The California Public Utilities Commission appears to take its orders from PG&E | Opinion
PG&E is now the most expensive electricity utility in the state. It’s living from crisis to crisis, having gone through two bankruptcies in two decades and five CEOs in 10 years. For years, PG&E neglected to invest in safety measures that would have protected communities from devastating wildfires. Now, in addition to worrying about smoky skies and rolling brownouts every year, its customers are forced to pay for PG&E’s mistakes with higher bills.
Most Californians buy power from one of three investor-owned utilities in the state. In Northern California, 5 million households buy power from PG&E. As of April 1, a PG&E customer using 750 kilowatt hours of electricity will pay $352 a month — more than twice as much as what a Sacramento Municipal Utility District customer would pay.
Opinion
After its latest increase, a PG&E’s customer’s electricity bills will have doubled over the last 10 years. The utility has indicated that rates will rise further as the year progresses. At the same time, PG&E has announced record profits and asserted that there is no connection between rate hikes and profit.
To mitigate climate change, California wants to promote electrification by encouraging customers to replace their gas furnaces, air conditioners, gas stoves, water heaters and gasoline-powered cars with induction cooktops, heat pumps and electric vehicles. But ever-increasing electric rates pose a barrier.
Now, the California Public Utilities Commission (CPUC), whose commissioners are gubernatorial appointees, has made two policy decisions that will do nothing to lower rates.
On April 15 of last year, claiming that high rates were being driven by customers installing solar panels on their roofs, the CPUC significantly slashed the price paid to customers for their exports. As a result, new solar installations dropped by 80%. This claim ignored the deleterious impact other factors have had on rates, including a discount of 35% that is given to low-income customers, $1.5 billion spent annually on energy efficiency programs, bloated overheads at investor-owned utilities and gross mismanagement and neglect.
Last month, the CPUC issued a proposed decision that will lower energy charges by five to seven cents per kilowatt-hour by collecting some revenues instead through a new charge of $24.15 a month for all customers who are not enrolled in low-income rate relief programs. Such a shell game between flat and variable charges will not promote electrification. Instead, it will penalize frugal, energy efficient customers who use less than the average amount of electricity simply because they are not low-income customers.
Something has gone terribly wrong in California. The CPUC is failing to protect Californians.
The commission has approved multiple rate hikes and disincentivized clean energy alternatives. It seems to be consistently doing whatever the utilities it regulates want it to do. No wonder former CPUC President Loretta Lynch recently lamented, “The PUC is supposed to be a watchdog, but, instead, the PUC is a lapdog. When PG&E asks for a rate increase, the PUC’s response is: ‘How high should it be?’”
In response to public outcry over CPUC decisions, several pieces of legislation have been drafted. Assembly Bill 2205 (Mandatory Rate Reduction), authored by Asm. Joe Patterson, R-Rocklin, and Asm. James Gallagher, R-Yuba City, would require the CPUC to reduce the price of electricity by at least 30%. AB 2054 (Employment, Gifts and Rates), authored by Asm. Rebecca Bauer-Kahan, D-Orinda, would prevent a CPUC commissioner from being employed by a public utility that they previously regulated until three years have elapsed since that person left the CPUC. It would also prevent any utility executive from serving as a commissioner until two years have elapsed since he or she left the utility.
AB 2619 (Net Energy Metering), authored by Asm. Damon Connolly, D-San Rafael, would require the CPUC to ensure that customers with solar panels are appropriately compensated for their exports to the grid. And AB 1999 (Fixed Charges), introduced by 11 assembly members, would set a cap of $10 a month, limiting the CPUC’s ability to increase customer bills to fund the state’s utility grid.
These bills are designed to save ratepayers hundreds of dollars in their annual electric bills and make it easier and cheaper for families to use clean energy resources. Gov. Gavin Newsom should take note and follow suit. Californians are fed up with ever increasing electric bills. We need the governor to protect us from getting slapped with new rate increases. We need regulators to do their jobs. We need rules to stop investor-owned utility companies from passing their penalties onto us and profiting from their mistakes.
Dr. Ahmad Faruqui, an energy economist, works on rate design and energy efficiency issues.
