Gov.-elect Becerra’s rate freeze plan could pit him against powerful interests

Gov.-elect Xavier Becerra plans to pursue a freeze on utility bills and home insurance premiums, according to a spokesperson for the campaign. The actions could pit the Democrat against powerful interests — including some that indirectly boosted his campaign — early in his tenure.

It’s unclear what form Becerra’s actions might take. His spokesperson, Jonathan Underland, said in a text message that the details of the policy were still being formulated.

But any attempt to freeze rates — a policy that experts say would be challenging to enact — would mark a notable exception to Becerra’s avoidance of bold policy announcements.

“A lot of other folks make these wild promises and they’re not the governor-elect,” Becerra told reporters last week.

Becerra vowed to “immediately” freeze utility and home insurance rates as early as February, when his campaign was struggling to gain traction in a crowded primary. As the Democrat’s campaign surged in April, PG&E directed more than $13 million to an independent committee designed to undercut his top Democratic rival, Tom Steyer.

Becerra reiterated a version of the policy as recently as an Oct. 30 campaign stop in San Francisco using slightly softer language and a focus on utility bills rather than rates.

“We cannot allow — whether it’s the utility companies or the casualty insurance industry — to just keep hiking prices without understanding as families why, and that’s why I called for a freeze of the utility bills and insurance premiums,” Becerra said.

The former attorney general’s proposal drew criticism during the primary from Democratic rivals, regulatory experts and the insurance and utility industries. Skeptics argued Becerra lacked the authority to unilaterally freeze rates. Industry representatives said that doing so would chase away home insurers.

Even California Public Utilities Commission President John Reynolds publicly questioned how the utility rate freeze would be implemented in a June interview with Politico.

In an April debate hosted by CBS News California, Becerra said the next governor needed to act as if the affordability crisis were a “break-glass moment.” The Democrat said he would declare a state of emergency related to high prices, summon the insurance commissioner and industry representatives to his office to urge them to freeze rates, and threaten an investigation if they failed to do so.

“I’d be willing to go to court to tell you that I could call that freeze,” Becerra said in an exchange with reporter Julie Watts.

Lobbyist and state constitutional expert Chris Micheli said rate freezes would almost certainly require sign-off from other bodies or officials: the state utility commission in the case of the utility freeze and the newly elected insurance commissioner, Jane Kim, in the case of home insurance rates. Micheli said both efforts, especially the insurance push, could run into legal and practical hurdles.

In a statement, Kim said she didn’t run on a rate freeze and hadn’t discussed the idea with Becerra.

“But I will explore every idea and leverage every tool necessary to make insurance affordable and available, including freezing rates after a claim is filed so that no homeowner pays a penalty for using the service they paid for,” Kim said.

Becerra will come into office at a decisive moment for insurers, utilities and consumers who’ve faced mounting costs.

Both industries have faced upheaval caused by wildfires. Home insurers say they’ve slowly returned to California under rules designed to stabilize the market. Utilities have lobbied the Legislature to rewrite rules on liability for wildfires caused by their equipment, arguing those costs represent a threat to their long-term financial health.

Consumer Watchdog President Jamie Court, whose organization often finds itself at odds with both industries, argued Becerra’s proposed rate freeze could function as a “time-out” to address what he described as industry-friendly regulators. Court also described the policy as a signal PG&E’s spending in the governor’s race didn’t sway Becerra.

“You don’t call for a rate freeze if you’re pay-to-play guy,” Court said.

So far, Becerra is keeping his plans close to his chest. Neither Court nor industry representatives from the California Municipal Utilities Association or the Personal Insurance Federation of California said they’d spoken to the governor-elect or his team.

CMUA spokesperson Matt Williams said they “look forward to discussing this and other proposals with his administration.”

PG&E spokesperson Mike Gazda said the company shares Becerra’s “commitment to making energy more affordable for Californians” and argued that “the most urgent need to lower costs for customers and enable continued investment in the energy system is wildfire liability reform.”

PIFC Vice President Seren Taylor said the concept of the rate freeze “has an obvious and predictable outcome”: incentivizing insurers to leave California’s risky market.

Former Insurance Commissioner Dave Jones took a different tack. He argued Becerra could address affordability concerns by advancing legislation that would require insurers to factor in “risk-reduction investments” — mitigation measures designed to reduce the risk of natural disasters on homes — when pricing, writing or renewing a policy.

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