A Dim Idea in California
Charging electric fees based on income is a quintessentially Californian idea
California has come up with a new and creative way to treat people unequally:
But California is about to challenge that basic logic, in an attempt to curb rising rates and help electrify the state’s approximately 14 million homes. A new state law will require its three investor-owned utilities to charge customers fees for electricity based not only on how much electricity they use, but also on how much money they make.
Depending on the proposal the state ultimately adopts, Californians making more than $180,000 a year could end up paying an average of $500 more on their annual electricity bills, while the lowest-income residents would save around $300 per year.
California already has tons of problems with electricity generation. Issues with transmission lines and wildfires have caused some of the issues. But the majority of the issues with power generation is California’s insistence on moving toward renewable energy sources at the expense of reliable power generation. While the move away from natural gas and coal power generation may be ostensibly better for the environment, it takes away a huge amount of power from the grid. The nonsensical move away from nuclear power generation is even more nonsensical.
California has made poor decisions, but its natural inclination to hurt the consumer stays the same. But their proposal manages to treat people unequally while treating everybody unfairly.
The proposal has two components to it:
A Fixed charge everyone customer has to pay just to receive electricity;
Variable charges depending on the customer’s income.
The logic behind this is absolutely ludicrous. The idea is that the flat fixed charges will be used to improve the grid and to improve power generation. A cost that is borne by consumers elsewhere through the cost of using electricity. But the customers will also be charged for the use of electricity itself. On top of it, electric companies will be responsible for determining how much each individual customer makes in an effort to make sure that they are being charged the correct flat fee.
The concept is madness.
California’s idea is going to charge lower-income customers a regressive fee while simultaneously charging successful Californians more just for the privilege of receiving electricity. What will the net result of this be? It will be the same thing that always happens in California: people of means leaving California for greener pastures elsewhere, and poorer Californians left holding the bag.
No doubt this idea will come to other states (like Maryland) soon enough.
As they have done for fifty years, California continues to roll out bad idea after bad idea that hurts consumers and hurts taxpayers. When will they learn?