Earlier this month, PG&E, Southern California Edison and San Diego Gas & Electric (the Joint IOUs) submitted a proposal to the California Public Utilities Commission (CPUC) to substantially change the electric rate structure for residential customers through a combination of an Income Graduated Fixed Charge (IGFC) based on the Federal Poverty Level (FPL) along with lower volumetric rates closer to a cost basis. The Joint IOUs argue their proposal is necessary to encourage greater electrification and decarbonization through rate reform by minimizing customer bill volatility during heat waves, for example.  

The Income Graduated Fixed Charge would replace minimum residential bills, currently set at $10, or $5 for low-income households. California has two rate assistance programs including the CARE program (amounting to a 30-35% discount on electric bills) and FERA program for larger households at 200-250% of the Federal Poverty Level that do not qualify for CARE (receiving an 18% discount). The Joint IOUs Income Graduated Fixed Charge is summarized in the table below.  

 

Income Bracket
Description 

Criteria 

PG&E IGFC 

($/month) 

SCE IGFC 

($/month) 

SDG&E IGFC 

($/month) 

Average Fixed Charge
(not including volumetric rates) 

$53 

$49 

$74 

Very Low 

< 100% FPL (CARE) 

$15 

(13% of customers) 

$15 

(11% of customers) 

$24  

(12% of customers) 

Low  

($28,000 to $69,000)  

< 250% FPL 

(Other CARE/FERA) 

$30 

(15% of customers) 

$20 

(15% of customers) 

$34 

(15% of customers) 

Moderate 

($69,000 to $180,000  

< 650% FPL 

(Non-CARE) 

$51 

(47% of customers) 

$51 

(55% of customers) 

$73 

(50% of customers) 

High  

($180,000+) 

> 650% FPL 

$92 

(25% of customers) 

$85 

(19% of customers) 

$128 

(23% of customers) 

 

The Joint IOUs propose to recover costs of wildfire mitigation and vegetation management, reliability improvements, safety and risk management distribution costs, ongoing distribution operations and maintenance as well as other various programs that are not driven by a customer’s usage in the Income Graduated Fixed Charge. However, other non-bypassable fixed charges—such as the Wildfire Fund Charge and continued operation of Diablo Canyon nuclear facility, among others—would not be collected through the proposed Income Graduated Fixed Charge. Additionally, the Joint IOUs are proposing to verify customer incomes through a third party (to be determined) with costs potentially borne by taxpayers. 

 

This is the most recent attempt by the large investor-owned utilities to gain approval for default residential fixed charges as part of their rate design, not including recent changes to the net energy metering (NEM) tariff. This proposal is pending in a rate-setting proceeding to advance demand flexibility through electric rates. RCRC is not a formal party to this proceeding and continues to evaluate the implications of the proposal. For more information, please contact RCRC Policy Advocate, Leigh Kammerich.