California approved a fixed rate billing system for electric utilities: What's next

SAN DIEGO (FOX 5/KUSI) — California's utility regulators approved a proposal on Thursday that will shift the way households pay for their electricity to a new flat rate system — a controversial change made in an effort to put the brakes on skyrocketing energy prices.

Under the new billing structure, most customers of investor-owned utility companies will be charged a fixed $24.15 rate per month, reducing the fee charged for how much electricity a household uses by five to seven cents per kilowatt-hour.

Low-income households could see a greater reduction with the new policy's discounted flat rate of $6 or $12, depending on certain qualifications like participation in existing utility assistance programs or whether the ratepayer lives in a designated affordable housing unit.

These flat rates mark a departure from the from the structure of paying for the electricity a household uses that has guided Californian's utility bills for the last five decades.

The new fees would be put towards a portion of utilities' infrastructure costs, which have been the culprit of many of the recent upticks in rates over the last few years as the companies work to harden electrical grids for severe weather amid the state's ambitious trek towards clean energy.

So, now that the proposal has become policy, what can ratepayers expect to happen next?

Californians likely will not see the change reflected in their electricity bills until the end of 2025 at the earliest, according to the state's utility regulator, the California Public Utilities Commission (CPUC).

San Diego Gas & Electric and Southern California Edison are slated to be the first investor-owned utility companies to have the new fixed rate reflected in their billing, while Pacific Gas & Electric customers likely will not see it implemented until early 2026.

In the meantime, a spokesperson for Predictable Power Coalition -- made up of SDG&E, SCE and PG&E -- says that utility companies will be collaborating with state regulators to educate customers on the new billing structure.

When it does go into effect, it is likely that households may only see a modest decrease on their bills, if there is any change at all.

Those who use a lot of electricity, such as large homes or those reliant on air conditioning, could see more savings than others. On the other hand, smaller households or higher-income customers who frequently conserve energy could be among those paying more under the fixed rate.

It is also likely that people with solar panels powering their home or business will see their energy costs rise, given that they too will now have a monthly fee on their bill.

However, it is unclear whether the proposal will circumvent any proposed changes to usage fees based on utilities' general rate cases, which is the process for changing the state's caps on revenue and operating costs every four years to modify rates for customers.

State regulators are still in the process of litigating these cases, with decisions expected later this year. When those wrap up, customers' usage rates are likely to go up — something that could offset any savings under the new flat fee structure.