California gubernatorial candidate Xavier Becerra has proposed guaranteeing two free hours of electricity per day for low-income households, a policy modeled on Australia’s “free power hour” programs that would fundamentally reshape how the nation’s largest retail electricity market prices energy for its most vulnerable customers. The plan targets the state’s escalating energy burden – where low-income families spend roughly 8-10% of income on utility bills – by shifting costs onto ratepayers or taxpayers rather than reducing underlying generation or delivery expenses. If implemented, it would become the first statewide zero-marginal-price electricity block in the U.S., creating a precedent that could spread to other states grappling with affordability crises driven by wildfire mitigation costs, grid hardening, and renewable integration.
How the Proposal Works and Where It Comes From
Becerra’s plan would direct the California Public Utilities Commission (CPUC) to design a tariff providing up to two hours of free electricity daily to households enrolled in the California Alternate Rates for Energy (CARE) program, which currently serves about 4.5 million low-income accounts across the state’s three investor-owned utilities – Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric. The free hours would likely align with midday solar abundance, roughly 10 a.m. to 2 p.m., when wholesale prices frequently dip negative and curtailment of renewable generation exceeds 2,000 megawatt-hours on spring days. Australia’s version, pioneered by retailers like Amber Electric and adopted in various forms by state governments, uses smart-meter data to zero out charges during designated windows, effectively subsidizing flexible loads such as water heating, EV charging, and pre-cooling.
California already has the metering infrastructure: over 95% of residential customers have advanced metering infrastructure (AMI) capable of interval billing. The CARE program’s enrollment database provides a ready-made eligibility mechanism. What’s missing is the regulatory framework to isolate a daily time block from the existing tiered and time-of-use rate structures, and a funding mechanism – either a non-bypassable charge on all ratepayers, a General Fund appropriation, or a reallocation of existing Public Purpose Program surcharges that currently total roughly $1.8 billion annually across the three IOUs. Becerra’s campaign has not specified which path he would pursue, though his prior tenure as state attorney general suggests comfort with using regulatory authority to compel utility compliance.
Grid Economics: Shifting Load to Solar Hours Has Limits
That points to a structural tension: the policy’s stated goal – lowering bills for low-income households – aligns with grid operators’ desire to soak up excess midday solar, but the magnitude of load shift achievable from residential customers is modest. CARE households average roughly 500-600 kilowatt-hours per month; two free hours daily, even if fully utilized at 3-5 kW (typical for HVAC, water heating, or EV charging), represents only 180-300 kWh monthly – 30-50% of total use. Aggregated across 4.5 million accounts, that’s 800-1,350 GWh shifted annually, or roughly 1-1.5% of the IOUs’ combined 2023 retail sales of 190,000 GWh. By comparison, California’s spring curtailment alone exceeded 2,500 GWh in 2023. The policy helps at the margin but cannot solve the duck curve; utility-scale storage, now exceeding 10 GW / 40 GWh installed, remains the primary tool for shifting solar to evening peaks.
If this trend holds, the real cost pressure falls on the revenue requirement. Zeroing out energy charges for two hours daily for CARE customers removes an estimated $300-$500 million in annual energy revenue from the IOUs’ collective ledger, based on current time-of-use rates of $0.30-$0.45/kWh during midday periods. That shortfall must be recovered elsewhere – either through higher rates for non-CARE customers (who already pay among the highest residential rates in the continental U.S., averaging 32-35¢/kWh), increased Public Purpose Program surcharges, or state budget allocations. The CPUC’s 2024 General Rate Case cycle, which sets revenue requirements through 2026, would need to incorporate this new cost layer, likely triggering a contentious proceeding over cost allocation between income-qualified and standard residential classes.
Equity Mechanics: Who Actually Benefits and Who Pays
The distributional effects depend critically on housing stock and appliance ownership. CARE enrollment skews toward multifamily renters – roughly 60% of CARE accounts – who often lack control over major loads like central HVAC, water heaters, or EV chargers. A renter in a 1970s apartment complex with gas heating and no in-unit washer/dryer has limited ability to shift consumption into a free midday window. By contrast, a CARE-enrolled homeowner with a heat-pump water heater, smart thermostat, and Level 2 EV charger could capture the full value. Without complementary programs – on-bill financing for smart appliances, landlord incentives for building electrification, or community solar subscriptions – the policy risks delivering the largest per-household subsidies to the relatively better-off within the low-income cohort.
