Because of new state law, California’s three largest power companies, Southern California Edison, San Diego Gas & Electric and Pacific Gas & Electric, have submitted a joint proposal to the state’s Public Utilities Commission to simplify electricity bills to include a fixed-rate billing system based on household income.

The aim is to lower power bills, particularly for lower-income customers, while increasing transparency.

If enacted, customers would see two main charges on their bills.

The new fixed rate

Put simply, the more you earn the more you pay for recurring charges (not related to energy usage):

  • Households with annual income from $28,000 – $69,000 would pay $20 a month in Southern California Edison territory, $34 a month in SDG&E territory, and $30 a month in PG&E territory.
  • Households earning $69,000 – $180,000 would pay $51 a month in Edison and PG&E territories, and $73 a month in SDG&E territory.
  • Those with incomes above $180,000 would pay $85 a month in Edison territory, $128 a month in SDG&E territory and $92 a month in PG&E territory.

According to SCE, the fixed rate will cover “the costs of safely building, maintaining and operating the electric grid, of providing customer support, and the cost of state initiatives to help income-qualified customers and energy-efficiency programs.”

Income verification would be handled by a third party, possibly a state agency. Utilities would not manage or have direct access to income data, the SCE said.

Power use rates

In addition to the fixed rate system, California’s energy companies say rates for kilowatt-hour use will also go down. SCE estimates rates will decrease by around 33% for all residential customers. SDG&E estimates rates will drop by 42%.

“This portion of a customer’s bill, which is mostly related to the electricity purchased from natural gas, wind and solar plants, will continue to vary based on electricity usage,” SDG&E said in a news release.

SDG&E estimates that lower-income customers will save up to $300 per year.

Assembly Bill 205 requires the CPUC to adopt a new rate structure by July 1, 2024. Customers could see the new bills as early as 2025, SCE said.