s bill, primarily hitting low-income families, seniors and renters hardest.
For Latino, Black, and Asian American communities, this disproportionately affects renters, residents of multi-unit buildings where rooftop solar is not an option and customers who cannot afford to install solar. As a result, families who already are paying a high share of their income on housing and utilities are forced to cover someone else’s solar subsidy.
California lawmakers must face these rate realities. Too many of their policies are making matters worse, jeopardizing electric system reliability and ultimately raising customer electric bills. If legislators want to get serious about affordability, they should start by cutting the costly mandates and lowering electric bills.
Ahmad Holmes is president and CEO of the California African American Chamber of Commerce. Pat Fong Kushida is president and CEO of the CalAsian Chamber of Commerce. This commentary appeared first on CalMatters.
