Pacific Gas and Electric Co. is poised to hit customers with a major hike to monthly bills in January, an increase that comes amid an unprecedented rise in utility rates for Californians over the last decade.
In the last eight years, average monthly residential bills for electricity and gas combined jumped by $86.51 — from $154.52 in January 2016 to $241.03 in January 2023, according to data from PG&E obtained by the Chronicle.
And average bills are about to rise even further — by $25-$31 in January — depending on how state regulators vote Thursday.
Residential rates for electricity in California have far outpaced the rate of inflation as electricity prices have risen to be more than twice the national average in the last 10 years. In its latest quarterly report, the Public Advocates Office at the California Public Utilities Commission said rates rose about 92% for residential customers between January 2014 and September 2023.
“It just keeps going up,” said Jerrie Groves, a 33-year-old single mother in Bakersfield who said her PG&E electricity bill averages about $500 each month. “It is the biggest stress and the highest bill I have.” (Bakersfield is close to the southernmost point of PG&E’s service territory.)
Utility bills are becoming a greater burden for PG&E customers like Groves, who works at a Costco food court and has four children ages 9-14. Groves said she has tried to minimize her family’s electricity use, but with four children, it’s a challenge.
“It doesn’t seem to matter what I try to do, like not run the AC — it’s still super high,” Groves said.
Historically, utility rates generally kept pace with inflation, but that began to shift in 2013, according to the CPUC. And catastrophic wildfires have driven costs even higher for PG&E and its customers since 2021.
PG&E is allowed to recoup certain costs for operating expenses and capital expenditures from its customers, including key wildfire response and prevention projects. So far, some of the biggest wildfire-related expenses passed on to customers have been tree-trimming programs and wildfire liability insurance coverage, according to the CPUC.
PG&E has slashed its vegetation management program as part of the company’s effort to curb costs. But with its new budget, PG&E is preparing to spend billions of dollars to strengthen thousands of miles of power lines in regions where the risk of wildfires is high by either burying power lines or insulating bare wires.
State regulators Thursday will decide how much PG&E can spend on these programs and others.
PG&E spokesperson Lynsey Paulo said the big bump in rates in 2024 should be an anomaly, and PG&E expects to keep future rate increases “at or below” the rate of inflation. The company is trying to reduce costs wherever possible — for example, in 2022, the company cut operating costs by 3%, she said.
“We understand the impact of any rate increase on our customers, and we are committed to completing critical safety and reliability work as cost-efficiently as possible,” Paulo said.
Some California lawmakers worry the rising cost of electricity in California is undermining the state’s effort to phase out natural gas by encouraging greater reliance on electric vehicles and appliances.
State Sen. Josh Becker, D-Menlo Park, said he and others in Sacramento are discussing how the state might intervene to lessen the amount utility customers pay for statewide programs, like transmission line construction and utility subsidies for low-income households. Some money could come from the state’s general fund, for example, or from a bond.
“Proportionally, a small part of our rates is actually distributing and moving energy around — a lot of it is wildfire costs,” said Becker, who chairs the Senate Budget Committee’s Subcommittee on Resources, Environmental Protection and Energy.
The CPUC is also considering how to restructure utility bills for PG&E and the state’s two other investor-owned utilities to add a fixed charge while reducing how much people pay per unit of electricity by about one-third. The fixed charge would be less for low-income households and cover essential costs like infrastructure maintenance and improvements. A decision is expected next year.
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Barbara Terrio is a seasoned business journalist, delving into the world of finance, startups, and entrepreneurship. With a knack for demystifying complex economic trends, she helps readers navigate the business landscape. Outside of her reporting, Barbara is an advocate for financial literacy and enjoys mentoring aspiring entrepreneurs.
