A team of state legislators have introduced a bill to put a $10/month cap back on the Utility Tax. The bill, AB 1999, would fix a 2022 law that uncapped the Utility Tax, opening the door for nasty bill increases on millions of ratepayers. Utilities and their allies are lobbying furiously to defeat this effort. Which side will prevail—the public or the utilities?
Background: Proposed Utility Tax will increase bills on millions of people and undermine rooftop solar
In 2022, state legislators passed a law (AB 205) requiring all ratepayers to pay an uncapped Utility Tax in addition to per kilowatt/hour charges.
Previously, the law allowed for a modest Utility Tax capped at $10/month. This was apparently was not enough for the utilities. Once the Legislature removed the $10/month cap on the Utility Tax, the utilities and their allies promptly started pushing for the highest Utility Tax in the nation. Now, Californians are facing down a Utility Tax between $30 and $70 per month—just for being hooked up to the utility.
Even a $30 per month Utility Tax will increase bills on millions of households that do not use much electricity. This includes solar users, as well as those without solar who live in apartments, condos, and small homes. Learn more
Lawmakers have introduced a bill to re-cap the Utility Tax
In January, a team of state legislators led by Assemblymember Jacqui Irwin introduced a bill to stop the big Utility Tax provision. The bill, AB 1999, would:
- Put the $10/month cap back on the Utility Tax. The Utility Tax would be $5/month for those on CARE or FERA. This mostly reverts back to what the law said before all these shenanigans.
- Prohibit the Utility Tax from rising any faster than inflation.
The public does not want a Utility Tax
At the press conference announcing the bill, numerous lawmakers cited the data showing how even a $30/month Utility Tax will increase electricity bills on millions of households that don’t use a lot of energy. This includes solar users and millions of people who live in apartments, condos, and small homes.
Lawmakers also noted how unpopular the Utility Tax was with their constituents. That includes scores of people showing up in person to legislators’ town hall meetings to press them on stopping the Big Utility Tax.
The CPUC cannot be trusted with the Utility Tax
It is great that legislators are pushing to put a cap back on the Utility Tax. If the Legislature does not pass AB 1999, the California Public Utilities Commission will set the size of the Utility Tax. That would be bad, since the CPUC’s actions indicate that usually side with the utilities.
The Big Utility Tax is the Legislature’s problem to fix—through legislation
The Legislature created the Utility Tax. It is their responsibility to fix it. That means putting a cap back on the Utility Tax by June 30, 2024. That is the day before the law requires the CPUC to approve a Utility Tax.
AB 1999 is a great start. But one important loophole must be closed to prevent CPUC shenanigans.
AB 1999 is a great start. The 20 legislators who introduced it deserve kudos for standing up for their constituents. However, there is one loophole in AB 1999 that needs to be closed to completely remove the threat. AB 1999 should be amended to ensure that it applies to “all rate schedules”. The bill currently only applies to the “default rate schedule”. This gives the CPUC an opening to charge a huge Utility Tax on other rate schedules and then force certain types of customers onto those alternative rate schedules. We hope lawmakers make that change quickly and protect all ratepayers from any malarkey.
There is no excuse for inaction
We suspect some state legislators will say that it is more “realistic” to “work something out” with the CPUC.
Our view: The CPUC’s track record makes it clear that things won’t end well in their hands. Legislators have only two choices. They can change the law to put the $10/month cap back on the Utility Tax. Or they can do nothing and face the blame when the Utility Tax raises electricity bills on millions of their constituents.