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The urgency of finding strategies to tamp down continually rising utility bills was the focus of an Assembly energy committee hearing, with lawmakers weighing using taxpayer funds to lower rates while continuing to green the grid.

“Customers want the most green [energy] for the least green[backs],” Mark Toney, The Utility Reform Network executive director, told lawmakers during a March 30 Assembly Utilities & Commerce Committee hearing.

Using state revenue to cut rates in half would incentivize a lot more people to electrify their homes and switch from gas appliances to electric ones, said Assemblymember Bill Quirk (D-Hayward). Using surplus money in the state General Fund would promote our climate goals, he added.

Assemblymember Miquel Santiago (D-Los Angeles) backed using state revenue to drive down ratepayer costs but stressed the need to ensure that overburdened customers are the prime beneficiaries.

Investor-owned utility rates have exceeded inflation for the last decade and are expected to rise much more. The top drivers are the soaring price of natural gas and the costs of the utility plans to reduce equipment-sparked wildfires. Natural gas demand has spiked worldwide and the cost in Southern California has been pushed up because of an extended outage on an El Paso interstate pipeline that serves Southern California Gas and San Diego Gas & Electric.

“Some customers have reported a doubling or tripling of their bills even without usage increasing,” Committee Chair Eduardo Garcia (D-Coachella) said in an opening statement read by Assemblymember Quirk . The record-high electric and gas bills were unexpected, “shocking many Californians” struggling with inflation and economic uncertainty, he added.

By 2030, residential electric rates are forecast to be far higher than if they had tracked inflation since 2013—now set to be 70% higher in SDG&E territory, 40% more in Pacific Gas & Electric’s region, and 20% higher for Southern California Edison, Simon Baker, California Public Utilities Commission director of distributed energy, natural gas and rates, told the committee. Over a decade, those percentages translate into average monthly increases of $79 for SDG&E ratepayers, $45 for PG&E customers, and $46 for SCE.

Wildfire reduction costs have risen 57% since 2011, from $8.8 billion to $13.8 billion, Baker said.

Another big driver is utility transmission investments, with PG&E’s rising 9% a year, SCE’s 5.6%, and SDG&E’s 4.8%. In addition, the shifted cost of grid maintenance from those with solar rooftops to the have nots is estimated at $3.4 billion, according to Baker.

Funding solutions beyond rates

TURN’s Toney proposed strategies within lawmakers’ control that could shift some of the costs now borne by ratepayers to taxpayers and other consumers.

He called for using taxpayer money to fund “once in a generation, extraordinary yet urgent” costs, namely those arising from climate-worsened wildfires and the corresponding utility plans to mitigate this risk. Utility ratepayers have already paid $6.8 billion for the three utilities’ annual plans and are on the hook for billions of dollars more, he warned.

TURN’S chief also said state funds should be used for increased electrification of buildings to cut natural gas use and help the climate. Part of the $962 million in the proposed state budget for electrification could, for example, replace the $677 million in SCE’s proposed rate increase to enable it to electrify 10,000 homes in its territory. Toney said.

He also suggested that lawmakers direct the CPUC to look at cumulative rate impacts, not only those of separate proposals, and to require the utility to submit “inflation constrained” rate proposals in place of the “sky is the limit” ones.

Quirk objected, warning that limiting bills to inflation rates would upend wildfire mitigation plans. “Wildfires are a big cost,” he noted. Is the legislature going to tell utilities, “We won’t give you a rate increase?” Quirk asked.

Toney pointed out that recent regulatory agreements on rate recovery for recent fires, the Kincaid Fire sparked by PG&E and the Thomas fire started by SCE, excluded ratepayer advocates, with the deals being agreed to behind closed doors. Not including ratepayer advocates impacted the bottom line, he said.

Toney also pitched a 2% carbon tax on the sale of gas-powered vehicles, with the adder being used to lower the cost of electric vehicles. This point of sales fee would help the state meet its climate goals and replace ratepayer or taxpayer dollars.

With new cars costing roughly $50,000, the proposed carbon fee would produce $1,000 a year per vehicle. With 1.5 million cars sold every year, the revenue generated would be $1.5 billion. It could be used to buy down the cost of EVs, and help fund the build-out of charging stations and other electrification investments, according to Toney.

Assemblymember Al Muratsuchi (D-Los Angeles) was concerned that a higher vehicle sticker price would harm low-income Californians. Toney replied that EVs would be more accessible with the price offset. In addition, the consumer would reap considerable annual savings on fuel and also because EVs have far lower maintenance costs.

Michael Colvin, EDF regulatory and legislative affairs director, agreed that lawmakers should look beyond utility bills to the overall energy burden on consumers, including the cost of gasoline and other fuels, such as propane. He also said that utility shareholders should reap different rates of return, with higher ones for strategies that increase the electrification of the system and lower ones for natural gas infrastructure that will be phased out to decarbonize the system by 2045. EDF has proposed different rates on equity for physical assets in the upcoming cost of capital proceeding.

The goal, Colvin said, is to “make investments as cheap as possible from a risk perspective.”

The CPUC’s Baker told the Assembly panel that staff are looking at various solutions to lower utility bills, including having the utilities self-insure for wildfire risks to avoid skyrocketing insurance premiums and reducing the utilities' double-digit rate of return on their physical assets.