A Progressive California Epiphany Over Soaring Electricity Rates

Democrats want to repeal the graduated income tax on electricity they passed two years ago

WSJ editorial. 

"Remember Nancy Pelosi’s famous line that Democrats had to pass ObamaCare to learn what was in it? Democrats in Sacramento are now having second thoughts about a law they passed two years ago that would effectively establish a second progressive income tax in California. 

Democrats last week introduced legislation to repeal a 2022 budget bill that authorized the Public Utilities Commission (PUC) to restructure electricity rates by imposing a fixed charge on an income-graduated basis. The budget bill’s purpose was to reduce the state’s skyrocketing rates for lower-income people and shift utility costs to higher earners.

Average residential rates for investor-owned utility customers have surged by 72% to 127% over the past 10 years. About 2.5 million households are behind on their bills, averaging $733 in arrears.

One culprit is the state’s aggressive green-energy buildout, which has required batteries to back up intermittent solar and wind. Another is the state’s net-metering program, which generously compensates households with solar panels for excess power they send to the grid. This has shifted costs for maintaining the grid to homes without solar panels.

Lawmakers have also shifted state government costs for wildfire mitigation and climate subsidies to utilities so the politicians can devote more spending to their public-union friends. At the same time the state has mandated that utilities provide discounts to lower-income customers. These discounts get baked into higher rates for all customers.

The climate lobby frets that soaring electricity rates will discourage low- and middle-income Californians from buying electric vehicles (though they are also an inducement to install solar panels). Thus, Gov. Gavin Newsom two years ago pressured the Legislature to pass the budget bill to establish the nation’s first income-based electricity rates.

“This is a crappy budget trailer bill that was dumped on us late Sunday,” Democratic Assembly Rep. Al Muratsuchi said at the time. The bill nonetheless passed overwhelmingly. Now Democrats in affluent areas are hearing from constituents who are irate that their electricity bills could soon climb even more.

The PUC hasn’t finalized the new electric rate structures. But

Pacific Gas & Electric

Company has floated charging customers fixed fees ranging from $15 a month for those earning less than $28,000 annually and up to $92 a month for those making $180,000 or more. Income-based charges on higher earners will rise as utility costs do.

Ten state Senators recently sent a letter urging the PUC to reject utilities’ proposed income charges. “Californians already pay some of the highest electric bills in the nation and should not be forced to arbitrarily pay more to cover for a private utility’s poor business decisions,” San Francisco progressive Sen. Scott Wiener declared.

No—they will be forced to pay more to compensate for Sacramento’s bad policy decisions. The progressive epiphany in Sacramento is welcome, belated as it may be. Maybe California isn’t completely lost."