Opinion: Utilities companies' implementation of income-based flat rates will increase energy waste [Opinion]
is an economist with experience designing electric rates for utilities in the U.S. and abroad. He lives in Danville.is an economist with experience on California’s energy, water and environmental regulations, planning and ratemaking. He lives in Davis.
A year ago, as the state Legislature rushed to pass a wide-ranging energy bill at the end of its session, it approved a huge change with zero debate. The magnitude of the proposed fixed charge is without precedent. In the U.S., the median fixed charge across 171 investor-owned utilities isTo put these numbers in perspective, the highest fixed charge in the U.S. is in the state of Mississippi, at $37 a month, and the second highest is in Wyoming, at $23. These states do not have any electrification or other climate-related mandates.
Income data is confidential, especially from private companies, for good reason. It should stay confidential. In the meantime, if desired, the new rates could be rolled out on a voluntary, opt-in basis. Other rate designs should be considered as well that may accomplish the state’s goals more effectively. For example, a homeowner replacing a gas furnace with a heat pump could be allocated an allowance of kilowatt-hours priced as a steep discount reflecting the incremental cost of electricity.
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