ORIGINAL REPORTING: New Ideas For Lowering Electricity Rates

California’s ‘affordability crisis’ attracts innovative ratemaking and regulatory proposals; Double-digit year-on-year spikes in electricity rates are leading California regulators and stakeholders to search for ways to protect climate goals and rate affordability.

Herman K. Trabish, May 19, 2022 (Utility Dive)

Editor’s note: The income-based fixed charge is gaining momentum but calls for public funding and better regulatory oversight continue.

Groundbreaking new affordability evaluation criteria and metrics to manage California’s skyrocketing electricity rates are a step forward but not enough, regulators and stakeholders agreed at the state’s second annual electricity rates affordability conference Feb. 28.

Despite the falling costs of wind and solar generation, California’s electricity rates are rising due to costs related to wildfires, legacy assets, and public purpose programs, the California Public Utility Commission’s 2019 Annual Affordability Report, published in April 2021, concluded. As a result, a “substantial number of households” face “a double burden of expensive service and a low ability to pay for it,” the report said.

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The severity of California’s “affordability crisis” for low-income customers has yet to be measured, but it “is beginning to impact middle-class households,” Senior Policy Expert Jennifer Dowdell of ratepayer advocacy group The Utility Reform Network told Utility Dive. She applauded the new CPUC criteria and metrics and other conference input because “the state needs all parties’ proposals.”

There is “no panacea” for electricity affordability, and a “portfolio” of solutions will be needed, especially because “some cost drivers, like global fuel prices, are outside our control,” CPUC Commissioner Darcie Houck cautioned. The commission is studying the conference’s many proposals for actions the state can take “for controlling costs and mitigating rates,” she added.

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The Feb. 28 California affordability conference began with a discussion of the new evaluation criteria and metrics. But much of the content was about electricity ratemaking reforms, new ways to fund public programs, innovations in regulatory oversight, and a potential breakthrough in equity with redesigned fixed charges for low-income customers… click here for more

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