Jon Coupal: Big problems for California’s Income-Based Utility Rates

In a recent column I referred to SBX1-2, a dangerous legislative proposal to define “excessive profits,” as setting a new speed record in California’s headlong rush toward Soviet-style central planning. Well, let’s add one more bad bill to the state’s perpetual march toward a collectivist state. Fortunately, this one may not be legal for long.

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Like SBX1-2, Assembly Bill No. 205 from last year, bypassed many of the normal procedures for enacting legislation. It did this because it was a so-called “budget trailer bill.” While the “budget bill” is constitutionally mandated to be enacted by June 15, it only passes by that date for one reason—so the legislators can continue to receive their paychecks. Moreover, after the enactment of the budget, there are so-called “junior budget bills” amending the fake June 15th budget as well as last-minute “budget trailer bills” directing the spending of billions in ways that the budget bill itself did not direct.

AB 205, the “energy trailer bill,” received scant public attention and no meaningful public hearings were held. But its impacts are profound, and not in a good way.

Following the new law’s mandates, California’s big utility companies have announced a radical change in the way they will charge customers for service. Soon, residential electricity charges will depend in part on the ratepayer’s income. Specifically, electricity bills will have two components: a fixed infrastructure charge that varies with income, and an electricity use charge, which would vary based on consumption. Next year, the CPUC will determine what charges are imposed, and on whom.

Not surprisingly, the announcement from Southern California Edison, San Diego Gas & Electric and Pacific Gas & Electric has resulted in a huge negative reaction from taxpayers and the media – for good reason. Trying to shoehorn an income component into utility rates converts “ratepayers” into “taxpayers,” and Californians have had their fill of high taxes.

The difference between a tax and a fee is more than semantics. Taxes are imposed for generalized government services like education, public safety, transportation, and even for a reasonable safety net for the less fortunate. But a “fee” or “charge” has always correlated to the receipt of a specific service. Californians readily understand the difference and have wholly embraced “cost of service” principles by approving several amendments to the California Constitution.

For example, immediately after Proposition 13 passed in 1978, voters approved the Gann Spending Limit (1979) to limit the growth of government spending to increases in population and inflation. The Gann definition of “proceeds of taxes,” subject to the spending cap, includes user fees except when those fees “exceed the costs reasonably borne by that entity in providing the regulation, product, or service.”

Likewise, in 2010 California voters specifically approved language to clarify the difference between taxes and legitimate user fees. Proposition 26 provides that a tax does not include certain fees as long as the charge “does not exceed the reasonable costs to the State of conferring the benefit or granting the privilege to the payor.”

The income-based utility rates are not scheduled to be in effect until 2025, so ratepayers, taxpayers and voters will have an opportunity to correct this mistake though political means.

But even if politicians do nothing to stop this tax increase, backers of income-based utility rates have another problem. A coalition of taxpayer and business organizations have already qualified the Taxpayer Protection and Government Accountability Act (TPA) for the 2024 ballot. Among its many provisions is not only further clarification of what a “tax” is but also a provision that requires any tax to be approved by a legislative body rather than some administrative agency or other authority not directly accountable to voters. That includes the PUC. If the income-based utility rates are deemed to be taxes – an incontrovertible fact – then the tax would have to be approved by the California legislature. Moreover, since the TPA requires any statewide tax increase (this one authorized by AB 205) to be approved by the statewide electorate as well as a two-thirds vote of both houses, voters, one way or another, will have the final say.

Click here to read the full article in the OC Register

Comments

  1. Talk about power grab. Can’t have natural gas. Can’t even have ANY reliable energy sources if the Chicken Little climate forecasters have their way.
    Fortunately, there are workarounds but I won’t give them any clue.

    What’s next? Can’t even guess.

  2. Rottweiler says

    If you are counting on the voters of California, then you can expect the worst decision making as is evidenced today. Gascon’s punishing the police and releasing violent criminals. Bass spending up a storm on an ineffective way to handle our homeless situation. Newsom just about the most corrupt and inept politician ever. Grooming our kids to be preyed upon and influenced by the trans Alphabet rainbow mafia, the SEIU, the taxes never cease, the open borders, the Soros funded anti-American, antifa, DNC terrorists, nothing screams intolerance except the leeches that run this state. So forget the voters, these transparent leeches effectively destroyed San Francisco and then these idiot voters voted them for our City and State. So, all that we are missing is the locus.

  3. I suspect this is illegal, as the state is proposing to charge individuals a different rate for the same product based on … first income, then financial status, then race, then LGBTQ, then woke, then whatever they can dream up next. This is absolute BS and I hope, Jon, you are ready to go to court again.

  4. This bill is “UNCONSTITUTIONAL AND WILL FAIL IN THE COURTS WHEN THEY GET SUED….BANK ON IT

    • Steve Spatola says

      It flies in the face of the 14th Amendment to the US Constitution, Equal Protection under the law and Equal treatment! Isn’t there some judge in this miserable state to put an end to thie legislation before we have to fight it in tyhe courts? If it had to do with discrmination with some wacko minority group, the corrupt judges in Black Robes and recipients of cash handouts would be on it in a a flash.

  5. Really??? says

    Max don’t be so sure.

    Where were the voters before this was passed?

    The ” I Cannot Be Bothered ” crowed elected these clowns.

  6. The grid will fail.

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