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HomeMy WebLinkAbout2024-05-21; City Council Legislative Subcommittee; ; California Public Utilities Commission Update Meeting Date: March 21, 2024 To: Legislative Subcommittee From: Jason Haber, Intergovernmental Affairs Director Staff Contact: Jason Haber, Intergovernmental Affairs Director jason.haber@carlsbadca.gov, 442-339-2958 Subject: California Public Utilities Commission Update District: All Recommended Action Receive an update on the California Public Utilities Commission’s policy and regulatory work, including a recent decision to implement income-graduated fixed charges for Californians' electric bills, as required by Assembly Bill 205 (2022), and provide feedback. Discussion The California Public Utilities Commission’s Local Government Liaison will provide an update on the Commission’s policy and regulatory work concerning the telecommunications, energy, transportation, and water industries, including an overview of the Commission’s decision to implement income-graduated fixed charges for Californians' electric bills, as required by Assembly Bill 205 (2022). Next Steps None. Exhibits 1. California Public Utilities Commission Fact Sheet: What is the California Public Utilities Commission 2. California Public Utilities Commission Fact Sheet: Proceeding R.22-07-005 LEGISLATIVE SUBCOMMITTEE May 21, 2024 Item #3 Page 1 of 7 What Industries Does the CPUC Regulate? Energy – Electricity and Natural Gas The CPUC regulates investor-owned electric and natural gas utilities. The CPUC ensures the reliability and safety of electric and natural gas systems, and works to advance renewable energy and climate goals. Transportation – Rail and Passenger Carrier Safety The CPUC oversees the safety of railroads and rail transit systems, for-hire passenger carriers (limousines, airport shuttles, charter and scheduled bus operators) and Transportation Network Companies (Lyft, Uber). Telecommunications The CPUC develops and implements policies for the telephone communications and broadband markets, including ensuring fair, affordable universal access to necessary services. Water The CPUC is responsible for ensuring that investor-owned water utilities deliver clean, safe, and reliable water to their customers at reasonable rates. What is the California Public Utilities Commission? The California Public Utilities Commission (CPUC) regulates services and utilities, protects consumers, safeguards the environment, and assures Californians’ access to safe and reliable utility infrastructure and services. To learn more about the CPUC, please contact the News & Outreach Office at outreach@cpuc.ca.gov 505 Van Ness Ave. San Francisco, CA 94102 415-703-2782 800-848-5580 (Toll Free) cpuc.ca.gov 0322 Exhibit 1 May 21, 2024 Item #3 Page 2 of 7 How Can the CPUC Help Me Resolve My Issues? Our Consumer Affairs Branch (CAB) can help if you have a problem with your utility bill or service that you are unable to solve directly with your utility company. You can contact CAB in three different ways: CALL: 800-649-7570 FILE a complaint online: www.cpuc.ca.gov/complaints WRITE a letter to: CPUC Consumer Affairs Branch 505 Van Ness Ave. San Francisco, CA 94102 Staying Informed: Where Can I Find Information About CPUC Proceedings and Events? DOCKET CARD: www.cpuc.ca.gov/Docket Search for documents related to CPUC proceedings. OPEN PROCEEDINGS: www.cpuc.ca.gov/proceedings-and- rulemaking Monthly updates of proceedings currently open at the CPUC. SUBSCRIPTION SERVICE: subscribecpuc.cpuc.ca.gov Receive email notifications when documents such as press releases are published. SERVICE LIST: www.cpuc.ca.gov/service-lists Receive ongoing communication about a specific proceeding. DAILY CALENDAR: www.cpuc.ca.gov/DailyCalendar Follow hearings, meetings, workshops, and how to access CPUC events remotely. MONTHLY NEWSLETTER: www.cpuc.ca.gov/newsletter Subscribe to receive our newsletter by email, or read it online. Getting Involved: Does My Voice Matter to the CPUC? Yes, your voice matters! We want to hear from you to help us make decisions that reflect all Californians’ concerns and perspectives. • Comment on an Issue: You can make comments on proceedings on the Docket Card at www.cpuc.ca.gov/Docket, where you can also read the comments of others. You can also give oral comments at Public Participation Hearings and at other CPUC meetings that have designated public comment sessions, or email us at public.advisor@cpuc.ca.gov. • Become a Party: You can become a party to a CPUC proceeding to participate formally in the decision-making process. For more information, contact the Public Advisor’s Office: VISIT: www.cpuc.ca.gov/pao CALL: 866-849-8390 EMAIL: public.advisor@cpuc.ca.gov How Does the CPUC Work with and for Communities? The CPUC has several programs to reach different people and groups so that we can meaningfully involve them in CPUC proceedings and decision-making. Our Consumer Affairs Branch helps resolve disputes between customers and their utility company. Our Public Advisor’s Office provides information, advice, and assistance to individuals and groups who want to participate in CPUC proceedings. Our Business and Community Outreach Office builds relationships with community organizations and local governments, working to keep them informed and involved with CPUC programs and policymaking. Our Small Business Program gives small businesses opportunities to contract with the state and utility companies, and keeps them informed about important issues and policy. Our Supplier Diversity Program successfully encourages utilities to spend more than 20 percent of their contracts to business owned by women, minority, lesbian, gay, bisexual and transgender (LGBT), and disabled veterans. Our Low Income Oversight Board helps ensure the CPUC and utility companies serve low income customers with helpful programs and partnerships. Our Disadvantaged Community Advisory Group advises the CPUC and our partners at the California Energy Commission on issues related to environmental justice and social equity. Our Telecommunications Access for the Deaf and Disabled Administrative Committee advises the CPUC about the provision of telecommunications equipment