I don’t know if this pricing plan based on income is a good idea. My first reaction is to be skeptical of these sort of schemes.
However, it should be recognized that higher income people often do not pay their share when it comes to maintaining the power grid infrastructure. Those wealthier people can often reduce their bills through net-metering from solar panels. Lower and middle income people, who either can’t afford solar, or are not allowed to install solar (because those people rent, for instance), pay a disproportionately higher share. The burden of keeping the grid operational falls on lower income people. But the solar panel owners still need to be hooked up to the grid to keep the lights on when the sun doesn’t shine as much.
This is explained in the link below…
A few excerpts:
One reason is that California’s size and geography inflate the “fixed” costs of operating its electric system, which include maintenance, generation, transmission, and distribution as well as public programs like CARE and wildfire mitigation, according to the study…
…These are legitimate expenses, Fowlie said. However, because lower-income residents use only moderately less electricity than higher income households, they end up with a disproportionate share of the burden, according to the study. And while the bills of Californians continue to decrease as they adopt cost-efficient alternatives like the state’s Net Energy Metering solar program, costs will keep rising for a shrinking customer base composed mostly of low- and middle-income renters who still use electricity as their main energy source.
“When households adopt solar, they’re not paying their fair share,” Fowlie said. While solar users generate power that decreases their bills, they still rely on the state’s electric grid for much of their power consumption — without paying for its fixed costs like others do. At the same time, the state has set high goals toward decreasing reliance on fossil fuel, including by encouraging residents to switch to renewable energy like solar, which often bears a high cost of entry due to costly equipment and installation.
“As this continues it’s going to make electricity even more unaffordable,” said F. Noel Perry, founder of Next 10, which funds nonpartisan research on the economy and environment.
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I have previously pointed out here that Californians pay some of the highest prices for electricity in the nation. According to the EIA’s latest monthly report, the residential price is 26.45 cents per kilowatt-hour. Customers in Oregon pay 12.04 cents/kwh. The price is 12.62 cents in Arizona. Here in San Diego, I pay 39 cents/kwh on average. Prices have skyrocketed in the last few years. Something needs to change. Is this new plan based on income a good idea? Probably not, but to repeat, something needs to change.
Average cost of electricity in the US for each state: