Income Graduated Fixed Charge Update
To provide relief for working-class households, the California Legislature passed Assembly Bill (AB) 205 in 2022 that paved the way for regulators to adopt a more equitable rate structure known as an Income Graduated Fixed Charge (IGFC).
As envisioned, the State Legislature anticipated IGFC would include a fixed charge on the monthly bill, which would vary based on household income, with a targeted implementation date of July 1, 2024.
In concept, higher-income households would have higher charges to help off-set electrical costs for lower-income customers who are struggling to keep up with utility bills.
Initially, the Investor-Owned Utilities (IOUs) proposed differing fixed charges based on income tiers, with charges for most customers ranging from $51 to $73.
The update which follows was jointly prepared by Braun Blaising & Wynne (BB&W) and Deveau Burr Group (DBG). These two important members of our team work in close collaboration with the CPUC and CalCCA to monitor such matters and collectively represent the interests of our Member Agencies.
During the implementation planning process this approach raised privacy and feasibility questions for the CPUC. Additionally, the IOUs indicated that income verification would be difficult for their billing system and not achievable by July 1, 2024.
On March 27, 2024, the CPUC issued a proposed decision addressing all Phase 1 Track A issues in R.22-07-005, implementing AB 205. Below are a few modified excerpts from the summary section of the proposed decision.
SCE implementation date to begin applying the adopted changes to residential customer bills will commence during the fourth quarter of 2025.
The decision authorizes all IOUs to change the structure of residential customer bills by shifting the recovery of a portion of fixed costs from volumetric rates to a separate, fixed amount on bills without changing the total costs that utilities may recover from customers.
The adopted billing structure encompasses three tiers, offering discounts based on the existing income-verification processes of the utilities’ California Alternate Rates for Energy and Family Electric Rate Assistance programs as follows:
Tier 1: Customers enrolled in the California Alternate Rates for Energy program shall automatically pay the lowest discounted fixed amount (approximately $6 per month)
Tier 2: Customers enrolled in the Family Electric Rate Assistance program or who live in affordable housing restricted to residents with incomes at or below 80 percent of Area Median Income shall automatically pay a discounted fixed amount (approximately $12 per month.
Tier 3: All other customers will pay a fixed amount of $24.15 per month
These proposed charges would affect all SCE customers (bundled and unbundled alike) and have no direct impact to existing/future generation rates approved by each of our Member Agencies.
Additional information will be shared as it becomes available. In the interim, please do not hesitate to contact Kevin Tonoian with any questions.