“Well, here’s another nice mess you’ve gotten me into!” Oliver would routinely tell Hardy, which was the famous 1930s-era comedy duo’s best-known line. Sadly, that catchphrase could again be applied to the California Legislature, which has a long history of adopting complex and ill-thought legislative actions. It then scrambles to undo the mess.
The latest example, detailed by this newspaper group’s reporter Teri Sforza, involves a new law – passed last year by sizable margins – that directed the California Public Utilities Commission to adjust the fixed-charge portion of electricity rates to an “income-graduated basis … such that a low-income ratepayer would realize lower average monthly bills without making any changes in usage.”
Rates in our regulated utility system are based on the amount of electricity that households use and also a fixed rate to handle stranded costs – e.g., the price of building and maintaining the grid. Gov. Gavin Newsom and lawmakers decided to shift more of the costs to higher-income families and reduce the costs for lower-income ones, but now even some Democrats who supported the bill are outraged.
Equitably distributing fixed costs is a legitimate issue, but as commentators have noted, this far-reaching measure was rammed through the Legislature as part of a budget trailer bill. That circumvented the normal legislative process of hearings and analyses that vet complex changes. The state has a history of wreaking havoc with the electricity system, so lawmaker should have proceeded carefully.
As Sforza added, some Democratic legislators have introduced a bill to roll back the changes. Sen. Scott Wiener, D-San Francisco, noted Californians pay among the nation’s highest electricity bills and the re-structuring proposal “would raise energy bills for millions of Californians.” The proposed fixed charges, he added, are four-to-six times higher than in other states. Wiener also said that it will reduce progress on meeting our climate goals.
In other words, a state plan to make electricity bills more affordable could make them far less affordable. A plan to make bills more equitable could create rate hikes that hit hardest those residents who are least able to afford the hikes. Now Democrats are scrambling to deal with this. Republicans have been sounding the alarm, but, as Sforza added, their repeal efforts have failed in a Capitol dominated by Democrats.
By the way, Wiener’s climate concern was entirely predictable. People use less of anything – gasoline, water and electricity – when there’s a direct connection between how much they use and how much they pay. If the state shifts costs to the fixed portion of electricity users’ bills, then it makes little difference if they use less electricity. As a result, they will use – this is not brain surgery – more energy (thus harming the state’s conservation goals).
To some, encouraging more electricity use is a feature of the new rate structure. One UC Berkeley professor had argued in a paper that the structure promotes more electricity use and therefore encourages consumers to, say, buy electric cars and appliances. That might potentially make some sense, except the state’s electricity grid already is stressed – and isn’t keeping pace with the current EV adoption rates.
Well, lawmakers have their work cut out for them dealing with this situation in the new session. It’s a mess entirely of their own making.
