Utility Rate Changes: Understanding California’s New Flat Rate Energy Plan

The California Public Utilities Commission (CPUC) has introduced a new flat rate energy plan. Assembly Bill 205 (“AB 205”) contains energy measures aimed at lowering the cost of electricity for California residents. The new rate plans are expected to come into effect at the end of 2024 and will include one flat rate of $24.15 instead of the combined service fee, transmission/delivery fee, and public purpose charges, as well as a lowered per kWh rate or “Usage Rate”.

Usage Rate

The usage rate refers to the price paid for each kilowatt-hour (kWh) of electricity used. Currently the per kWh rate is between $0.17 - $0.50, depending on your utility and other factors, and the new structure reduces this rate by 5 to 7 cents per kWh.

The usage rate will continue to vary throughout the day (this is called Time of Use plan, or TOU) to encourage conservation and efficient energy use. Currently, the higher priced “peak hours“ are 4pm to 9pm for most Californians.

Flat Rate

The flat rate will cover the infrastructure costs necessary to maintain the electric grid, such as wires and transformers. This rate will appear as a separate line item on electricity bills. The CPUC has set the flat rate at $24.15 per month, which is at the lower end of the proposals reviewed, some of which suggested rates as high as $73 per month.

Benefits of the New Structure

Improving Affordability for Low-Income Customers

Customers enrolled in the California Alternate Rates for Energy (CARE) program will benefit from a significantly discounted flat rate of $6 per month, but will pay the same per kWh rates as across the State. Additionally, those in the Family Electricity Rate Assistance (FERA) program and residents of deed-restricted affordable housing with incomes at or below 80% of the area median income will qualify for a flat rate of $12 per month, plus usage rates.

Solar Power and the Grid

While the new billing structure includes all residential customers, those with rooftop solar panels will also transition to the flat rate. Rooftop solar customers still rely on the grid for electricity when their solar panels are not generating power, such as during nighttime or cloudy days. However, Solar Households will still benefit from TOU plans, as solar panels are supplying the most energy to the grid during peak hours, earning top credits counting against their utility bills.

Ensuring No Profit Increase for Utilities

A significant aspect of the CPUC’s decision is that it does not allow utilities to increase their profits through this new billing structure. The flat rate is designed to redistribute existing costs equitably among customers without raising the overall amount collected by utilities. This ensures that the change benefits consumers without resulting in additional revenue for the utilities.

Implementation Timeline

The new flat rate billing structure will be implemented in late 2025 and early 2026, giving utilities and consumers time to adapt to the changes. The decision also extends to smaller utilities like Bear Valley, Pacificorp, and Liberty, with flat rates ranging from $23.40 to $33.98, as agreed upon by the California Public Advocates.

The CPUC’s new flat rate energy plan marks a significant shift in California’s approach to electricity billing. By lowering the per-unit cost of electricity and introducing a flat rate for infrastructure costs, the plan aims to make electricity more affordable and equitable, particularly for low-income households. For those considering going solar, the new plan still offers advantages, as the reduced usage rate and support for grid infrastructure ensure that solar power remains a viable and beneficial option.

Read the Official CPUC Information Sheet

Still worried about your energy bill?

Energy Assistance Programs: You can learn more about the income qualified households programs available for those struggling with their energy.

Energy Audit: Another option is to ensure your home is energy efficient. This helps you understand how much energy your home consumes and how you can improve its efficiency.

Learn more about PGE during an outage.

Explore Solar Energy:

Quick Tips for Going Solar in California:

Review available solar incentives – Our California solar incentivesarticle will help you learn about local installers, tax credits, and rebates.

Understand your utility: PG&E, SCE, SDG&E

You can also connect with us below to learn more about solar for your home. Our advisors will walk you through the best options for you and your home. based on your current monthly bill.