Electricity rates in California are among the highest in the nation and growing faster than other states.
Not only are electricity rates in California among the highest in the nation, they’re also growing faster than in other states, according to a Jan. 7 report from the state’s Legislative Analyst’s Office (LAO).
Major factors driving California’s high and growing residential electricity rates include wildfire-related costs and “the state’s ambitious greenhouse gas (GHG) reduction programs and policies,” said the nonpartisan government agency.
About three-quarters of statewide electricity services in California are provided by three large investor-owned utilities (IOUs): namely Pacific Gas and Electric (PG&E), Southern California Edison (SCE), and San Diego Gas and Electric (SDG&E). Their rate increases significantly drive the state’s high prices.
In the past 10 years, from January 2014 to October 2024, the electricity rate increases of these three large companies ranged from 83 to 118 percent, more than double the national average of 34 percent, according to the most recent quarterly report from the California Public Utilities Commission.
Wildfire-Related Costs
The portion of wildfire-related costs in electricity rates has increased in recent years, making up between 7 to 13 percent of a regular electricity bill, LAO’s report said. California’s high wildfire risk and its wildfire-related policies are behind the increases.
Utility service providers are liable for the costs of wildfires caused by their infrastructure regardless of whether they are found to have acted negligently. As California wildfire risks have increased in recent years, large IOU companies have “spent unprecedented amounts” on wildfire mitigation, said the report.
These wildfire liability and mitigation costs are often passed along to ratepayers.
In addition, IOUs and their ratepayers also pay for wildfire insurance that contributes to the California Wildfire Fund, which helps cover the costs of certain utility-sparked wildfire damages, LAO’s report noted.
Some of the largest and most destructive wildfires in California’s history include the 2018 Camp fire, the 2019 Kincade fire, the 2021 Dixie fire, in northern California in PG&E’s territory, the 2017 Thomas fire, 2018 Woolsey fire, in Southern California in SCE territory, and the 2007 Witch fire in San Diego County in SDG&E territory. These fires were all caused by utilities’ power lines or equipment.
By Jane Yang
