California Utility Rates, Already Nearly Twice the National Average, Set to Increase

Utility workers make repairs to electrical wires in Guerneville, Calif., on Jan. 9, 2023. Justin Sullivan/Getty Images

Regulators with California’s Public Utility Commission approved rate hikes for three of the largest utility companies in the state on Dec. 19, with higher prices expected starting next year for ratepayers who already see bills that are almost double the national average.

The utility commission granted Pacific Gas and Electric (PG&E)—the largest energy provider in the state supplying nearly 16 million Californians—its fifth and sixth rate hikes of 2024.

Over the next year, ratepayers will reimburse the utility giant $723 million to pay for operating the Diablo Canyon nuclear power plant and nearly $376 million for vegetation management performed in 2020.

A rate increase request was filed after the company spent more clearing trees and protecting transmission lines than commissioners approved in prior hearings, but regulators said during the meeting that the unique circumstances of 2020 made the lack of compliance understandable.

One consumer advocate specializing in energy policy reform said the utility companies routinely use memorandum accounts set up by regulators to spend more than approved, knowing that they can later request another rate increase.

“They overspend, that’s why PG&E has such high rates,” Mark Toney, executive director of The Utility Reform Network, told The Epoch Times.

He said the more people that reach out and express their concerns to state representatives, the sooner a solution will arise.

“Call into the CPUC meetings, show up in person when they have in-person hearings, call your assemblyman, call your state senator, call the governor’s office, over and over again, call them ... every time you get your bill,” Toney said. “They need to hear, and it’s making a difference. We want there to be more calls on electricity bills than every other issue combined.”

‘Out of Control’

State lawmakers from both parties spoke out repeatedly in commission hearings over the past year about calls from constituents asking for legislative aide to mitigate skyrocketing utility rates.

Newly elected Republican Assemblyman Carl DeMaio is prioritizing the issue with the introduction of Assembly Bill 23, also known as the Cost of Living Reduction Act.

The bill would provide Californians with $2,500 rebates and suspend state taxes and fees on gasoline and electricity for 180 days if California’s prices exceed the national average by 10 percent or more.

“The reason why I’m doing that is the politicians will not fix this problem until it actually comes out of their pocket,” DeMaio told The Epoch Times. “When that happens, they’ll literally fix the problem overnight.”

He said unelected bureaucrats appointed by politicians are contributing to the dilemma and avoiding responsibility for their actions.

“The CPUC is completely out of control,” DeMaio told The Epoch Times. “They’re focused on something radical, and that is imposing a political agenda on all consumers.”

Many of the costs included in rate prices are created by legislative mandates meant to achieve state climate agendas, not the utility companies, he said.

“The costs are only going to continue to increase until we force the politicians to be accountable for what they’ve created,” DeMaio said. “They’ve created a monster.”

Living Without Heat

During the meeting, multiple commissioners noted the formidable task of balancing the interests of utility companies and ratepayers.

Alice Reynolds, president of the utility commission, addressed the “challenge of decarbonization and rising costs” during opening remarks.

Dozens of public commenters passionately asked the commission to deny the rate increases.

Several pointed to PG&E’s billions of dollars in profits reported in recent years, including $2.24 billion in 2023, and suggested shareholders’ rate of return is sufficient and that no further rate hikes are needed.

Many told of the financial strain put on them by rising utility costs. Some on fixed incomes said they are living without heat in the winter because they can’t afford it.

A Northern California-based small business owner said his electricity bill equals all of his other costs, and the prices are so high he was forced to lay off his only employee.

“It’s insane,” Tyler Frazier told the commission. “You’re not looking out for the people of California.”

One commissioner later recognized the aggravation some ratepayers are experiencing.

“I can understand the public’s frustration with PG&E’s rate increases, and I get the impulse to punish a utility for its past failings,” commissioner John Reynolds said. “But we need utilities to take action in an emergency situation, and the costs approved here represent reasonable actions to reduce risk.”

He said costs are driven by a variety of factors, including policy mandates, infrastructure, and wildfire risk.

A colleague on the dais questioned the level of overspending and cautioned against allowing for subsequent rate increases to cover a “failure to control costs.”

“In continuing to approve these costs, we shield PG&E’s shareholders from these risks at ratepayers expense,” commissioner Darcie Houck said. “We’re in an unprecedented affordability crisis in California, and asking ratepayers to share this burden is a major part of the ... crisis.”

Though saying a smaller rate increase was preferable, she ultimately voted for the proposal.

Rate increases were also approved for customers of San Diego Gas and Electric and Southern California Gas and Electric. Ratepayers can expect spikes of approximately 3.5 percent starting in 2025.

More Costly Than Other States

Averaged across the state, Californians pay about 31 cents per kilowatt hour compared with the 16.9 cent national average, according to data from the U.S. Energy Information Administration.

Residents of Utah, Louisiana, and Arkansas pay the lowest utility prices, averaging less than 12 cents per kilowatt hour.

Customers of investor-owned utilities, including PG&E and others, pay higher rates—averaging nearly 40 cents per kilowatt hour and spiking to 61 cents per kilowatt hour at peak times.

Municipal utility districts, including in Sacramento and neighboring Roseville, among others, offer significantly lower rates of between 13 and 20 cents per kilowatt hour, depending on the time of year.

The price of energy statewide continues to grow at a faster pace than national averages, while rent and consumer goods are lagging, according to data from the nonpartisan Legislative Analyst’s Office.

Utility costs in the Golden State grew by nearly 45 percent compared with about 30 percent nationally since 2020.