From 2019 to 2023, the average electricity rate for California went up by almost 50 percent.
The state has the second highest electricity rates in the nation, and according to a new report, wildfire risk and environmental programs factor into those costs.
The California Legislative Analyst's Office released the report Tuesday, which cited wildfire-related costs as a leading cause behind high electricity rates.
Most of California, including the North State, is served by Investor-Owned Utilities (IOUs) like PG&E. These are private companies that are financially responsible to their shareholders. That means their primary goal is to earn profits rather than provide affordable services.
Due to high fire risk in California, utility companies pay for wildfire mitigation to reduce liability of a utility-caused fire. According to the report, however, those costs are usually passed down to customers.
Additionally, the report states that programs aiming to reduce greenhouse gas emissions are funded through ratepayers served through IOUs. That includes the Renewable Portfolio Standard, which requires a certain percentage of electricity sold by utility companies to be generated by renewable sources.
The analyst's office says electricity rates could impede on their climate goals, especially with affordability being a topic in the 2025 legislative session.
In a written statement released in response to the report, freshman Sen. Susette Martinez Valladares, R-Valencia, said, “The affordability crisis in California is out of control. Families in this state pay nearly double in utility bills over those in any other state, pay more for each gallon of gasoline than in any other state, and struggle to find insurance for their homes that cost more than in any other state.”
The report did not make any recommendations but did question whether residents should bear the burden of paying for climate policies.
Currently, PG&E’s average residential rate is around 39 cents per kilowatt-hour. In contrast, customers of Sacramento’s Municipal Utility District, which is not a privately owned corporation, paid around 24 cents per kilowatt-hour.
