While I understand the desire to have a progressive pricing scheme to offset some of the criticism around solar subsidies being "subsidies for the rich", I think this would be a terrible precedent as far as invasion of privacy. I think it is cynical overreach. There is absolutely no reason that the utility company should gain access to household income data of their entire market.
If the CA government thinks we should have this kind of pricing or means-based support of the utilities, I think they should design it into the income tax code and provide subsidies to the utility from collected tax revenue.
An alternative might be to extend current CARE, FERA, and Medical Baseline Allowance programs to extend discounts or payment assistance for households in need. But I think these programs may also be flawed in that they endanger the privacy of those needing assistance. The state tax board already has the necessary data and the state should not be supporting the creation of additional parallel systems.
Utility companies already run credit checks on new customers. This doesn't seem like a big leap from that. They may already be estimating income based on the credit check. I don't disagree in theory but utility companies today, across the country, are already all up in your financial business.
Source: I got a new apartment in a new state and had a lot of difficulty proving that I make enough money to get electricity from the utility company. The utility company was harder to convince than the landlord renting me the actual apartment.
Isn’t this just going to incentivize the people can afford to, to install residential solar/battery and go off grid? Which probably has negative consequences for the low/moderate income people who will have to share a larger portion of the fixed costs?
Technology Connections has a really interesting (as always) video on this. Supposedly 10-20% of your power bill goes to power, the rest is for grid maintenance. The poor are going to have to pay more and more to maintain the grid, unless there is a radical change in how grid-tied is priced.
This is kind of on the right track, but not correct.
The breakdown varies wildly depending on which electrical market you're in, and where in that market you're physically located. The price you pay is mostly a combination of:
- Wholesale energy prices set by multiple markets (week ahead, day ahead, balancing)
- Market fees (minimal)
- TSO/ISO tariffs for running the transmission grid and any ancillary services, as well as grid maintenance and capital recovery
- Similar DSO tariffs for the distribution grid
- retail costs that represent the overhead of any electricity retailer that exists between you and the DSO
- taxes and other fees depending on your state
In my country, the wholesale cost is approximately 60%, TSO and DSO fees are around 10-15% each, retail is around 5% and other fees and taxes make up the rest. My numbers are loose because it has been 4 years since I broke it all down last.
Your underlying point is right though, that richer people can afford to buy their own production to avoid most of these fees. The result being that poor people shoulder more of the cost.
This _is_ done by government -- the scheme is being implemented to comply with AB 205.
The article uses confusing and misleading terminology. The _rate_ charged for electricity is in no way based on income; this is about the "residential fixed charge", the bill component you pay regardless of usage. This fixed charge was introduced to counteract a freeloader phenomenon from people who benefited from electric infrastructure but paid next to nothing because of solar rebates.
Yes. Switching from usage charge to more fixed charges will increase bills for low usage users and decrease bills for higher usage users. Not exactly a green solution
This is a horrible proposal. Whether or not you are upset about PG&E knowing your income, the mere fact that it would be a flat rate reduces or eliminates the incentive to reduce electricity usage.
If this goes through, we will probably see people running their AC and heat more because there's no incremental cost for them to do so.
We need to be incentivizing reduction in energy use, not making it free to use more.
As the sibling notes, there is still a per-Kwh charge. The change is supposed to be revenue neutral and more closely matches PG&E's real costs (grid maintenance is 75%, generation is ~25%). This actually supports electrification by making it more feasible to switch to heat pumps vs gas heat.
The real problem with the proposal is that it perpetuates hidden subsidies for rural electric networks. The progressive fixed rates should be related to the cost to connect that particular household to the grid.
It’s not really about consumption. It is a stealth way for PG&E to get urban areas to subsidize rural areas. This is likely driven by vegetation management costs in rural areas.
> Existing law authorizes the PUC to authorize fixed charges that do not exceed certain amounts per residential customer account per month, as provided.
This bill would delete the requirement that each electrical corporation offer default rates to residential customers with at least two usage tiers. The bill would additionally require the PUC to ensure that the approved fixed charges do not unreasonably impair incentives for beneficial electrification and greenhouse gas reduction. The bill would instead authorize the PUC to authorize fixed charges for any rate schedule applicable to residential customer accounts. The bill would eliminate the cap on the amount of the fixed charge that the PUC may authorize. The bill would require the fixed charge to be established on an income-graduated basis, as provided, with no fewer than 3 income thresholds so that low-income ratepayers in each baseline territory would realize a lower average monthly bill without making any changes in usage.
Since the income bracketing is a legal requirement, the CA state government will be sharing income data with these utility corps. I would imagine. So the bill’s obviously being positioned as relief for low income households, but what it would do is hand these utility oligopolies access to intelligence on their captive customers so it can fully exploit their price elasticities.
What business does the power company have knowing my income level? I already get offers to sign up for substantial low-income discounts from SCE, and it never strikes me as a good idea to pursue despite likely qualifying on my long sabbatical style stints of self-employment. My usage is so low in general it's just not an optimization worth further compromising my privacy for.
Furthermore why would we want to disconnect cost from utilization? This seems ridiculous on the face of it, and the rates they're describing for the high-earners strike me as low compared to how wasteful such households tend to be.
Am I missing something? Is some millionaire with an electric heated outdoor pool going to be paying $92/mo in this scheme? That's madness and incentivizing the wrong things entirely.
Or are those figures listed just averages expected under the new scheme, but still scaled by utilization?
