California Utility Rates, Already Close to Double the National Average, Poised for Further Increases

On December 19, regulators from California’s Public Utility Commission authorized rate increases for three of the state’s largest utility companies, with consumers facing higher bills starting next year, amid costs that are nearly double the national average.

The commission approved the fifth and sixth rate hikes for Pacific Gas and Electric (PG&E), the largest energy provider in California serving nearly 16 million residents.

In the upcoming year, ratepayers will repay the utility company $723 million to cover the operational expenses of the Diablo Canyon nuclear power plant, along with nearly $376 million related to vegetation management completed in 2020.

The request for this rate increase was made after PG&E spent more on tree clearing and transmission line protection than the amount approved by the commissioners in earlier hearings. However, regulators noted during the meeting that the extraordinary circumstances of 2020 justified the overspending.

Mark Toney, executive director of The Utility Reform Network and an advocate for energy policy reform, expressed that utility companies frequently utilize memorandum accounts established by regulators to exceed approved spending, knowing they can subsequently request another rate increase.

“They overspend, that’s why PG&E has such high rates,” Toney shared with The Epoch Times.

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Toney emphasized that increased public outreach to state representatives can expedite the search for solutions. “Make calls to CPUC meetings, attend in-person hearings, and contact your assemblyman, state senator, and the governor’s office repeatedly. Every time your bill arrives, they need to be aware of the concern, and every call makes a difference. We want electricity bill concerns to outweigh all other issues combined,” Toney urged.

‘Out of Control’

Lawmakers from both political parties have frequently expressed the frustrations of constituents who are seeking relief from excessively high utility rates in commission hearings throughout the past year.

This bill would grant Californians $2,500 rebates and suspend state taxes and fees on gasoline and electricity for 180 days if state prices surpass the national average by 10% or greater.

“The reason for this is that politicians will not address the issue until it affects their wallets,” DeMaio explained to The Epoch Times. “Once that happens, they will quickly resolve the problem overnight.”

He criticized unelected bureaucrats, who he claims are avoiding accountability for their roles in the current situation.

“The CPUC is completely out of control,” DeMaio asserted. “They are immersed in radical agendas that impose political views on all consumers.”

He indicated that many expenses included in rate prices arise from legislative mandates designed to fulfill state climate goals, rather than from the utility companies themselves. “Costs will only continue to rise until we compel politicians to take responsibility for what they’ve contributed to,” DeMaio stated. “They’ve created a situation that has spiraled out of control.”

Living Without Heat

Several commissioners addressed the challenge of reconciling the interests of utility companies with those of ratepayers during the meeting.

Alice Reynolds, the utility commission president, acknowledged the difficulty posed by “decarbonization and rising costs” in her opening remarks.

Numerous public commenters passionately urged the commission to reject the rate increases.

Several highlighted PG&E’s reported billions in recent profits, including $2.24 billion in 2023, contending that shareholders’ returns suffice and no further rate hikes are warranted.

Many shared personal accounts of how escalating utility costs have affected their lives, with some fixed-income individuals stating they could not afford heat during winter.

A small business owner from Northern California reported that his electricity bill matched all other operational costs, leading him to lay off his sole employee due to unaffordable expenses.

“It’s absurd,” Tyler Frazier told the commission. “You’re not advocating for the people of California.”

Afterward, one commissioner acknowledged the frustration ratepayers are feeling. “I understand the public’s irritation regarding PG&E’s rate hikes and get the urge to penalize a utility for its past errors,” commissioner John Reynolds noted. “Yet, we need utilities to respond effectively in emergencies, and the costs sanctioned here are reasonable actions to mitigate risks.”

He explained that costs are influenced by a range of factors, including policy directives, infrastructure, and wildfire threats.

Another commissioner raised concerns regarding the extent of overspending, warning against sanctioning subsequent rate increases to cover a “failure to manage costs.”

“By continuing to authorize these expenses, we are essentially shielding PG&E’s shareholders from these risks at the expense of ratepayers,” commissioner Darcie Houck observed. “We are facing an unprecedented affordability crisis in California, and placing this burden on ratepayers is a significant factor in this crisis.”

While she expressed a preference for a smaller rate increase, she ultimately voted in favor of the proposal.

More Costly Than Other States

Averaged statewide, Californians pay roughly 31 cents per kilowatt hour, compared to the national average of 16.9 cents, according to data from the U.S. Energy Information Administration.

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

Customers of investor-owned utilities, including PG&E and others, face much higher rates—averaging nearly 40 cents per kilowatt hour and peaking at 61 cents per kilowatt hour during high-demand periods.

Utility costs in California have surged by nearly 45% compared to about 30% nationally since 2020.