Get the Facts About the Fixed Charge
Proposed Decision
On March 27, 2024, the California Public Utilities Commission (CPUC) proposed a new billing structure that would split residential customers’ electric bill into two parts:
(1) Usage charges for the electricity that customers use during their billing period, and
(2) a separate “fixed charge” line item that would stay the same each month, to cover fixed costs of grid infrastructure, like power lines, transformers and other equipment. The fixed charge would be offset in part by reducing energy usage rates by 5-7 cents per kilowatt hour. The new billing structure would begin in late 2025 or early 2026.
Pay Less for Electricity
The proposal cuts the price all SCE residential customers pay for each unit of electricity.
No new income verification
Electric bills will not be based on household income. The only income-based aspect of the proposal is that customers enrolled in income-qualified programs customers receive a discount on the fixed charge.
Simpler, more stable bills
A fixed charge that is separate from energy charges helps keep bills more stable and less volatile on a month-to-month basis.
Similar to cell, water and cable service bills
Almost all publicly owned utilities in California and most utilities nationwide use a similar billing structure; this proposal brings California in line with state and national trends.
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Frequently Asked Questions
Energy bills are made up of fixed costs and the costs of electricity customers use.
Fixed costs generally don’t change month-to-month. They include costs of safely building, maintaining and operating the electric grid, connecting each customer to the grid, providing customer support, and of state programs to help income-qualified customers and support energy efficiency.
The cost of electricity usage can vary from month to month. SCE buys fuel to generate energy and also buys power from other companies; by law, the costs get passed through directly to customers without any markup.
Today, both fixed costs and electricity usage costs are combined on residential customers’ bills into an energy charge. The new law (AB 205) requires costs to be separated into a monthly fixed charge to cover certain fixed costs, and an energy charge based on the electricity the customer uses during their billing period.
AB 205 also requires that when implemented, the fixed charge results in lower bills (on average) for lower-income customers.
All residential customers. That includes homeowners and renters, including those with or without solar panels.
According to the most recent proposal submitted by Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric, a standard fixed charge would be applied to all residential customers, except for lower-income customers enrolled in the state’s CARE or FERA programs whose income already qualifies them for bill discounts. Their fixed charge would be lower. No income verification is needed in this proposal.
On average, all low-income customers enrolled in CARE or FERA will save on their monthly bills under the proposal.
The change cuts the price all SCE residential customers pay for each unit of electricity.
The rate reduction helps to make it more affordable for customers to use electric vehicles, stovetops, heat pumps and other clean energy solutions, regardless of income or where they live.
By cutting electric rates, the proposal intends to accelerate the state’s transition to 100% clean electricity.
A fixed charge separate from energy charges helps keep bills more stable and less volatile on a month-to-month basis.
The proposal ensures that everyone who uses the electric grid helps to pay for its operation and upkeep.
The CPUC proposal is not a new fee or tax. It simply shifts how existing costs are shared among utility customers.
The CPUC’s proposed fixed charge is $24.15/mo.
Income-qualified customers would receive a discount on the fixed charge:
CARE (California Alternate Rates for Energy) program customers’ fixed charge: $6/mo.
FERA (Family Electric Rate Assistance) program customers’ fixed charge: $12/mo.
No. Utilities will receive the same amount of money as they receive today for the investments they make in operating and protecting the electric grid.
In June of 2022, the California Legislature passed and Governor Newsom signed Assembly Bill 205, mandating the CPUC change the way residential customers’ electric bills are structured.