Opinion: Take Action to Slow California’s Out-Of Control Energy Costs

Source: The Mercury News  |  By Mark Toney & Michael Boccadoro

California is in the midst of a profound utility bill affordability crisis. Over the last decade, PG&E residential customers have watched their monthly electric bills skyrocket — from $88 in January 2015 to $215 a month, (a staggering 250% increase). This additional $1,600 annual burden forces families to make devastating trade-offs between utility bills and groceries, electricity and prescriptions, keeping service and even remaining housed. And it is not just residents teetering on the brink of survival.  Rising utility bills are impacting large industrial companies and local shops across the state. From steel mills and glass factories, to fruit, vegetable and dairy farmers, to neighborhood restaurants and small businesses, escalating utility bills have created an unsustainable burden. The good news is that after months of advocacy driven by a “big tent” of residential, small business, industrial and agricultural supporters, the Legislature has assembled the most significant electricity affordability package in decades. The bad news is that PG&E, SoCal Edison, Sempra, and Wall Street investment firms are actively resisting affordability legislation, because delivering savings to customers could trim utilities’ profits. Their message is clear: protecting shareholder profits is more important than providing relief for California families and businesses. Two major bills would unlock billions in customer savings and prioritize affordability over utility profit margins. State Senator Josh Becker’s SB 254 and Assemblymember Cottie Petrie-Norris’s AB 825 target three key areas where California can significantly reduce costs, while maintaining reliability and safety. Passing these bills would make an enormous difference.  First, they would save customers roughly $7.5 billion over 10 years by eliminating excessive shareholder profits on $15 billion in new grid spending, per analysis by The Utility Reform Network, or TURN. $15 billion in mandated ratepayer-backed bonds carries much lower interest costs than traditional shareholder financing, which includes guaranteed profit margins that force ratepayers to pay financing costs of 14%. Second, they would authorize public financing options for new transmission lines — infrastructure California urgently needs to meet growing electricity demand. By shifting from investor-owned utility financing to public-private partnerships, the state could save ratepayers more than $3 billion annually, totaling approximately $123 billion over 40 years. Third, they would require utilities to submit an inflation–constrained alternative, whenever they submit a rate increase that exceeds the rate of inflation. This will provide the California Public Utilities Commission the opportunity to use inflation as the starting point, placing the burden upon utilities to justify every dollar over inflation, rather than only having a sky-high starting point determined by utilities, that requires ratepayer advocates to whittle down the proposal dollar by dollar. Mark Toney is executive director of The Utility Reform Network (TURN). Michael Boccadoro is executive director of the Agricultural Energy Consumers Association (AECA).