California Commission Takes Action to Assess Affordability of Utility Services

The California Public Utilities Commission on Aug. 4 took major steps and formalized procedures to consider the affordability of utility services in its upcoming activities to address the cost of utility services in the state. The action requires utilities to offer consumers the tools to evaluate the total affordability of planned rate surges throughout industries and proceedings. The decision clarifies when and how the commission will apply its affordability framework and additionally develop tools and methodologies for calculating the three-affordability metrics: affordable ratios, hours-at-minimum-wage, and a comprehensive measure of vulnerability indicator.

The decision incorporates the affordability structure in all water and energy proceedings involving proposed revenue increases exceeding one percent of present revenues, as well as in investor-owned utility general rate cases to be filed in the near future. It also requires utilities to submit quarterly reports on water, gas, and electric rates, and detailed lists of all recently accepted and pending revenues, including a collective total to the commission’s Industry Division and the Public Advocates Office.

By adopting the new metrics, the commission is providing new tools that the general public and stakeholders can use to explore the total affordability of suggested rate surges and help to make well-informed decisions, according to the press release.

In 2018, the commission initiated the affordability proceeding to examine how individual proceedings and utility rate requests impact affordability. Phase one of the proceeding described affordability and essential services, as well as the three metrics and data sources for evaluating affordability.

Phase two, which began in June 2020, addressed several issues, including how to calculate the commission’s affordability metrics, how to project variables, and how to establish proxy values for unavailable data pertaining to utility service costs.

The third phase of the project, opened in Feb. 2022, consists of a ruling to solicit suggestions from parties regarding energy affordability, a discussion group to debate the suggestions, and a staff proposition on suggested strategies to lessen energy rate rises.