Financial Times Selects Energy Institute Research for Responsible Business Education Award

January 20, 2024

This month the Financial Times announced its Responsible Business Education Awards and selected “Paying for Electricity in California: How Residential Rate Design Impacts Equity and Electrification” for an Academic Research Award, designating the research “Highly Commended”. The study was co-authored by Severin Borenstein, Meredith Fowlie, and James Sallee at the Energy Institute at Haas and funded by Next 10, a nonpartisan research nonprofit organization. The FT’s awards celebrate academics who are “focusing their research on solutions that address some of the biggest challenges facing our society and planet”.

The study took a detailed look at the utility bills of more than 11 million California households served by the state’s three largest investor-owned utilities (IOUs): San Diego Gas & Electric (SDG&E), Pacific Gas & Electric (PG&E), and Southern California Edison (SCE) and concluded that utilities in California are covering many costs beyond the direct cost of supplying electricity through higher electricity prices. The Energy Institute researchers found that because electricity bills account for a larger share of income among lower-income households, these extra costs are like an invisible electricity tax that is far more regressive than the state income tax and somewhat more regressive than the state sales tax.

The study also discusses how California’s high retail electricity prices are working against the state’s efforts to accelerate electrification of transportation and buildings. High electricity prices increase the cost of operating electric cars and appliances.

One the authors’ recommendations, to introduce an income-graduated fixed charge and lower volumetric rates, has been written into law and is currently being implemented through a regulatory proceeding at the California Public Utilities Commission. Read the full report.