Sacramento Lawmakers Introduce Bill to Repeal New Utility Tax

As we previously reported, a proposed new utility tax was snuck through the California State Legislature in just three days at the close of last year’s session with no public testimony.

Currently, electricity is billed at a single rate per kilowatt-hour that is meant to pay for both the cost of the electricity and the cost of maintaining infrastructure — the network of power lines and other facilities that deliver electricity to customers. The new plan would charge customers a $30 flat fee — essentially a utility tax — to go toward infrastructure, while promising a slightly reduced per-kilowatt-hour rate to cover the cost of the energy.

If the Public Utilities Commission (PUC) approves the tax as it currently stands, the monthly bills of small consumers of electricity and solarized homeowners will go up while the bills of large consumers of electricity will go down.

For millions of users who consume small amounts of electricity, the savings from the rate reduction would be minimal, but they still would have to pay the full $30 fee — resulting in higher monthly bills. On the other hand, the savings for residents in larger homes who consume much more electricity would be bigger than the $30 fee, so their bills would go down.

Here in Irvine, Vice Mayor Larry Agran — who has been a vocal critic of the Orange County Power Authority’s (OCPA) sky-rocketing electricity rates — has spoken out against the proposed utility tax. In January, Agran’s office hosted an information session on the proposed fee. Expert presenters at the meeting said the fee would up-end California’s decades-old commitment to encouraging clean energy and energy efficiency.

The tax is not capped and could be raised at any time by the PUC. One panelist at the Irvine meeting noted that utilities originally submitted a plan for a tax of up to $70 — about seven times the national average for a utility tax — and that remains a target figure that the utilities will continue to seek in the future.

A group of lawmakers in Sacramento has now introduced a bill to severely limit the so-called “utility tax” being considered by the PUC.

The new bill introduced by Assemblymember Jacqui Irwin (D-Thousand Oaks) and co-sponsored by 19 other Assemblymembers and state senators, would cap any utility tax at $10 initially and limit any increases in the tax to the increase in the Consumer Price Index in the preceding year. If the bill, AB 1999, becomes law, differences in the tax effects among various consumers’ energy bills would be minimal.

AB 1999 has been assigned to the Assembly Utilities and Energy Committee, which will hold a hearing on it this month.

“I certainly hope that lawmakers in Sacramento quickly correct their mistake and pass AB 1999,” said Vice Mayor Agran.

Agran credited citizen involvement with spurring the legislature to reverse course, and urged residents to contact Irvine’s State Senator Dave Min and State Assemblymember Cottie Petrie-Norris to express support for AB 1999 and make their opposition to the utility tax known.