California Senate takes rare stand against misuse of budget ‘trailer bills’

Few people inside or outside the Capitol were paying much attention last year when Assembly Bill 205 popped up on the California Senate floor on June 29.

The measure had been sitting in the Senate for more than four months, one of many so-called “trailer bills” legally connected to the state budget but having little, if any, policy connection to the budget.

Over the previous decade, after voters – perhaps unwittingly – reduced the legislative vote requirement for budgets from two-thirds to a simple majority, it had become common practice for governors and legislative leaders to put sweeping policy changes into trailer bills to make their passage easier.

Trailer bills need just simple majority votes, take effect immediately on being signed by the governor, and are typically taken up in rapid fire order with little or no serious discussion.

Typically, AB 205 was, in fact, a major revision of how regulated utilities, such as Pacific Gas and Electric Co. and Southern California Edison, acquire, distribute and price electric power.

One of its many provisions, under the title of “miscellaneous,” declared it would “authorize the Public Utilities Commission to establish reasonable fixed charges on default residential customer rates to help stabilize rates and equitably allocate and recover costs among residential customers in each electrical corporation’s service territory.

“If the Public Utilities Commission establishes fixed charges on default residential customer rates, ensure that the fixed charges are established to more fairly distribute the burden of supporting the electric system and achieving California’s climate change goals through the fixed charge.”

A Senate staff analysis of the measure was a little more specific. It said that the $10 per month “fixed charge” that utilities charge customers for maintaining their basic systems was repealed. The new fixed charges would be “on an income-graduated basis with no fewer than three income thresholds, such that a low-income ratepayer would realize lower average monthly bill without making any chances in usage, as specified.”

In a few hours, AB 205 whipped through both legislative houses and Gov. Gavin Newsom signed it into law a day later.

Two months ago, Californians finally learned what it meant. The state’s utilities had filed plans to replace the $10 fixed charge with variable fees tied to customers’ incomes, ranging from as low as $15 for households with the lowest incomes to as much as $128 for those in upper-income brackets.

The utilities said the new fixed costs would be offset by lower prices for power consumption for low- and moderate-income households.

The revelation garnered national publicity and touched off debate over what was clearly an effort to have higher-income consumers underwrite the utility bills of those with lower incomes.

GOP state senators issued a letter saying, “the tactic of implementing a structured fixed-charge system that diminishes individual responsibility and usage in favor of an ‘identity’ subsidization is not, in our opinion, an answer. More fees are not a solution to already ridiculously high utility bills.”

Setting aside the merits, or lack thereof, of income-based utility pricing, AB 205 is another example of how trailer bills are misused – and while it’s just wrong, even more abusive trailer bills have been proposed.

When Newsom unveiled a plan recently to make wide-ranging changes to the California Environmental Quality Act, he wanted it to be a package of trailer bills. The plan drew heat from environmental groups and when it received an initial airing in a Senate budget committee, members balked at giving it the fast-track treatment afforded to trailer bills, saying it needed greater scrutiny.

That was a procedural step in the right direction. AB 205 should have had the same scrutiny.