How Does the Fixed Charge Bill Structure and Income Graduated Fixed Charge Adopted by the CPUC Impact Customers? Posted on Jun 11, 2024
In May 2024, the California Public Utilities Commission (CPUC) approved a fixed charge bill structure that includes income-graduated fixed charges (IGFCs) for default residential electric rates. The CPUC vote was 4-0 vote with one recusal approving a $24 per month fixed charge on most residential customers. CARE and FERA households will pay $6 and $12 per month respectively. This fixed charge will be the second highest in the nation among investor owned utilities and it is twice the national average according to energy economist Ahmad Faruqui.
The new fixed charge rate structure was mandated by Assembly Bill (AB) 205, which required that default residential electric rates include a fixed charge implemented on an income-graduated basis. The CPUC's approval stipulated that these IGFCs must have no fewer than three income thresholds and ensure that typical low-income customers realize a lower average monthly bill without altering their energy usage. Additionally, the IGFCs are designed not to unreasonably impair incentives for conservation, energy efficiency, beneficial electrification, and greenhouse gas reduction, while reflecting an appropriate portion of the different costs of serving small and large customers Order Instituting Rulemaking to Advance Demand Flexibility Through Electric Rates.
The implementation of the IGFCs was part of a broader legislative effort to advance California's electrification and decarbonization goals by modifying the rate structure to better accommodate and incentivize various consumer behaviors and economic conditions. The CPUC's decision followed extensive comments and proposals from large utilities, which included discussions on the budget and timing for implementing these charges. Order Instituting Rulemaking to Advance Demand Flexibility Through Electric Rates.
This decision by the CPUC represents a significant shift in how electric rates are structured in California, aiming to balance economic equity with environmental and efficiency goals. The details of this approval can be found in the administrative materials from May 2024, which outline the legislative background and procedural steps leading to the adoption of IGFCs Order Instituting Rulemaking to Advance Demand Flexibility Through Electric Rates. As a result of the decision, discounts will be available for low-income customers through utilities’ California Alternate Rates for Energy (CARE) and Family Electric Rate Assistance (FERA) programs, while all other customers will pay $24.15 per month.
