California Lawmakers Backpedal on Income-Based Utility Charges as IOUs, Others Propose Alternatives

Source: Utility Dive |  By Herman K. Trabish

Some California lawmakers have proposed repealing a measure the legislature approved in 2022 that would protect low-income customers and beneficial electrification from electricity rates that are now the nation’s third highest. The income graduated fixed charge, or IGFC, was proposed in a 2021 University of California white paper as a way to partially shift the funding source for some of the state’s public policies from its fast rising per kWh, or volumetric,  power prices to income-based fixed charges.

But without “some kind of rate restructuring,” the growing non-electricity costs imposed on the volumetric rate could lead to “profound unfairness between the haves and the have-nots,” said Matthew Freedman, staff attorney with The Utility Reform Network, or TURN. Many stakeholders, including UC Berkeley’s Borenstein and TURN’s Freedman, expect regulators to propose a simplified IGFC. With a very high fixed charge, upper income customers “may buy solar and batteries and other technologies and defect” from utility service, TURN’s Freedman agreed. Reducing utilities’ return on equity and using new sources of and approaches to financing to reduce the capital needed for infrastructure projects will also reduce costs, TURN’s Freedman added.