California Governor Gavin Newsom signed an executive order meant to help reduce electric costs for Californians.
Californians have seen their electric bills rising in recent years, and a major driver has been critical utility wildfire mitigation efforts that have accelerated to match the pace of the climate crisis, as well as several programs added over time, Newsom’s office said.
The executive order aims to address both of these cost drivers by zeroing in on some programs that could be inflating customer bills and evaluating utility wildfire mitigation expenses for potential administrative savings.
First, the executive order asks the California Public Utilities Commission (CPUC) to identify underperforming programs and return any unused energy program funds back to customers receiving electric and gas service from private utilities as one or more credits on their bills.
Next, the order directs the California Air Resources Board (CARB) to work with the CPUC to determine ways to maximize the California Climate Credit, which is a twice annual credit that shows up on many Californians’ electric and gas bills in the spring and fall and is funded by the state’s Cap-and-Trade program.
Additionally, the order asks the CPUC to evaluate electric ratepayer supported programs and costs of regulations and make recommendations on additional ways to save consumers money. It also asks the CPUC to pursue any federal funding available to help lower electricity costs for Californians. Additionally, the executive order directs the California Energy Commission (CEC) to evaluate electric ratepayer-funded programs and identify any potential changes that could save Californians money on their bills.
Finally, the order directs the Office of Energy Infrastructure Safety, and requests the CPUC, to evaluate utility wildfire safety oversight practices and ensure that utility investments and activities are focused on cost-effective wildfire mitigation measures.
In addition to the Governor’s action, earlier this year, the CPUC approved a proposal to reduce the price of residential electricity through a new billing structure authorized by the state Legislature. The billing adjustment introduced a flat rate bill component and reduces the electricity usage rate. CPUC says it will lower overall electricity bills on average for lower-income households and those living in regions most impacted by extreme weather events.
The CPUC’s decision changes how large investor-owned utilities (IOUs) bill residential customers for infrastructure-related costs. All customers already pay the cost of building and maintaining the electric grid through the price they pay for the electricity they use, but the CPUC’s decision moves these existing fixed costs into a “flat rate” line item on bills.
When the temperature spikes during the summer in California, so do electricity bills, leaving some customers with monthly payments over $500. A big reason for that is the way California’s largest power companies calculated rates before the addition of the flat rate. The more power you used, the more money you paid — not just for electricity, but also for things like maintaining the grid and reducing wildfire risk.
California was one of the only states that didn’t already have a fixed charge for its largest utilities, and the state Legislature ordered regulators in 2022 to implement one by July 1 of this year.
This article contains reporting from the Associated Press.
