Vice Mayor Agran Hosts Information Session Regarding the State’s Proposed Utility Tax

Vice Mayor Larry Agran speaking against California’s proposed utility tax

Dozens of Irvine residents attended an information session organized by the office of Vice Mayor Larry Agran regarding a proposed change in how electricity is billed. The change would upend California’s decades-old commitment to encouraging clean energy and energy efficiency.

When implemented by the state’s Public Utilities Commission (PUC), the bills of those who use little electricity — like apartment renters and residents in solarized homes — will go up while the bills of those who use large amounts of electricity will go down.

Here’s how it works: 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 — which would be designated for infrastructure. The proposed plan would provide a slight reduction in the per-kilowatt-hour rate to cover the cost of the energy and remaining infrastructure costs that are not covered by the utility tax.

“A utility tax of $30 will increase bills for anyone who lives in an apartment, condo or small home, which is a problem,” said Cailey Underhill of the Solar Rights Alliance, who moderated a presentation that also featured economist Dr. Ahmad Faruqui; Dr. Ariane Jong-Levinger of Chapman University; and Josh Plaisted from Flagstaff Research.

Plaisted explained that for millions of ratepayers who consume relatively small amounts of electricity, the savings from the rate reduction would be minimal, but they still would have to pay the full $30 utility tax … which would result in a larger monthly electricity bill. On the other hand, the savings for owners of homes that consume large amounts of electricity would be more than the $30 fee, so their bills would go down.

The utility tax — which was buried in a massive budget bill passed by the State Legislature in just three days at the close of last year’s session with no public testimony — is opposed by hundreds of organizations across the state.

Underhill pointed out that the new utility tax is not capped and could be raised at any time by the PUC. Plaisted noted that utility companies originally submitted a plan for a tax of up to $70 — about seven times the national average for a utility tax — and that $70 per month remains a target figure that the utilities will continue to seek in the future.

As for claims by utility companies that the tax will spur solarization and electrification of appliances currently powered by natural gas, Chapman University’s Ariane Jong-Levinger noted that penalizing small or efficient customers while rewarding higher consumption will actually deter solarization and electrification. “It’s going to set us back in our effort to meet climate goals,” she concluded.

Asked what people can do, Underhill urged Irvine residents to contact Assemblymember Cottie Petrie-Norris and State Senator Dave Min to urge repeal of the tax right away.

Agran reiterated that advice in his closing remarks, saying: “The regressive nature of this utility tax goes against everything our state says it believes in. It’s important to get the word out to as many people as possible in order to repeal the tax before it takes effect.”

UCI Astrophysics Professor Kev Abazajian, a member of the City’s Sustainability Commission, was among those in attendance. “I’d say both as a solar panel homeowner and an Irvine Sustainability Commissioner that the utility tax is an egregious and unnecessary attempt by investor-owned utilities to halt the democratization of renewable energy production while simultaneously levying a regressive tax on Californians,” Abazajian said. He added, “This utility tax should be halted altogether.”