What you can do about California’s high electricity prices and the reasons why

In this article, we will discuss What you can do about California’s high electricity prices and the reasons why. California’s average monthly residential electricity cost is projected to be $164 in 2023, more than 22% than the $134 national average.

Because of significant rate hikes authorised by the California Public Utilities Commission (CPUC), Californians’ electricity costs have never been higher. Customers of California’s top three investor-owned utilities, San Diego Gas & Electric (SDG&E), Southern California Edison (SCE), and Pacific Gas & Electric (PG&E), regularly pay amounts that are significantly higher than the state’s average per kWh price.

What you can do about California’s high electricity prices and the reasons why

Your bill changes depending on your energy provider, the type of house you reside in, and how much energy you consume. As an illustration, SDG&E costs significantly more for power than SCE or PG&E. Additionally, those who live in single-family houses consume substantially more power than those who reside in apartment buildings, and those who use exclusively electric appliances consume more than those who use exclusively gas appliances.

Below, we’ll go through all these variations and explain how you may save money by becoming more energy-efficient, switching to a Time of Use rate plan, and, of course, installing solar panels on your house. You’ve come to the correct place if you’ve been tearing out your hair over California’s exorbitant electricity prices.

Key Points

• Based on a use of 623 kilowatt-hours per month and an average residential rate of 26.4 cents per kilowatt-hour, California’s average electricity bill is $164.
• Depending on which utility company serves you and the type of property you reside in, your average California power cost will vary.
• Depending on their utility provider, single-family homeowners in California typically pay between $148 and $446 in monthly utility bills.
• Low-income assistance programmes, Time of Use charges, and installing solar panels on your house are just a few options for lowering your California electricity bills.
• Californians who install solar panels can save thousands of dollars annually, recouping the initial cost of their investment in just 5 to 6 years, and benefiting from decades of virtually free solar energy.

In this article, we will discuss What you can do about California’s high electricity prices and the reasons why.

California power bills, broken down by utility and housing type

Each California utility has its own set of rates based on the unique mix of energy sources it uses and the total cost of serving its customers. As a result, residents in some areas pay significantly more per kWh than others. Customers of SDG&E pay greater prices than customers of SCE, despite the fact that the utilities serve neighbouring areas in some places.

People’s energy use varies greatly depending on the type of home they reside in.

Electricity bills for single-family detached homes on average

The residents of a single-family detached home in California use an average of 10,500 kWh annually, according to Genability, a utility rate database that supplies information for our solar savings calculator. That amounts to 875 kWh every month, which is sufficient for certain utilities to charge their clients a marginally higher price per kWh because they use more energy than the typical customer.

The variations for each utility are broken down as follows:

California single-family detached home average monthly bill:

What do those typical bills look like, aside than making everyone in the state want to go to Sacramento or Los Angeles? Although everyone in California still pays more than the national average of $0.15/kWh, as seen in the charts above, SDG&E customers are paying a LOT for electricity.

Apartment power usage costs on average

Less than half the amount used by single-family homes, residents of apartment complexes with more than five units use just 5,000 kWh annually on average.

That is logical. Apartments are more energy-efficient since they are typically smaller and frequently share walls, ceilings, and floors with other dwellings, which results in significantly lower heating and cooling requirements. Apartment residents also profit from tiered rate schemes utilised by the majority of Californian utilities because they have lower average costs per kWh if they consume less energy.

The following table shows typical flat monthly expenses:

California single-family flat average monthly cost:

In this article, we will discuss What you can do about California’s high electricity prices and the reasons why.

While consumers of the large investor-owned utilities pay more, typical utility bills for apartments in Sacramento and Los Angeles supplied by municipal utilities are cheaper, similar to single-family houses.

Costs of electricity have changed over time

Over the last 25 years, the average rate of rise in energy rates in the United States has been roughly 2% each year. Unfortunately, most California residents have seen significantly faster increases in power rates. The average annual growth rate for all California utilities over the past ten years has been higher than 7.7%.

Here’s a table that shows the average growth rates for customers of the five major California utilities we’re looking at over the last 10 years:

There are several reasons for these rapid increases. Two of the most significant are significant increases in the cost of natural gas used by power plants and rising expenses connected with grid maintenance. The cost of operating the grid has risen dramatically as companies reinforce their infrastructure to avoid or repair damage caused by windstorms and wildfires. Regrettably, some California utilities have permitted the costs of the wildfires to be passed on to ratepayers.

In this article, we will discuss What you can do about California’s high electricity prices and the reasons why.

What will the future hold for electricity prices?

In the long run, as we indicated above, the cost of power in the United States has a tendency to rise by about 2% annually; but, in recent years, the cost of electricity in California has climbed significantly more than that. Does that imply that California’s utilities will reduce the rate hikes they want and that things will eventually balance out? No chance.

