Josh Becker, California state senator, and Marc Berman, California state assemblymember, critique Income Graduated Fixed Charges Quote: "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. .... "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." #cpuc #igfc #ratedesign #fixedcharges #california #incometax Read the rest of this article at the link below.
Ahmad Faruqui
1 年
Here is one more critical commentary. https://www.mercurynews.com/2023/09/01/elias-basing-californians-electricity-rates-on-income-unworkable/
Aftab Raza
1 年
Thanks for sharing this Ahmad Faruqui. Is there any other example of IGFC from elsewhere in the world? Does its implementation not raise privacy issues and cost to collect and verify income information? One economic concern about IGFC is that it may distort the price signals and incentives for energy conservation and efficiency. By shifting a portion of the costs from volumetric rates to fixed charges, IGFC may reduce the marginal cost of electricity consumption for some customers, especially those with higher incomes who face higher fixed charges.?This may lead to increased energy demand and consumption, which may undermine the state’s climate goals and increase the need for more generation and transmission capacity.
Until the public is confident that the CPUC is implementing policies that are in are in the in the public interest versus the IOU’s interests, the public will continue losing confidence and trust in the CPUC, and continue to increase public resistance to critically important electrification and deccarbonization policies that Senators Josh Becker and Berman appropriately support
Economist-at-Large
1 年The letter from 20 assembly members on the topic has also been written up in the Politico newsletter. https://www.politico.com/newsletters/california-climate/2023/11/02/problems-in-paradise-00125158