California Wants To Charge for Electricity by Income

The biggest electricity providers in California want to alter the way that customers pay their electric bills. Pacific Gas and Electric, Southern California Edison, and San Diego Gas and Electric recently submitted a combined application to the Public Utilities Commission of the Golden State proposing a new pricing structure that is in part dependent on income.

The fundamental electrical services that are billed to customers by the three power companies are proposed to be charged at a set rate to families. These charges cover the price of the wires and meters used to transmit electricity from the grid to buildings. Additionally, they pay for the expenses related to reading meters, keeping customer records, and accounting for bill payments.

These fees won’t vary under the proposed idea regardless of how much energy people use. Instead, based on the users’ household income, the corporations will determine a flat amount for those payments.

Aaron Ginn, co-founder of Hydra Host data centers, published a tweet explaining the three-tier arrangement that the power firms propose. Depending on which of the three firms delivers the customer’s electricity, his post displays a price range for each income level that the customer can anticipate paying.

Assembly Bill 205 (AB 205) was passed by the California legislature in June 2022, opening the way for the combined plan. The law obliges energy providers to make their bills simpler. They must also establish a set fee for basic services for clients based on an income scale with at least three income criteria. Low-income consumers would have a lower average bill without any reductions in usage, said the senate floor study of the measure.

According to the utility providers, the proposal would result in lower average costs for each kilowatt hour of usage for all of their customers. They also pointed out that the new approach will increase billing predictability and transparency.