REPEAL OF UTILITY TAX SOUGHT BY SOLAR RIGHTS ALLIANCE

View video of interview and scroll down for transcript.

December 12, 2023 (San Diego) -- East County Magazine recently interviewed Cailey Underhill,  Advocacy and Development Director for the Solar Rights Alliance, on our radio show aired on KNSJ. The topic was AB 205, which the Legislature passed to create what supporters called a fixed charge for utility rates,  but which opponents call a utility tax. It’s poised to become the largest utility tax in the nation. 

Solar Rights Alliance say this will be unfair to consumers—and they’re fighting to get the utility tax repealed. They are urging ratepayers to ask legislators to repeal the utiliity tax provision of AB 205 in January when the Legislature returns to session in Sacramento.

Q: The new law, if not repealed, would eliminate a $10 a month cap on utility taxes and instead mandate a new tax of between $30 and $70 a month.  How does that compare nationally?

A:  One point of clarification: right now, the California Public Utilities Commission has the ability to add a $10 a month utility tax to ratepayers’ bills.  They’ve had that right for many years. That is in line with the national average, which is about $10-11 a month.  What’s happening now is when the Legislature passed the big budget trailer bill,  AB 205 last year, it included this little-known provision requiring the CPUC to charge all ratepayers a new, uncapped utility tax that would be based on household income. That bill, AB 205, it went from proposal to law in just three days, with no public hearing and no public discussion. 

Q:Supporters say that AB 205 will establish a fixed charge and provide for consumers to be billed for energy use based on income,  so low income customers would get reduced rates, while wealthier customers would pay more.  What’s wrong with this plan ,in your view?

A:  It’s a little bit more complicated than that. The concept is that now, the monopoly investor-owned utilities and some organizations are proposing the charge all ratepayers the highest utility tax in the country-$30 to $70 a month. Just to be clear, you’d have to pay this utility tax even if you don’t buy any energy from utilities.  For the pleasure of being connected to the grid, you’ll have to pay this utility tax. And because it’s uncapped, they could ask the CPUC to raise....Proponents of the utility tax are saying okay, if you lower rates a little bit for this uncapped utility tax, it will have the impact of lowering bills for working class households and it will get people to electrify.

But an organization called the Clean Coalition, it’s been around for over a decade...looked into all these proposals. These are serious folks... What they found is even a utility tax of $30 a month, will raise bills on anyone with a small energy footprint.

Q: How would it impact people who use the least amounts of electricity, such as those who have gone off-grid, have installed solar, or who live in small condos,  for example?

A:If someone is truly offgrid, totally disconnected from the grid (it won’t apply).  But let’s also say that you don’t have solar, because frankly solar users aren’t the majority of people who will be harmed by this. It’s those who live in a small apartment or a small home...The majority of impacts will be on people who have a small energy footprint to begin with.” She notes that even for those who get the reduced rate, “that little bit of reduction is far outweighed by this utility tax.

Q: Will it impact ratepayers on community choice plans,  as well as those still paying SDG&E for their power?

A: This applies to all residential customers,of PG&E, Southern California Electric,  SDG&E, and all community choice aggregates.

Q: Are there any incentives here for consumers to conserve energy or switch from  natural gas to less polluting electricity from  solar and wind?

A: Great question. In AB 205, this big budget bill that created this provision, this whole mess, there is nothing in there that says that bill savings have to be used to electrify. There is nothing in there about freezing or reducing rates. And the Clean Coalition found that any of these utility tax proposals will not incentivize electrification. In fact with any of them, it will be cheaper to stick with gas.

Q: Why are our electricity rates already among  the highest in the nation?

A: The reason that electricity prices are so high in the state of California is because of the overreliance on long distance power lines and the cost of liability when those lines spark wildfires. For anyone who doesn’t know, the investor-owned monopoly utilities get a guaranteed right of return on every long distance powerline that they build, and that gets passed down to ratepayers. So they’re making money, and then when they spark wildfires, that goes to all of us, too, dime for dime. So in this utility tax, they are creating another mechanism where they can gouge profits from all of us .Now there are a lot of solutions to high utility rates, it’s just that the utility tax isn’t one of them.

Q: What can be done to actually reduce those high prices?

A: Here at Solar Rights Alliance, we’re big fans of rooftop solar. The best biggest study of rooftop solar, the Vibrant Clean Energy Study, demonstrated that if we can keep rooftop solar growing in California, we all stand to save $120 billion over the next 30 years. That’s $295 per year, per ratepayer, regardless of  whether or not you have solar. So more rooftop solar benefits all of us because you don’t have to build all those powerlines, and there are less powerlines to spark wildfires.

