California PUC proposes billing structure that would cut residential electricity prices

Responding to state legislation, the California Public Utilities Commission (CPUC) recently released a proposed decision that would reduce residential electricity prices – particularly those at lower income levels and in parts of the state hit hard by extreme weather.

This flat rate proposal would alter how large investor-owned utilities bill their customers for infrastructure-related expenses. Presently, all customers pay to maintain the grid through their bills, which determines the price paid for electricity used. Going forward, utilities would move these costs into a flat rate line item on every customer’s bill, lowering the price for a unit of electricity for all customers.

In particular, CPUC eyed this as a move to make electrifying homes and vehicles more affordable, regardless of income or location. No new fees would be tied to the proposal, nor new profits for the utility. It is more a rethink of cost sharing, likewise more in line with other state and national trends for billing structures.

The results would be a split into two part customer bills, with both a usage rate and a flat rate. The usage rate would be cut about 5 to 7 cents per kW hour, although it would continue to vary throughout the day.

Meanwhile, the flat rate would be set at $24.15 per month, incorporating some of the costs that customers already pay in their usage rate and reflecting the cost of infrastructure. For those enrolled in the low-income assistance program California Alternate Rates for Energy (CARE), the flat rate would be just $6 per month, while those in affordable housing or the Family Electric Rate Assistance (FERA) program would see a flat rate of $12 per month.

CPUC noted that the average customer using electricity to power both their home and their vehicle would save an average of $28-44 per month under this new billing structure. If approved, it would begin enforcement likely between late 2025 and early 2026.