The Little Hoover Commission, an independent state oversight body, released a report on the high costs of electricity in California and made several policy recommendations to address high energy prices.
Unfortunately, the Little Hoover Commission’s report does not endeavor to mitigate the root causes of high energy prices, but instead focuses its attention on how to shift energy costs amongst different ratepayer classes – primarily through increasing costs on many Californians.
Surprisingly, the Commission’s highest priority recommendation to improve energy affordability is to increase energy prices. The report argues that the CPUC’s recent efforts to establish an income-graduated fixed charge on electricity rates didn’t go far enough. Despite calls from the investor-owned utilities (IOUs) to impose minimum monthly charges as high as $100/month, the CPUC recently established a $24.15/month fixed charge for IOU customers to offset wildfire mitigation, grid maintenance, and public purpose programs. The Little Hoover Commission report argues that by further increasing the minimum monthly charge, the CPUC will be able to further lower volumetric prices for all ratepayers. While this will increase costs for most IOU customers, it would likely lower prices for a large minority of customers (roughly 30% of IOU customers are enrolled in the CARE program that provides discounted electricity rates and who are subject to a far lower fixed monthly fee today).
The Little Hoover Commission report also appears to suggest increasing rates for a large majority of Californians by directing all California Climate Credit bill offsets (roughly $120/year) to low-income customers and all customers in hot climate zones.
The Little Hoover Commission suggests that the CPUC: create a clear framework to determine which electricity costs should be shifted to non-ratepayer funding sources; timely complete General Rate Cases through which IOUs request funding; and streamline proceedings and filings through which costs are recovered.
The Commission also recommended:
- Limiting the duration and benefits that solar customers receive under the Net Energy Metering (NEM) Tariff;
- Having the State Treasurer perform an independent analysis to inform CPUC Cost of Capital Proceedings;
- Requiring the State Auditor to determine whether the CPUC has adequate staff and expertise to perform its duties in a timely manner.
- Expanding financial assistance for households above the CARE income threshold.
- Streamlining the application and funding process for clean energy grant programs, reducing administrative burdens for awardees, and accelerating the distribution of funds.
RCRC participated in the Little Hoover Commission’s hearings on energy affordability and challenges, and its presentation can be found here.
For more information, contact RCRC Senior Policy Advocate, John Kennedy.