Report finds California residential electricity rates increasing faster than inflation
SACRAMENTO - California residents are paying more for electricity than practically any other state, according to a Legislative Analyst's Office (LAO) report.
The report said California has the highest residential electricity rates across the country, just behind Hawaii. It found that residential electricity rates in the Golden State are increasing at a faster rate than inflation.
The driving factors listed by the report are significant and increasing wildfire‑related costs, the state's ambitious greenhouse gas reduction programs and policies, and differences in utility operational structures and services territories.
James Bushnell, a professor of economics at UC Davis, said the findings do not come as a surprise. He said that as more people go solar, it leaves utility companies charging their customers more so they can upkeep the infrastructure such as transformers and wires.
"When you collect that money for the infrastructure through a monthly fixed charge, that allows the utility to lower the price of the electricity itself," Bushnell said.
SMUD has a monthly fixed charge of about $24. PG&E is implementing about the same amount a month for most customers starting in 2026.
"We got to have limits on increases, limits on overspending and limits on corporate profits so that everyday customers can get some relief," said Mark Toney, the executive director of The Utility Reform Network.
Toney thinks there needs to be caps on nonfixed increases for investor-owned utilities like PG&E.
The utility giant raised rates for customers six times in 2024, but PG&E told us its residential electric bills are about 4% lower today than they were this time last year.
Another big concern the LAO report raised is that higher electricity rates may discourage people from wanting to go electric, keeping California from reaching its climate goals.
PG&E gave us this statement in response to the report:
"PG&E is committed to building a safe, reliable, sustainable and climate-resilient energy system at the lowest possible cost for customers. We are delivering on our commitment to stabilize customer bills. PG&E's residential electric bills are about 4% lower today than they were in January 2024, assuming the same usage, and we are working to limit increases over the next two years.
We know many of our customers are impacted by higher costs, including energy bills. We are working to lower costs for customers, including reducing our operating expenses and seeking federal loans and grants to lower our borrowing costs."
SMUD also provided CBS13 this statement:
"At SMUD, we're proud to offer rates that are consistently among the lowest rates in California and are committed to keeping it that way. In fact, we've committed to keeping our rates at or below the rate of inflation and have many rebates, programs and services to help our customers keep their bills low. From our Energy Assistance Program Rate (EAPR) and MEDRate for those who use medical equipment, to flexible billing options — we ensure that we provide our customers the resources they need to manage their bills. From educational resources, electrification and energy efficiency programs, we're keeping our rates low while helping create a sustainable and energy efficient future for our customers and the communities we serve."
