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PG&E’s new utility tax is unfair to renters and must be repealed

Despite paying some of the highest electricity rates in the country, millions of Californians will be forced to pay higher utility bills because of a new flat tax.

Illustration of an urban alley with cash, electronics, and tangled cables amidst pastel buildings.
Source: AI illustration by Clark Miller for The Standard

By Shanti Singh

The San Francisco Bay Area is well known for its high cost of living. A takeout salad that might cost $12 elsewhere is going to run $16 (or more) here. Gas prices never seem to go down. And of course, housing costs are among the highest in the country. While many of us go through mental math and gymnastics to justify the premium of living here, one thing none of us likes is to feel gouged for the privilege.

So it’s hard to understand why PG&E, which also covers much of surrounding Northern California, wants to start charging a new utility tax, increasing electricity bills for millions of renters across our state. The California Public Utilities Commission just proposed a shocking $24 per month for this tax, affecting everyone who pays their own power bill. Commissioners could vote to approve this tax as soon as May 9, and it would take effect in 2025.

This proposal will hurt the millions of people who rent across the area, raising their overall electricity bills; in the Bay Area, that’s 65% of the population. Renters are some of the most vulnerable energy consumers. We can’t make investments to increase the energy efficiency of our homes, and because we’re the ones paying the electricity bills, there are no incentives for our landlords to spend money on this either. 

Affording to live here is already hard enough. Why are we being punished even more? Gov. Gavin Newsom has had a big year advocating for and passing housing rights-related bills statewide. This will help Californians build more housing in the future, which is great. But those of us living here right now need his help in blocking this unfair surcharge.

For Newsom to truly be a champion of equity and tenant protections, the stories of millions of renters like me (and perhaps you) should be at the forefront of the utility tax debate. In the midst of our ongoing cost-of-living crisis, it is crucial that our state leaders do not further exacerbate the difficulties of renting.

Here’s what’s at stake: Californians already shoulder some of the highest electricity rates in the country. Yet millions of people will be forced to pay higher bills. While the increase is not targeted only at renters, it will disproportionately impact us, since we typically live in smaller dwellings and consume less electricity. That means that under the latest CPUC proposal, a single tenant making $40,000 per year would pay a utility tax of $24 per month to PG&E—regardless of how much electricity they use.

This is all because California politicians jammed through a law, AB 205, in 2022 that didn’t have any public scrutiny or debate. The specter of the utility tax further exacerbates the financial strain on working families who are trying to make ends meet. It's a situation where, for many, every dollar counts, and stretching budgets is a daily struggle. Given how many politicians say they are looking out for renters, I’m amazed how they justified voting for this hypocrisy.

The landscape of rental housing in Northern California paints a stark and unyielding picture, representing a hurdle for working people. Rent prices consistently surpass the national average, making it exceedingly difficult for renters to make ends meet. Whether you're living in a small apartment or a modestly sized condo, the burden of high rental costs is acutely felt.

Proponents of the utility tax argue that it will reduce expenses for low-income families, but this argument paints an incomplete picture. While customers enrolled in the California Alternate Rates for Energy (CARE) and Family Electric Rate Assistance (FERA) programs may experience modest and short-term reductions in their utility bills, millions of residents living in apartments, condos and smaller homes who fall above the eligibility threshold for these programs will face increases in their utility bills. Don’t just take my word for it. Nick Chaset, who runs a Community Choice Aggregation in the East Bay called Ava Community Energy, did modeling that found that bills would go up for most people in their service territory. 

To make matters even worse, the state Legislature “uncapped” what utilities are allowed to charge, meaning that this utility tax will only go up. This is a concerning reality for a substantial number of working households across California. We unfortunately have seen a long track record, from wildfires to rate hikes, to its ongoing cold war with the city, that PG&E is a powerful monopoly that, in the long run, always gets what it wants. 

The only solution is for the Legislature to fix what it broke and repeal the utility tax provision of AB 205. Assemblymember Jacqui Irwin introduced AB 1999 in January to do just this. I urge other legislators and Newsom to take Irwin’s legislation seriously. Otherwise, we’re just writing a blank check for PG&E to cash at the expense of working people and renters like me. The Legislature created this mess. If lawmakers really want to protect and champion renters, now is the time for them to clean it up.

Shanti Singh is a San Francisco renter who is legislative and communications director of Tenants Together, where she advocates for tenants rights.

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