Middle-Class Californians to Pay Electricity Premium as State Makes Electric Car Push

California regulators have decided that millions of middle-class households will soon be charged an extra $24 per month for electricity, regardless of how much electricity they consume. The purpose of this utility billing policy is to redistribute the enormous costs of the state's electric grid so that utilities can lower their usage rates. The idea is to subsidize the lower income household electricity cost, reducing it by 5 to 7 cents per kilowatt hour, in an attempt to make charging EVs and using electric heaters and appliances cheaper.

This policy comes as California Democrats struggle to reconcile their goals of ridding the state's energy grid of fossil fuels in favor of costly wind and solar — a push that has led to massive spikes in electricity costs — while also forcing households to swap gas cars and appliances for electric versions. Regulators claim that the policy will lower people's bills while boosting California's electrification agenda. Governor Gavin Newsom (D) has supported the policy, saying it will help fight "climate change" by encouraging people to convert to EVs and electric appliances.

The rule was mandated by a provision tucked into a sprawling state budget bill passed in 2022. Households that earn less than $62,150 for a family of three will not be charged the additional $24 per month. Lower-income households will pay fixed fees ranging from $6 to $12 a month depending on their income. The public, advocates, and politicians spanning the political spectrum have criticized the policy, and it comes as Californians already pay the second-highest rates in the nation behind Hawaii.

California households that don't qualify for subsidies — those earning $62,150 for a family of three — will be charged the additional $24 per month. Lower-income households will pay fixed fees ranging from $6 to $12 a month depending on their income. Households that earn less than $31,950 qualify for a discount of more than 50 percent. Those earning between $31,950 and $41,650 will receive a discount of about 45 percent, and those earning between $41,650 and $52,400 will get a discount of about 40 percent. These ranges are based on the household's combined adjusted gross income.

The policy is backed by the state's major utility companies as a way to help fund the costs of electrifying their grid and following California's energy mandates. Critics say that the policy won't significantly impact lowering the costs of replacing fossil fuel use with electricity. Analysis from the pro-renewable energy group Clean Coalition said the lower rate still can't compete with "modern high efficiency gas appliances" and won't come close to justifying the expense of replacing them.

California households that don't qualify for subsidies — those earning $62,150 for a family of three — will be charged the additional $24 per month. Lower-income households will pay fixed fees ranging from $6 to $12 a month depending on their income. The policy is backed by the state's major utility companies as a way to help fund the costs of electrifying their grid and following California's energy mandates. Critics say that the policy won't significantly impact lowering the costs of replacing fossil fuel use with electricity. Analysis from the pro-renewable energy group Clean Coalition said the lower rate still can't compete with "modern high efficiency gas appliances" and won't come close to justifying the expense of replacing them.