Both PG&E and SDG&E propose double-digit rate hikes over the next few years in their current rate cases. For some California residents, premiums might rise by between 32% and 50% between 2022 and 2026, according to estimates. By the second half of the decade, homeowners may face average monthly costs of close to $500.

How to Save Money on Your California Electric Bill

So, what can be done to mitigate the effects of rising energy bills? In California, there are a few tried-and-true strategies:

• Invest in energy efficiency.
• Sign up for income-based discount rates.
• Change to a Time of Use pricing plan and move your energy consumption to off-peak hours.
• Install solar panels and begin saving money as soon as they are fully connected.

Here’s some background on each of those strategies:

Energy efficiency

It shouldn’t come as a surprise that the first recommendation for energy conservation is to simply use less electricity. You can significantly lower your monthly energy costs by investing in energy-efficient appliances and equipment. Add more insulation to your walls, floors, and attic. Replace any ineffective light bulbs with new LED bulbs. Switch to a smart thermostat that can manage your HVAC appliances automatically. Opt for a heat pump water heater.

The Inflation Reduction Act (IRA) offers tax credits and rebates ranging from 50% to 100% of the cost (depending on income) to help people replace outdated, inefficient appliances with new ones. Keep a watch on Rewiring America for further details since state governments are still developing several of the IRA-funded programmes.

In this article, we will discuss What you can do about California’s high electricity prices and the reasons why.

Income-qualified savings programs

California Alternate Rates for Energy (CARE) and Family Electric Rate Assistance Programme (FERA) are the two primary income-based programmes now available to assist Californians in reducing their utility rates. These programmes are accessible to customers of PG&E, SCE, SDG&E, SoCalGas, Alpine National Gas, Bear Valley Elect, PacifiCorp, Liberty Utilities, Southwest Gas, and West Coast Gas.

For households with incomes below 200% of the Federal Poverty Guidelines, the CARE programme offers savings of between 20 and 35% off energy and gas costs. Families whose incomes fall between 200% and 250% of the CARE standards are eligible for FERA coverage, which provides 18% power bill savings.

Fortunately, the CPUC provides a webpage with additional details on the programmes, their income thresholds based on family size, and links to each of the companies’ individual programmes websites.

LADWP clients can apply for the Low Income Home Energy Assistance Programme (LIHEAP), which has comparable income restrictions. The Energy Assistance Programme Rate (EAPR) is a unique programme that SMUD delivers. If none of the aforementioned programmes apply to you, ask your power company what options they have.

In this article, we will discuss What you can do about California’s high electricity prices and the reasons why.

Time of Use rate plans

Every utility listed in the tables above offers Time of Use rate plans, wherein electricity is more expensive when there is a high demand on the grid (such as in the evening when people come home from work to use appliances and air conditioning) and less expensive when there is a low demand (typically overnight and midday).

Although we won’t go into all the details of these plans here, we will offer one more comparison table. The table below illustrates the potential savings from moving the entire 875 kWh monthly usage for a single-family detached house to off-peak hours. This isn’t an accurate reflection of the potential savings offered by a TOU plan, but it’s a useful method to evaluate the plans of various companies.

In this article, we will discuss What you can do about California’s high electricity prices and the reasons why.

According to the aforementioned examples, switching to a TOU plan isn’t always advantageous for LADWP or PG&E customers, but it can result in significant financial savings for SCE and SDG&E consumers. The people who are willing to delay using large appliances like dishwashers and clothes dryers after 9 PM or to leave electric vehicles charging overnight tend to find that these arrangements work best for them.

Due to the fact that it only provides TOU prices to its residential clients, SMUD is not included in the chart above. There have been hints that all California utilities will eventually transition to mandated TOU charges. In order to go solar in California today, you must enrol in a TOU tariff.

In this article, we will discuss What you can do about California’s high electricity prices and the reasons why.

Installation of solar panels

Speaking of going solar, it’s the best way to lower your energy bills in California (we may be a little biassed, but we swear it’s real). Unfortunately, this only functions if you own your home, but it actually functions in California.

With a five- to six-year payback period and decades of sustainable energy beyond that, solar panels in California are a great investment in your future. Going solar not only helps you save money now, but it also safeguards you from the types of dramatic rises in electricity rates that we previously covered.

In this article, we will discuss What you can do about California’s high electricity prices and the reasons why.

However, beginning in April 2023, California will change the regulations governing how solar consumers are invoiced.

We won’t go into great depth here to save you time. Start by referring to our solar panel cost calculator if you’re considering going solar. The calculator will produce an estimate of your roof’s solar production, the potential savings taking into account any solar incentives that might be available, and the precise rate structures from Genability used to generate the estimates in this article after only entering your ZIP code and last month’s electricity bill.

In this article, we will discuss What you can do about California’s high electricity prices and the reasons why.