I do want to clarify that it is the case that folks on subsidy bill paying programs...will see small but temporary decreases in their utility bill...but once the rates rise again, and we all know they will, boom, there their rates. Meanwhile millions who are just above that subsidy cutoff and are also struggling will immediately see their bills go up.  I want to give one example. The CARE cutoff  for a family of 1-2 is $39,440 in the state of California.  Imagine a single mom, trying to rent an apartment and support a kid,  she’ll be just above that cutoff, she’s going to get slammed by this thing and her bills are going to go up. Say you have a retired couple living on a fixed income in an apartment San Diego; their bill is going to go up.

Another thing that we could do is better help those folks.  A lot of people are working for an expansion of CARE (and another program) or a freeze to their rates for real relief.....a real rebate program to help people get more solar and batteries, get some energy democracy, that would be great, too. So there’s lots of solutions that get at the actual underlying problems, and a utility tax is not one of them.

Q: Utilities are not here, but if they were they might be saying we’ve had a lot of expenses, all these fires, we need to repair lines to prevent future fires and with inflation we need more money to do it.  How would you address those concerns?

A: It’s time for the utilities to support clean energy initiatives that reduce all those costs...to focus on repairing and maintaining a grid that is flexible and functional and does not lead to wildfires, and by getting on board with changes that are coming. There’s a lot that they could do. ..Like community solar,  solar on brown lots...on highway rights-of-way; these are things we could certainly do and that utilities could get in on.

Q:When will the California Public Utilities Commission make a final decision on this, and have they held any public hearings on the utility tax?

A:  AB 205,  again passed by the Legislature, says that the CPUC has to enact this utility tax by July 2024, to decide how much it will be.  The actual provision in AB 205 has no cap...the leading proposals have coalesced around $30-70 (but it could be more); even a utility tax of $30 a month will have the impact of increasing bills for millions and millions who live in apartments or small homes. So the only solution here is for the Legislature to author a bill to repeal the utility tax provision in AB 205. We cannot leave this up to the CPUC. We cannot trust them to get this right. The Legislature created this mess; they need to be responsible for fixing it.

A series of legislators have signed a letter that came out of the Assembly heavily criticizing the utility tax. We’d like to thank all of the Assembly members who signed that and also, now is the time instead of punting this to the CPUC because we cannot trust them to get this right, to take action to repeal it and be the hero that your constituency needs.

Q:Tell us about the growing coalition to oppose the utility tax and repeal AB 205.  How many organizations have signed on?

A:  There is a coalition letter that has been signed by over 200 organizations that represent a broad swatch of groups that will be impacted..For example, several tenants rights groups...as well as some affordable housing groups...We also have a wide range of front-line community groups like Calif. Environmental Justice Coalition...groups representing low-income folks like the Western Center for Law and Poverty....environmental and climate groups have also signed on because this will have the effect of undermining conservation efforts that have been working for decades.

Q: How did San Diego County’s Assembly and State Senate Members vote, including our state legislators representing East County? 

A:  For anyone interested in looking up who voted, it’s online, just look up AB 205. Republicans as a group have come out against the utility tax; Democrats largely voted for it because it was the budget bill and many have informed us and constituents that they didn’t know this was in there. It was a big bill and this flew under the radar...no legislator has taken credit for putting that utility tax measure in there. The fact that 22 legislators have signed the letter is telling...some were not in their streets when this was voted on.

Lastly, Senator Berman and Assemblymember Becker coauthored an op-ed. I think the title says it all: “The income-based electricity bill provision is a mistake that will raise your rates. Let’s not shy away from real solutions.” Agreed, and the real solution is to repeal the utility tax provision in AB 205 which they can do when the Legislature is in session in January.

Please call your legislators and urge them to repeal the utility tax provision in AB 205.  Write them, email them; if you’re interested speaking with them in a townhalls, our website has resources...reach out to any of the coalition partners and we can help get you what you need.

Q:Where can people get more information and get involved? 

A: Go right to the organization that did the deep dive on the data, which is the Clean Coalition, Clean-DashCoalition.org, which did a webinar explaining their data and explaining the utility tax...If people would like our explainers you can go to SolarRights.org.  Another group looked at impacts on front-line communities: CEEETruth.org.

Learn more:

• Coalition letter with 200+ orgs in opposition to the Utility Tax
• Fact sheet with page number references to the full Clean Coalition Filing, which is where the data comes from
• Coalition for Environmental Equity and Economics Webinar
• Clean Coalition Webinar on the Fixed Charge/Utility Tax
• Analysis of prominent energy economists
• AB 205 roll call vote