Background on our income-

graduated fixed charge proposal

Committee on Utilities & Energy Briefing
October 3, 2023
Income-graduated fixed charge benefits

• Californians are facing climate and electric affordability

crises

• An income-graduated fixed charge will help solve both

crises

• A fixed charge will not increase utility profits

2
 Utility costs are growing because of “fixed” costs

Annual Rev Requirement of PG&E, SDG&E, SCE

40 • Electric bills are rising due to
Generation
increased utility “fixed costs” to
address wildfire risks and other
30
Amount (Billion USD)

Other
activities that are not related to
generating and delivering
Public Purpose
20 electricity (e.g., wildfire mitigation
Programs
costs)
Transmission
10

Distribution
• Despite this, most customer bills are
0
exclusively based on how much
2021 2022 2023
electricity they use.

Source: CPUC SB 695 annual report (2023)

A fixed charge will not increase how much utilities can
collect from customers

Authorized Utility Costs = Collections from Ratepayers

or

Current With a fixed charge

100% of collections Collections based on
based on usage usage & a fixed fee

4
 Our proposal prioritizes low-income households & electrification

Fixed Low Use High Use

$320
Monthly bill by Component ($)

$240 • Low-income. Income-qualifying

customers have an estimated 85%
$160 discount on their fixed charge.

$80
• Electrification. Households will find
electrification more cost-effective.
$0
Current PAO Current PAO
Low-income households Other
(CARE) (Non-CARE)

For reference, all Sacramento Municipal Utility District customers currently pay a fixed charge of $23.50 per month
Our proposal prioritizes low-income households & electrification
Proposed Fixed Charge by Utility

PG&E Fixed Charge SCE Fixed Charge SDG&E Fixed

Customer Type Criteria
($/month) ($/month) Charge ($/month)

Enrolled customers
below the federal
Qualifying CARE
poverty line (e.g., $4 $4 $4
customers
family of 4 making
less than $30,000)
Enrolled customers
FERA (and other (e.g., family of 4
$7 $7 $7
CARE) customers making less than
$75,000)
Customers not
All other customers enrolled in income- $29.96 $31.15 $32.15
qualifying programs
Average Fixed
$23.25 $24.52 $25.62
Charge

The fixed charge “brackets” are based on long-standing utility discount programs 6
The fixed charge will change individual bills -- and reduce
electricity price distortions
Likely to see modest bill savings Likely to see modest bill increases

+ Higher energy users - Lower energy users

Electric car owners Vacation property owners
Multigenerational households Single-resident households
Remote workers Commuters

+ Higher energy homes - Lower energy homes

In hotter regions (high AC) In cooler regions (low AC)
With heat pump or induction stove With rooftop solar
Older homes (not to code) New construction (built to code)

+ Lower-income households - Higher-income households

 Rate reform will reduce the energy burden on low-income
customers
$250

$204

• Electric bills are mainly rising due to

higher overall electricity prices
Average Monthly Bill

$166 $165

Increases to Date ("rates") and higher electricity use

$125 (e.g., air conditioning).
Average Non-CARE
2021 Bill

$152
$121 $113 • Low-income households are most
disproportionately impacted from
higher rates and bills.
$0
San Jose Greater
Los Angeles San Diego
L.A. Area*

Public Advocates Analysis analysis of utility data and household consumption for unsubsidized (Non-CARE) customers
*Los Angeles Department of Water and Power services the City of Los Angeles.
 The fixed charge will reduce electricity rates for all

Average household electric rates by service territory (forecasted vs. with our proposal)
Estimated electricity price
$0.50 where fueling an EV is more
expensive than a gasoline car

2022
$0.40
Electric Rate ($ per kWh)

Forecasted 2024
$0.30

Forecasted 2024
(with fixed
$0.20 charge)

$0.10
PGE SDGE SCE

Source: Public Advocates Office analysis

Rates represent schedules PG&E (E-1), SCE (D), SDG&E (DR)
Forecasted 2024 bars are for illustrative purposes based on the Public Advocates Office proposal. The CPUC anticipates fixed charge
implementation will require several years (circa 2026) to provide utilities sufficient time to update billing systems, educate the public, etc.
 Our fixed charge proposal will benefit ratepayers

Benefits Next Steps

1. Reduces volumetric rates for all Q4 2023 to Q1 2024. CPUC expected

customers (& incentivize electric to release a near-final proposal with
vehicle & appliance adoption) detailed policy design specifics.

2. Reduces monthly bills for low- Q2 2024. CPUC to authorize an

income customers income-graduated fixed charge.

3. Provides more accurate price 2025 and beyond. IOUs integrate

signals that align with actual grid costs program into customer bills.

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More information
We are a State entity charged with helping ensure Californians are represented at the
California Public Utilities Commission and in other forums. We develop recommendations
that advance the state's energy and climate goals in the most affordable ways for
ratepayers.

Visit our website at www.publicadvocates.cpuc.gov

Contact us
• Tara Dias-Andress, Legislative Advisor
tara.andress@cpuc.ca.gov

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Appendix

12
 Electric rate increases hinder clean energy
transition and electric vehicle adoption
Est. rates when fuel costs are
more expensive for a Tesla
$0.50 Model 3 than a Toyota
Camry at $4 per gallon*
Average Residential Rate ($ per kWh)

$0.40

$0.30

Our end of year forecasts

$0.20

$0.10
2014 2017 2020 2023
*Calculated based on fuel efficiencies reported to the federal government. Note: electric vehicle rate schedules depend on many factors (e.g., investor-owned utility and time of use).
Average residential rates represent bundled Non-CARE customers excluding California Climate Credit. Forecasts may be conservative as they only include pending applications.
Sources: Investor-Owned Utility Advice Letters (California rates) & fueleconomy.gov (efficiency)