California reviews climate credit impact on energy costs for millions of ratepayers

The Little Hoover Commission held a significant hearing on February 27, 2025, focusing on California's electricity costs and the implications of recent executive orders and legislative changes. The discussions centered around wildfire mitigation costs, the California Climate Credit, and the potential impact of new fixed charges on ratepayers.

One of the key topics was the question of whether all ratepayers should bear the costs associated with wildfire mitigation. The commission explored alternative, lower-cost methods for addressing these challenges. Programs such as the EPIC and SGIP initiatives, which support technology development and self-generation, were highlighted. These programs have increasingly shifted towards solar energy combined with storage solutions, particularly for residents in areas prone to Public Safety Power Shutoffs (PSPS) and other outages.

The California Climate Credit, funded by approximately $1.4 billion from cap-and-trade revenues, was also a focal point. Currently, all 11.6 million customers receive a $120 annual credit. However, proposals were discussed to potentially limit this credit to low-income customers or non-solar customers, which could significantly alter the financial landscape for many Californians. For instance, restricting the credit to low-income customers could increase their annual benefit to $454, while non-solar customers might see a slight increase to $143.

The commission cautioned that any changes to these programs could lead to increased energy costs for a substantial number of residents. The introduction of a fixed monthly charge, which was initially proposed to be as high as $120, was ultimately set at $24. This decision aims to balance costs but still poses challenges, as it could lead to higher expenses for some ratepayers.

Overall, the discussions underscored the complexity of California's energy landscape, where efforts to improve sustainability and support vulnerable populations must be carefully weighed against the potential for increased costs. The commission anticipates that these topics will generate significant public interest and commentary as they move forward.