and relay services for persons with functional limitations of hearing, vision, movement, manipulation, speech, cognition, and interpretation of information. May 21, 2024 Item #3 Page 3 of 7 1 After the billing adjustment, an average Fresno customer will save $33 over the summer months ENERGY DIVISION FACT SHEET May 9, 2024 | Proceeding R.22-07-005 | www.cpuc.ca.gov/R2207005 CPUC Decision Cuts Price of Electricity Under New Billing Structure and Accelerates California's Clean Energy Transition As required by Assembly Bill 205, the CPUC has cut the price of electricity for Californians, reduced electricity bills for lower income Californians and those living in parts of the state most impacted by extreme weather, and accelerated the state’s clean energy transition. The CPUC's decision changes how large investor-owned utilities (IOUs) bill residential customers for infrastructure-related costs. All customers already pay the cost of building and maintaining the electric grid through the price they pay for the electricity they use. The CPUC's decision moves these existing fixed costs into a “flat rate” line item on bills. This change shrinks the price for a unit of electricity for all customers, making it more affordable to electrify homes and vehicles, regardless of income or where someone lives. This billing structure does not impose any new fees—it simply reallocates how existing costs are shared among customers. It also aligns California with most other states. The new billing structure goes into effect late 2025 and early 2026. How it Works: Cutting the Price of Electricity for All Residential Customers Under the new billing structure, a residential customer bill will have two parts: Usage Rate. The usage rate is the price you pay for a unit of electricity •The CPUC's decision cut the usage rate by 5 to 7 cents per kilowatt hour, making electricity cheaper. • The usage rate will continue to vary throughout the day to encourage conservation. Flat Rate •The CPUC's decision moves some costs currently collected in the usage rate to a separate line item called a flat rate. •The flat rate includes the cost of infrastructure that connects all customers to the grid, such as wires and transformers that send power to and from your house so everyone can get power whenever you need it. Exhibit 2 May 21, 2024 Item #3 Page 4 of 7 CPUC Sets Flat Rate at Lower End of Stakeholder Proposals •CPUC reviewed proposals from a dozen stakeholders, including flat rate proposals up to $73 per month. •The CPUC's decision set the flat rate at $24.15 per month, which will reduce the price of a unit of electricity by 5 to 7 cents per kilowatt-hour. CPUC Brings California Utilities in Line with State and National Trends •California is one of the only states where investor-owned utilities do not have flat rates for infrastructure and maintenance costs. For example, some utilities in Texas have flat rates up to $39 per month. •Almost all publicly-owned utilities in California have flat rates. •At $24.15, the flat rate is the same amount as SMUD’s flat rate. Comparison of Proposed Flat Rates CPUC Flat Rate Compared to California Publicly- Owned Utilities 2May 21, 2024 Item #3 Page 5 of 7 3 California is Currently Not Aligned with the Rest of the Nation Source: Borenstein and Bushnell, National Bureau of Economic Research, “Do Two Electricity Pricing Wrongs Make a Right? Cost Recovery, Externalities, and Efficiency” (Rev. Sept. 2018) Fixed charge is another term for flat rate. Encouraging Electrification: Going Electric Is More Affordable for All • The CPUC's decision reduces the price PG&E, SCE, and SDG&E customers pay for each unit of electricity. •All customers, regardless of income or location, will be better off financially if they choose to electrify their homes and/or vehicles under the new billing structure compared to today’s rates. •The decision accelerates the state’s transition to 100% clean electricity. Improving Affordability: Discounts for Low-Income and Affordable Housing Customers •As directed by AB 205, on average all low-income customers will save on their monthly bills. • Customers enrolled in the California Alternate Rates for Energy (CARE) low-income assistance program will benefit from a discounted flat rate of $6 per month. »Approximately 30 percent of IOU customers currently participate in CARE. •Additionally, customers enrolled in the next level up of income qualified program, the Family Electricity Rate Assistance (FERA), as well as those residing in deed-restricted affordable housing with incomes at or below 80% of the area median income, will qualify for a discounted flat rate of $12 per month. A customer that electrifies their home and vehicle will save on average $28-44 a month compared to under today’s rates. For example, a San Francisco customer that electrifies will be roughly $32 better off each month. May 21, 2024 Item #3 Page 6 of 7 4 Other Key Elements of Proposal • No Income Verification Required. The CPUC's decision does not require any customer to verify their income. Existing programs like CARE and FERA already establish income eligibility through enrollment in programs like MediCal and SNAP or through a voluntary income self-attestation process followed by audits. • All Customers Included. All residential customers, including those with rooftop solar, will transition to flat rates. Rooftop solar customers consistently rely on grid infrastructure. They draw electricity from the grid and send electricity back to the grid throughout the day to balance their usage with intermittent solar production. Additionally, they need grid support to meet energy needs during nighttime or when solar panels are not generating power. • No Profit Increase for IOUs. The decision ensures that utilities cannot increase the costs they collect or make any profit. Instead, it redistributes costs associated with running the electrical grid in a more equitable manner on customer bills. • Approval for Other Utilities. The decision also approves a flat rate for Bear Valley, Pacificorp, and Liberty utilities, agreed upon by the ratepayer advocacy group California Public Advocates, that ranges from $23.40 to $33.98 for residential customers. May 21, 2024 Item #3 Page 7 of 7