By comparison, the federal Low-Income Home Energy Assistance Program (LIHEAP) distributes roughly $3.5 billion nationally each year, with California receiving about $350 million – a fraction of what a statewide free-hours program would cost annually. LIHEAP’s block-grant structure avoids the regressive cross-subsidy inherent in rate-based funding, but it lacks the behavioral price signal that could align residential demand with grid needs. Becerra’s proposal attempts to combine both: a targeted bill reduction plus a grid-service incentive. Whether it achieves either efficiently depends on implementation details the campaign has not yet released.
Precedent and Political Feasibility
California has experimented with adjacent ideas. The CPUC’s 2022 Income Graduated Fixed Charge decision (still pending final implementation as of mid-2024) would add a monthly fixed fee scaled to income, reducing volumetric rates for low-income customers – a different lever for the same affordability goal. The state’s Solar on Multifamily Affordable Housing (SOMAH) program and the federal Inflation Reduction Act’s Home Electrification and Appliance Rebates (HEAR) provide capital for the very appliances that would let households exploit free midday power. Becerra’s plan could stack with these, but only if the CPUC coordinates across proceedings that currently operate on separate tracks.
Politically, the proposal faces a divided legislature. Democrats hold supermajorities in both chambers, but moderate members from inland districts – where summer cooling loads drive high bills and solar saturation is lower – have resisted rate increases on non-CARE customers. The 2023-24 session saw multiple affordability bills stall over cost-allocation disputes. A gubernatorial executive order could direct the CPUC to initiate a rulemaking, but the commission’s independent status and the need for a funding source mean legislative buy-in is practically necessary. The 2026 gubernatorial primary, in which Becerra is a declared candidate, will test whether this specific mechanism – as opposed to broader fixed-charge reform or expanded LIHEAP – becomes a litmus test for progressive energy policy.
- Utility planner: Must model the revenue impact of zero-priced midday blocks across 4.5M CARE accounts and prepare rate-case testimony on cost allocation between CARE and non-CARE classes for the 2026 GRC cycle.
- Storage or generation developer: Should assess whether aggregated residential load shift from this policy materially changes net-load shapes or merely duplicates what utility-scale batteries already arbitrage; the effect is likely marginal at current CARE penetration.
- Policy analyst: Needs to evaluate the interaction between free-hours tariffs, the pending Income Graduated Fixed Charge, and federal IRA rebate programs to avoid overlapping subsidies that miss the hardest-to-reach renters.
- Grid operator (CAISO): Should quantify the incremental midday load increase from CARE households responding to zero prices and determine whether it reduces curtailment enough to defer any transmission or storage investments.
- CPUC rulemaking docket: Watch for an Order Instituting Rulemaking (OIR) on free-hours tariffs – likely late 2025 if Becerra wins and directs the commission – with a target effective date no earlier than 2027 given the GRC timeline.
- Legislative funding vehicle: Track whether a budget trailer bill or standalone measure appropriates General Fund money to cover the $300-500M annual revenue gap, or if the cost is loaded onto non-bypassable charges.
- CARE enrollment and usage data: Monitor quarterly CARE reports for changes in midday load profiles after any pilot launch; a 5-10% shift in participating accounts’ 10 a.m.-2 p.m. consumption would signal behavioral response.
- Multifamily electrification programs: Watch SOMAH and IRA HEAR rollout rates in CARE-heavy zip codes; without in-unit electric loads, the free-hours benefit remains theoretical for most renters.
Bottom line: Becerra’s free-power-hours proposal is a targeted affordability tool that doubles as a modest grid-service mechanism, but its fiscal scale – hundreds of millions annually – and regressive funding risk make it a rate-design precedent, not a curtailment solution. The policy’s real test is whether it can be paired with appliance-level electrification for renters, or whether it becomes another bill credit that flows disproportionately to homeowners with flexible electric loads.
Read the full report at Canary Media
Note: facts and figures attributed above to Energy News Network reflect that outlet's original reporting. Broader context, cross-sector connections, and forward-looking scenarios reflect independent analysis by our editorial team.
About this article: Drafted by Energy Ai with AI-assisted research and writing based on public reporting, then reviewed under our editorial process before publication.
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