Last year, California passed Assembly Bill 205.
We supported the legislation due to the critical clean energy reliability and permitting streamlining provisions, as well as the creation of a financial relief program for utility bills incurred throughout the pandemic.
However, tucked into the bill was a provision that required the California Public Utilities Commission (CPUC) to modify a portion of electricity rates to make them dependent on a household's income.
There are real concerns and real risks to this approach.
Most of the proposals that have been submitted would create additional financial burdens for low- and middle-income customers in the Bay Area, since the income thresholds are tied to federal and statewide income thresholds.
Given the Peninsula's high cost of living, particularly for housing and child care, these financial thresholds do not accurately represent the financial struggle many of our constituents are facing.
In turn, many low- and middle-income San Mateo and Santa Clara County residents struggling to make ends meet will see increases to their electricity bills.
Not only are the income thresholds geographically inequitable, it's clear that Pacific Gas & Electric (PG&E) is using this proceeding as a way to raise your rates.
The three monopoly utilities, including PG&E, jointly proposed using this change as an opportunity to raise the overall revenue they collect from customers.
Incomes between $28,000-$69,000 would pay an additional $120-$288 per year; incomes between $69,000-$180,000 would pay an additional $492-$876 per year; and those above $180,000 would pay an additional $1,020-$1,536 per year.
The federal low-income threshold for a family of four living in San Mateo County is $149,100, making this proposal financially burdensome for many of our low- and middle-income constituents.
In addition, this change would disincentivize energy conservation and efficiency, as well as rooftop solar and battery use, as it would increase the fixed costs for many households relative to what they pay per kilowatt of electricity used.
Undermining our energy conservation and efficiency goals, especially in this moment when the Bay Area is looking to electrify buildings and the cost of a kilowatt of electricity can make-or-break the financial decision to switch a home appliance to electric, is a huge problem.
There are meaningful solutions the Legislature can and should use to decrease rates. We have fought and are fighting for those solutions.
California should subsidize the clean energy buildout by funding some of it through a proposed climate bond, which we are both strongly advocating for.
California provides our utilities with the highest "return on equity" for shareholder profits, which according to experts overestimates the financial risk return. These profits could be rebalanced.
We have also fought against boondoggle programs and outdated legal obligations that are paid for by taxpayers.
PG&E has been allowed to put extensive costs from the horrific wildfires, some of which were started by their own equipment, as well as the significant costs of prevention of future wildfires, into electricity rates.
Instead, we should follow the Legislature's proposal to stop ratepayers from footing the cost of these wildfires and pay for them out of a Climate and Equity Trust.
Electricity affordability is a top priority that we both support, but it's critical that we proceed thoughtfully and don't undermine our existing climate policies.
This proposed change is at risk of being poorly implemented, with long-lasting affordability and climate impacts for the Peninsula.
The CPUC needs to consider the impacts to all California communities.
Editor's note: This Guest Opinion originally published in the Palo Alto Weekly, our sister publication. Senator Josh Becker was elected in 2020 to represent the 13th Senate District and serves as the Chair of the Senate Budget Subcommittee No. 2 on Resources, Environmental Protection, and Energy. Assemblymember Marc Berman was elected to the Assembly in 2016 to represent the 26th Assembly District.
