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Income-based electric bills spark debate on whether they would harm or hurt EV and heat pump adoption

Multifamily Housing

Income-based electric bills spark debate on whether they would harm or hurt EV and heat pump adoption

Californians may pay utilities based on how much they make, not just amount of power they use.

By Peter Fabris, Contributing Editor | June 1, 2023
Image by Rebecca Moninghoff from Pixabay
Image by Rebecca Moninghoff from Pixabay

Starting in 2024, the electric bills of most Californians could be based not only on how much power they use, but also on how much money they make. Those who have higher incomes would pay more; those with lower incomes would see their electric bills decline.

A law passed last year in California requires state utility regulators to devise a plan for charging customers income-based fixed fees as part of their electric bills by July 2024. If California goes ahead with this plan, it would be the first state to enact such a change.

The income-based billing concept has provoked strong debate as advocates and opponents argue over whether such a measure would encourage or discourage adoption of sustainable technologies such as solar panels backed with battery systems, electric vehicles, and heat pumps. Opponents include supporters of green technology who fear such a change would discourage customers from investing in new technology to reduce their electricity usage, according to a report in Grist. They say higher costs spur more people to use electricity more efficiently.

Supporters of income-based electric bills say just the opposite: reducing utility costs for lower income individuals could actually encourage them to use the savings from lower bills to install heat pumps and buy EVs.

A key point in the debate revolves around cost related to things that are not linked to usage such as burying electric supply lines to reduce wildfires. Such expenditures are passed on to all customers regardless of the amount of power they consume.

Both sides can agree on one thing: customers are already fed up with rates that have been rising at three times the rate of inflation in recent years. And, escalating electric bills are almost a certainty in the foreseeable future.

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