DeMaio Releases Report Exposing $4.5 Billion in “Hidden State Taxes” Added to Utility Rates

Californians are getting crushed by electric and gas utility rate hikes — with some residents seeing bills that DOUBLED or TRIPLED during the month of January 2023 alone. Experts warn that many residents may be unable to pay their utility bills. One frustrated resident summed up rising frustration by saying “the choice is to eat or to heat.”

But while California politicians are trying to shift the blame to utility company profits, an independent analysis of utility rates in California conducted by the non-partisan Transparency Foundation reveals that the state politicians are actually to blame.

“The public has a right to know that they are being forced to pay higher utility rates than they should be paying – and policymakers need to take immediate action to provide relief,” says Carl DeMaio, Chairman of the Transparency Foundation.

“We found over $4.5 billion in hidden state taxes added by Sacramento politicians to the electricity and gas rates imposed on California residents – and none of these taxes are disclosed on the bills sent to residents,” adds DeMaio.

The study provides a complete itemized list of these hidden taxes contained within the rate structure of each of the state’s largest utilities – charging Californians fees for a variety of dubious government programs ranging from a fund to cover unpaid utility bills to some residents, to give financial aid for “disadvantaged communities,” to provides free windows and appliances to others, etc.

The $4.5 billion in government program charges uncovered by the study amounts to a combined hidden state tax rate of over 10% on each utility bill each month!

But that’s not all the study discovered state politicians are doing to spike your utility rates.

“On top of the hidden state taxes found within the utility rates, California’s aggressive climate change mandates have both increased the commodity prices of electricity and natural gas as well as been the primary contributor to price spikes during supply disruptions that led to the doubling and tripling of bills,” DeMaio notes.

In fact, the study found that Californians are forced to pay electricity rates that are 67.1% higher than the national average and natural gas rates that are 30.1% higher than the national average.

While some of these costs could be market-driven, the Transparency Foundation concludes that California state government hidden taxes and mandates are resulting in an increased cost to consumers by at least one-third of their bill – if not closer to half of their bill.

DeMaio says the substantial costs added by state politicians means those state politicians can easily lower the rates back down – but only if they wanted to.

Sensing the public was turning on them, state politicians recently moved up the issuance of small “credits” of $40 and $63 on utility bills for the next two months. But DeMaio says these credits are merely crumbs – and are actually coming from ratepayers themselves through a costly “Cap and Trade” tax imposed on the cost of their electricity and natural gas.

Rejecting the small credits as “completely inadequate relief,” DeMaio is instead proposing a plan to cut electric and gas utility rates called the “2500-25-5 plan.”

“Because state politicians have deceptively imposed taxes on utility bills for years, it is only fair that every Californian receive an immediate refund of $2500 from the state,” DeMaio says.

“Those illegal taxes should also be removed immediately – along with lifting any climate change mandate that increases the cost of electricity or gas – and that will allow an immediate cut of 25% in the utility rates,” DeMaio notes.

DeMaio says that by repealing the taxes and mandates California should commit to not raise rates for 5 years.

To assist state leaders in hitting these rate reduction targets, DeMaio says the Transparency Foundation study identified that 71.6-84.5% of electric utility costs and 60.4-78.7% of gas utility costs are unnecessarily increased by costly state mandates and regulations.

In fact, the Transparency Foundation study found a disclosure made by Pacific Gas & Electric in its 2023 rate case filing with the state where the utility openly admits the rate increases they seek are directly driven by “the impact of the State’s decarbonization strategy.”

“There are many ways state politicians can undo the damage they’ve done – but they have to act quickly,” DeMaio says.

“I doubt they will act, however, without a substantial revolt by the public – and that will take a massive public education effort,” DeMaio concedes.

That’s why DeMaio blasted California media outlets for “poor and outright dishonest coverage of what is really causing high utility rates.

A review of coverage in California’s five largest newspapers between January 28 and February 6 found repeated inclusion of quotations from politicians blaming utility profit margins, but absolutely no mention of the fact that the politicians set the utility rate and approve the rate of profits for the utilities through their appointees on the California Public Utilities Commission.

Moreover, the Transparency Foundation examined the audited financial statements for the three main California utility companies in 2021 and found their profit margins (SDG&E 14.8%, SoCal Edison 6.2%, PG&E 0.67%) were actually far below the 17.1% national average profit margin for utilities in other states.

“The same politicians that sneak hidden state taxes into your utility rates without disclosing them on your bills are now trying to pretend like the utilities set the rates when, in fact, the politicians do,” DeMaio notes.

DeMaio warns that additional costly state climate change mandates are about to be adopted that will spike electricity and gas rates even higher – including a proposal to ban gas appliances in all homes and buildings.

“It is clear that California politicians are trying to force residents to finance the high costs of California’s early implementation of the controversial Green New Deal transition – and rates will likely quadruple within the next decade if this misguided transition continues,” DeMaio concludes.