California’s energy bills are on the rise

California consumers have seen their electric bills rise in recent years and double in the past decade as utilities invest more in wildfire prevention and transmission lines to cope with growing renewable energy production.

As these utilities invest billions of US dollars to make the grid more resilient, they pass the higher costs on to consumers.

So, Californiarnia now has the second highest average electricity bill in the United States, second only to Hawaii.

“Unsustainable” value.

California is looking to rapidly move away from fossil fuels and make its grid more resilient, but these efforts show the other side of grid greening — power generation costs may be falling, but transmission and distribution costs are rising, which leads to higher expenses. from utilities.

Those increased costs are passed on to consumers by investor-owned utilities Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric. As a result, California’s electricity bills have risen so much in recent years that in some places the energy bill exceeds the cost of rent, The Wall Street Journal rEPORTS in a featured article.

The bill increase was “unbearable,” according to the office of the consumer advocate at California’s utility regulator.

In the latest electricity tariffs from Q2 2024 Report Last month, the Public Advocates Office tracked residential electric rate changes from Pacific Gas and Electric (PG&E), San Diego Gas & Electric (SDG&E) and Southern California Edison (SCE) through July 1, 2024.

The report found that in recent years, California’s electric bills have generally risen due to higher electricity use from things like air conditioning and overall higher electricity prices.

Since January 2014, average residential rates for PG&E’s service area have increased 110%, SCE’s have increased 90%, and SDG&E’s rates have increased 82%.

The main drivers of statewide rate increases were investments in fire mitigation, investments in transmission and distribution and rooftop solar incentives, or so-called net metering, the Public Advocates Office said.

Overall, residential electricity rates have risen substantially since 2014, outpacing inflation, he noted.

It might come as no surprise then that nearly 1 in 5 households are behind on their energy bills, according to the bureau. A total of 18.4% of customers of the three investor-owned utilities are in arrears on their energy bills.

Changes in electricity tariffs

This year, California changed the way utilities charge for electricity and is moving from net energy metering to net billing rates for residential solar projects. These regulatory changes have affected residential solar installations and are set to change the way energy bills are formed starting next year.

California’s net billing rate move dragged down the total US residential solar market, which in Q2 2024 was the lowest since Q1 2022 at 1.3 GWdc, reflecting a 25% year-over-year decline per annum and 18% quarterly. -over a quarter.

“While the slowdowns are occurring nationally, these declines have been heavily influenced by California, where quarterly installations have shrunk over the past two quarters as NEM 2.0 projects are built and the state transitions to the net billing rate,” said the Solar Energy Industries Association (SEIA). ) said in its latest quarter report.

In another significant change, California utilities will charge all customers a flat monthly fee of up to $24.15 starting next year or 2026, while reducing the fees charged per kilowatt of electricity used.

California Public Utilities Commission (CPUC) say that the new billing structure “reduces overall electricity bills, on average, for lower-income households and those living in regions most affected by extreme weather events, while accelerating California’s clean energy transition, making electrification more accessible for all”.

The electricity usage rate will be reduced by 5 to 7 cents per kilowatt-hour for all residential customers, making it more affordable for everyone to electrify their homes and vehicles, regardless of income or location, as the price of charging an electric vehicle or the operation of the heat pump is lower.

However, critics of the new billing structure said it would hurt customers who live in small homes and have relatively low electricity consumption, as the lower rate per kWh would not offset the new flat rate.

It remains to be seen how the new billing structure will affect California customers and whether it will lead to the expected mass electrification of homes.

A total of 78% of Americans they are worried on rising energy bills, an exclusive CNET Money survey showed. About 80 percent of U.S. adults across all regions, including the Northwest, Midwest, South and West, said their finances have been affected by rising home energy costs, according to the study. study.

California is the leader in solar and battery installations in the US, but the cost of bringing this energy production to consumers has risen along with the need to expand, modernize and protect the electric grid.

By Tsvetana Paraskova for Oilprice.com

More top reads from Oilprice.com