I know as I type this, that the significance of it will be lost on most of you, but there is actually a physics argument in favor of California's pricing model.

It's a well known problem in electrical engineering that the simple, residential electric meters have limitations. They do not have the expensive circuitry necessary to perform the phase difference calculations to determine true reactive power consumption. Rather, they use assumptions to do a simpler calculation to determine apparent power.

Now, there's something you have to understand about the electrical grid:

AC power is divided into two complex components: real power and reactive power. An ideal resistor consumes only real power, and an ideal inductor consumes only reactive power.

It is MUCH more expensive to deliver reactive power than it is to deliver real power. Like direct current, reactive power can only be delivered a few miles, meaning in most metros it has to be produced in-situ using capacitor banks at transformer stations. Which are expensive, maintenance intensive, and prone to exploding. A generating plant may cost half a billion dollars to build and millions to operate, but utility scale capacitors have to be deployed and replaced in huge numbers. Never underestimate multiplication.

Since the grid was devised, the largest change in residential energy consumption patterns has been air conditioning. A/C units consume obscene amounts of reactive power to drive their compressors and fans.

Now, this consumption is measured by residential electrical metering units because it shows up in apparent power. The hucksters selling capacitors claiming they'll make your power meter stop are just that; the meters measure apparent power, the capacitor won't make them stop counting. All adding capacitors at your house does is make the power company's life easier and make your house a fire hazard.

BUT, the meters don't have the capacity to BILL customers differently based on their power factor (that is, the balance of resistive vs inductive load).

And since highly inductive loads are more expensive to meet than resistive loads, this is something the power companies sort of want to do.

But they can't, because the metering technology to do it is expensive. It makes sense to use it for massive industrial customers. It's not practical to do it for residential customers.

So the current electrical billing system in California (that is, the old system) was already bad, because the wealthiest people have the highest load factors (something which the meters couldn't accurately bill).