Also what happens if you refuse to provide proof of income level under this scheme? Does it just default to the highest bracket? Many actual low-income folks won't be filing paperwork proving their taxed income level with the power company, will this just fuck them over by treating them as high earners?
It’s not just income but all residents too. Will everyone’s grandma be on the power bill? What is there are two earners filing separately? Or four roommates?
So rich people who can afford their accountant fees to hide their income, like with taxes, will pay almost nothing for energy, while the essentially broke person will pay more.
What percentage of the population do you believe is both rich and hires accountants to hide all of their income? What percentage of people serviced by PG&E do you think fall into that category? From my perspective you're referring to a number of people that I could count on one hand. Do you think it's some significant portion of the population?
Presume that everyone making above, say, $1 million per year isn't taking all their income as W2 income. How much this counts as "hiding" income is up to you to decide, but generally W2 is considered "normal people" income, 1099 "contractor people" income (whether that's a plumber who owns their own business, or an Uber driver), and 1099-DIV and 1099-INT and related are rich people incomes.
If we further assume big tech companies have 5 CxO (CEO, CFO, CTO, COO, CISO, CMO; pick 5), and that there are more than 1 big tech companies headquartered in California. If we assume those officers make large incomes that aren't W2 incomes, that they live in California, and, further, live in areas serviced by PG&E (which, statistically speaking is basically all of them), and then count individuals based on the fraction of income "hidden" as non-W2 income, and sum them up, then that number is surely greater than 5.
Not a statically significant portion of the 17M employed Californians mind you, but more than 5.
The “rich people who can afford accountants” in this case are going to be middle income families, and I’m not even talking about household income of more than 100k. Only the bottom 30% will see savings, which you’ll realize is not a big threshold.
Another problem I see is that by reducing the per-unit costs and shifting it back to a flat grid connection fee, they are reducing the incentive to save energy. Is this really going to bring the future we want?
I honestly think it is a mistake to allow grandfathered NEM rate structures to continue, if these other wacky plans are really attempting to compensate for that imbalance.
Maybe we need better than the NEM 3 proposal, to actually charge based on your grid connection size and usage. Something based on peak and actual power transfers as they reflect proportionate reliance on the grid infrastructure.That would be in addition to any actual energy consumption which I think should also follow the NEM 3 plan with retail rates for consumption and wholesale rates for production that vary by time of delivery.
I think that having energy be more affordable for people who are less well off makes sense. What this article seems to suggest is making electricity unmetered and cost a fixed amount based on your income. This completely discourages people to be economical about saving energy. Rich people already tend to use their heating and AC more than poorer people. We should not incentivize people to be inefficient. Adjusting a unit price would be reasonable, but people should be charged just that — a unit price.
For CA, depends very much on where you are. $0.47 is not the highest in CA, nor in the continental US.
Here in Boston, my rate is $0.14479/Kwh for delivery with a $0.33891/kWh supply charge, or $0.4837 per kWh. Yep, higher than you're paying. That excludes a fixed standing charge of $7/mo. About 53% of our base load (IIRC) is natural gas, so when natural gas wholesale prices spiked, so did our rates by 80+ percent back in October 2022.
My electric bill nearly doubled over the course of 6 weeks. I'm fortunate that over the years I had always driven my power consumption into the ground. Certainly paid off. Back in 2017, the rate was legitimately under half what I paid now.
Again, I believe there might be some parts of CA where the delivery+supply rate might be approaching $0.60/kWh at some points in time, but it'll be location dependent.
That's wild. My meter fee is like $15 and then my rate is less than $0.14 total, for delivery and supply.
Guess I'm burning coal.
I used ~200 kW-h last month, so at least it wouldn't ruin my life to pay $0.50 per. I don't have AC, so even with a gas furnace, the winter months tend to be my largest electric (running the blower and hydronic pumps).
Depending on where you live, it very well may be coal. Have a friend in Kentucky who pays about $0.105/kWh, but 70% of his electricity is coal powered.
this is incorrect -- many large income earners in California pay tons of taxes. And also, many low income earner pay tons of taxes. In a famous experiment, a dozen professional tax prepares were paid to do their best with some (hypothetical) tax situations, and their results were significantly different. IIR the IRS itself was asked to calculate the tax, and it was different again.
Computer programmers in particular might be forgiven for incredulity of these tax systems, but here we are in 2023.
It would cost me about twice that to upgrade my current solar and battery for 100% off grid. ($10K would go to a backup generator that we need anyway because PG&E pulls about 1 nine of reliability around here).
So, if this proposal passes, I’ll strongly consider just not paying for electrical service anymore. I suspect most high income houses will be looking at similar numbers as the cost of solar plus battery continues to drop.
This will only accelerate California’s power grid death spiral.
Edit: They should make the variable part of your electric bill proportional to carbon footprint (negative bills for net negative housholds), and legalize community net metering. This would allow poor people to buy into non-profits that lower their bills, so they could benefit economically form solar panels, just like rich people do. Also, this would even more rapidly decarbonize California’s power grid.
They could make it revenue neutral for PG&E by raising the base rate for interconnect, by giving PG&E cap and trade credits, or by giving individuals the cap and trade credits in lieu of a discount off their bills.
If the CA government thinks we should have this kind of pricing or means-based support of the utilities, I think they should design it into the income tax code and provide subsidies to the utility from collected tax revenue.
An alternative might be to extend current CARE, FERA, and Medical Baseline Allowance programs to extend discounts or payment assistance for households in need. But I think these programs may also be flawed in that they endanger the privacy of those needing assistance. The state tax board already has the necessary data and the state should not be supporting the creation of additional parallel systems.