April 6, 2026
PROBLEM
American families are facing a historic surge in electricity prices. Time Magazine reported in January that the average monthly residential electric bill rose nearly 30% from 2021 to 2025. These increases outpace inflation and hit lower-income households hardest, since those households spend a larger share of their income on utilities. A significant but largely invisible driver of these increases are costs embedded in utility bills to fund public programs that are not directly related to a given customer’s energy usage. These charges are regressive – allocated by kilowatt-hour consumption, not income – and largely unknown to the households paying them: 72% of voters either don’t realize such charges exist or aren’t sure.* State policymakers and advocates have structured this funding mechanism to guarantee automatic, predictable revenue for policy priorities, while shielding those priorities from annual budget battles and recessions. The result is a system that lacks fairness and accountability.
IDEA
State policymakers should: 1) conduct a comprehensive audit of all public programs funded through utility bill charges or buried in the rate base; 2) evaluate whether each program achieves its stated goals and is cost-effective; and 3) move worthwhile programs – of which there are likely to be many – to the state general budget, funded through the tax base and subject to normal appropriations and accountability. Programs that cannot survive public budget scrutiny should be wound down.
Governors can direct program reviews and issue regulatory guidance. State lawmakers can pass laws eliminating or restructuring public benefits charges, directing regulators on base rate treatment, or creating new tax-base funding mechanisms. Utility regulators can be directed (by governors or state lawmakers, depending on the state) to stop approving base rates that include recoverable program costs.
EXPECTED OUTCOME
If successfully implemented, this reform would benefit all ratepayers because energy bills would decrease. How much they decrease would vary significantly by state; it depends on how many public programs are funded this way, what the costs are, and how they are collected.
- For example, in Connecticut: the average public benefit charge is $24-48 per month (among the highest in the nation), but New York’s analogous System Benefits Charge averages $2.56 per month.
- In September 2025, Massachusetts Governor Healey ordered the Department of Public Utilities to investigate all charges on bills and determine which should be cut, reduced, or restructured.
- In California, the California Public Utility Commission (CPUC) has authorized an estimated $27 billion in wildfire prevention spending through utility rate bases, buried in delivery charges with no separate line item. A 2025 CPUC report found wildfire-related costs add roughly $250-490 per year to average residential bills for many utility customers. California is working to address this: starting this year, all three major utilities in the state are implementing a new charge that surfaces some of these costs as a visible fixed monthly line item.
These changes could take effect within one to two rate cases following enactment. Relief should be immediate for explicit line-item charges. Moving programs into the appropriations process will subject programs to cost-benefit scrutiny, which could yield additional savings over time. For programs that are retained and funded through the tax base, the distributional burden should shift away from low-income ratepayers.
TRADEOFFS
Benefits:
- Immediate bill relief to ratepayers, especially lower-income households currently bearing a regressive burden.
- Forces accountability for programs by requiring budget scrutiny, avoiding placing mandatory charges on captive ratepayers.
- Transparency for voters, who can see and evaluate what their tax dollars fund and hold officials responsible for those tradeoffs.
Costs and Risks
- Program funding disruption: worthy programs currently funded by these charges (e.g., low-income energy assistance, weatherization, renewable energy deployment, wildfire mitigation) could go unfunded if legislatures fail to replace the revenue.
- Revenue stability: rate base funding is generally recession-proof; moving these programs to the tax base would subject them to annual political pressure such that worthy programs might get cut during economic downturns.
Long-term cost effectiveness: some proponents argue that the costs of these programs today are offset by future savings (e.g., weatherization reduces future energy use, demand-flexibility programs reduce peak load and therefore grid costs).
POLLING*
- Voters want transparency: 92% of voters say it’s important that utility bills show and explain each charge, including 71% who say it is very important. Importance is consistent across party lines.
- Awareness is low: Just 28% of voters say they know utility bills include public-program charges.
- When informed that bills include these charges, 58% of respondents prefer funding through the state general budget (vs. 16% who prefer utility bill charges).
- 45% of voters say that, during times of high inflation, lawmakers should prioritize keeping utility bills as low as possible, even if it means reducing some program funding; 44% say both should be equally prioritized; only 8% say maintaining program funding should come first.
FAQ
- Who is likely to support this idea?
- Consumers and ratepayer advocacy groups focused on affordability
- Taxpayer and fiscal transparency organizations
- Those skeptical of off-budget financing
- Utilities that prefer not to be the face of politically contentious charges
- Voters broadly (58% of whom support the shift)*
- Who is likely to oppose this idea?
- Environmental advocates and clean energy organizations that depend on these programs and worry that general-budget financing is less stable, especially for renewable energy and weatherization
- Those who support the underlying programs and view the rate-base mechanism as a pragmatic workaround for a legislature that may not fund these priorities
- Some utilities that have built program administration infrastructure and costs around existing charge structures and programs
- Does this put clean energy programs and low-income assistance programs at risk?
- No. At the moment, pressure to reduce electricity prices means everything is at risk. The proposal does not call for eliminating any program; it simply argues for making funding decisions transparent through the appropriations process. Programs that are of high value can and should be funded through the progressive tax base.
*Polling data cited from a Data for Progress survey of 1,259 U.S. likely voters conducted March 13–15, 2026. The sample was weighted to be representative of likely voters by age, gender, education, race, geography, and recalled presidential vote. The margin of error is ±3 percentage points. For more information on methodology, visit dataforprogress.org/our-methodology .