In a misguided attempt to make energy more affordable and equitable, California Democrats have proposed a new plan that would charge residents based on their income rather than their actual electricity usage. As Shon Hiatt, director of the USC Business of Energy Transition initiative, pointed out, “This would be the first state to charge people based on their income rather than what they actually just use.”
The plan, which the California Public Utilities Commission (CPUC) must implement by July 1, would impose a tiered rate structure on households. Those earning $28,000-$69,000 would pay an additional $20 to $34 per month, while households making $69,000-$180,000 would be charged an extra $51 to $73 monthly. The highest earners, those over $180,000, would face a staggering $85-to-$128 monthly surcharge.
So a wealthy widow who uses electricity for 1 will pay more for electricity than those who are in a lessor tax bracket, maybe a family who uses 100x the electricity daily. Do I have this right? https://t.co/2MJf8lKQFV
— cagrown5 (@cagrown5) March 14, 2024
This proposal is particularly egregious considering that Californians already pay some of the highest electricity rates in the country. According to Energy Sage, residents have been paying an average of 32 cents per kilowatt-hour, compared to the national average of just 18 cents. This translates to an average monthly bill of $273, or $3,276 per year.
The plan has sparked outrage among many Californians, including some Democrats who initially voted for the bill. Jacqui Irwin, a Democrat from Thousand Oaks, stated, “Our constituents have had enough and so have we. It’s time to put some reasoning back into how we charge for electricity in California.”
Irwin also raised concerns about the privacy and logistical challenges of implementing such a system, saying, “It would be nearly impossible to implement given the many legal and privacy challenges that there would undoubtedly be to accurately determine every taxpayer in the state’s income.”
Critics argue that this plan unfairly punishes middle-income residents who conserve energy, as they may end up paying more than neighbors who consume more electricity. It also fails to account for household size and other factors that impact energy usage and financial burden.
It’s 10 p.m. in California, and if you’re charging your electric car and paying a high electricity bill, you’re actually paying for natural gas to generate electricity, and you’re also paying for solar installations that are merely decorative after sunset. See for yourself. pic.twitter.com/YU7LbupqK2
— Susan Shelley (@Susan_Shelley) March 12, 2024
The root of this problem lies in California’s rushed embrace of clean energy, driven by Gov. Gavin Newsom’s strict mandate for the state to be carbon-free by 2035. Despite promises from Vice President Kamala Harris and President Biden that renewable energy would be cheaper, Californians have seen the opposite. As Hiatt explained, “Renewable energy is not cheaper than natural gas or coal or other types of baseload energy. The problem with intermittent renewables is that they’re not on all the time. You still need natural gas or battery backup.”
California’s income-based electricity tax scheme is a prime example of how well-intentioned but poorly conceived policies can backfire. Instead of making energy more affordable and equitable, this plan will likely drive more residents and businesses out of the state, further exacerbating California’s economic woes. It is time for lawmakers to abandon this misguided approach and focus on solutions that truly address the root causes of high energy costs without punishing hard-working Californians.
