Reform California Unveils Plan to Repeal New “Flat Fee” Utility Surcharge

Californians are still suffering under the highest utility rates in the country, and many can barely afford to pay their bills.

Now California Democrat politicians want to impose a new “flat fee” surcharge on all utility bills based on each household’s income for the year.

That means many households will pay an additional flat charge of $24.15 per month to subsidize “lower income households” who would pay a lesser fee of between $6 and $12 a month.

Politicians claim these fees would pay for installing and maintaining the equipment necessary to transmit electricity to homes, but Reform California Chairman Carl DeMaio notes that those charges are already part of the electricity rates — and that the proposal is an excuse for a new tax.

“By imposing a flat fee that varies based on household income, California politicians are turning utility bills into tax bills,” said DeMaio.

The fixed rates are required under Assembly Bill 205 (AB 205), which was signed by Governor Gavin Newsom (D) in 2022. The bill states that “the commission may authorize fixed charges [for utilities] … The fixed charge shall be established on an income-graduated basis.”

The specific rates in this “flat fee” scheme were voted on and approved last week by the California Public Utilities Commission (CPUC). And in exchange for the new charge, the CPUC promises it would reduce electric rates between 5 cents and 7 cents per kilowatt hour. But DeMaio says that is a “shell game scam” because the CPUC routinely increases rates — and would likely do so quickly to erase any savings.

Carl DeMaio says that AB 205 and the CPUC proposal is playing class warfare and is fatally flawed — and even illegal.

“California’s Prop 218 says that you’re not allowed to favor one customer over another, but that’s exactly what this proposal would do — favor customers and give them better or worse rates based on their income,” said DeMaio.

“This would be illegal if this was nearly any other service, but because these utility companies are merely charging the rates imposed by the government itself, they’re skirting this requirement — but that doesn’t mean this will be free from legal challenges,” explained DeMaio.

“If we allow the state to charge you differently based on factors like your income, then what factors might come next — your race, your sex?” asked DeMaio. “Why should one resident be forced to subsidize another resident when we already pay our taxes, some of which already helps give breaks to low income residents?”

DeMaio proposes a different solution to penalizing higher-earning Californians: blame the politicians responsible for making the utility rates so high in the first place and demand they take action to reduce the actual costs associated.

DeMaio points to a recent report by the Transparency Foundation that found $4.5 billion in hidden taxes imposed by politicians — among other things under state control and can be changed immediately — that are causing high utility rates.

>>> Read report on utility rates

How can concerned Californians help stop this proposal?

DeMaio says the best way is to get involved in Reform California’s campaign to pass the Taxpayer Protection Initiative in the November 2024 election.

The California Taxpayer Protection Initiative would require that any taxes or fees must be approved by a two-thirds vote of the State Legislature and a vote of the people of California. The measure also prevents the government from charging a ‘fee’ for what is really a tax.

The California Taxpayer Protection Initiative would ensure it applies to fees by defining taxes as everything that you pay that government directs, except when:

1. A payment is voluntary;
2. What you are charged gives you a product or service in return; or
3. The amount you are charged does not exceed the value of the service

DeMaio says if passed the initiative would most certainly be invoked to challenge the legality of the utility rate flat fee scheme being currently proposed. The CPUC proposal violates the third provision because some residents would be paying more than the value of the service — making the “fee” defined as a tax.

“The utility rate ‘flat fee’ is really a tax because it charges wealthier Californians a higher cost than the value of the service in order to subsidize or pay for services for lower income residents,” explained DeMaio.

DeMaio and Reform California are leading the campaign to pass the California Taxpayer Protection Initiative to defeat crazy proposals like the utility rate “flat fee” up and down the state. Join the campaign today to fight back!