Southern California Edison, Pacific Gas & Electric, and San Diego Gas & Electric submitted a new fixed rate structure for electricity that would be based on a customer’s income rather than the amount of electricity they use. While this approach seems like an equitable solution to the rising energy cost, is it a punishment for financial success and hard work?
Under the new proposal, households with higher incomes will be charged more for their electricity, while those with lower incomes will be charged less. For example, households earning less than $28,000 per year will pay a fixed charge of $15 per month on their electric bills in Edison and PG&E territories and $24 per month in SDG&E territory. Meanwhile, households earning above $180,000 per year will pay $85 per month in Edison territory, $128 per month in SDG&E territory, and $92 per month in PG&E territory.
While the proposal may seem like a step toward income equality, should we be concerned that it sends a message that success and hard work are being punished? Making smart choices, such as going to school, working hard, and delaying gratification, should not be penalized by a fixed rate structure based on income. Additionally, those who have achieved success and higher incomes often use their resources to invest in their communities and create jobs for others.
While $92 – $128 may seem like a small price considering all the other costs associated with running a household, could this model also open up Pandoras Box for other income-based rate structure programs?
As more details emerge, we should also consider whether this approach could lead to a lack of incentive for households to conserve energy. For example, if a family knows that they will be charged the same amount regardless of how much energy they use, they may not feel compelled to reduce their energy consumption. This could lead to a more significant strain on the already overloaded energy grid and ultimately result in higher energy costs for everyone.
Too many discussions in the halls of government are focused on raising taxes on higher-income earners and creating prospective programs for income distribution, in other words: programs that punish success and hard work. Rather than penalizing those who earn higher incomes, let’s work on helping those at the bottom increase their income.
The wealthy have a luxury that most of us don’t have. They can pack up and go to another state, and with it goes their tax dollars. We should be working to keep our high earners in-state, keeping the indirect benefits of their fiscal success and responsibility.