We start to twitch when family members run the dishwasher or throw on a load of laundry at night. At night, after the sun has set; that’s when our time-of-use electricity rates peak!
With temperatures exceeding 100 degrees in much of Southern California, and air conditioners working overtime, the pain of the monthly electric bill can be staggering. Over just the past three years rates rates have skyrocketed 51% for customers of Southern California Edison and Pacific Gas & Electric, while they’ve jumped 20% for customers of San Diego Gas & Electric, according to a new analysis by the Public Advocate (the branch of the California Public Utilities Commission that’s supposed to represent the little guy).
“The bill volatility that comes with these heat waves will be pretty eye-popping. And we’re concerned about that,” said Mike Campbell, Assistant Deputy Director of Energy for the Public Advocates Office.
It’s worse if you gaze back over a full decade. Electric bills have essentially doubled. Edison’s rates are up 90% over 10 years; SDG&E’s are up 82%; and PG&E’s are up, gulp, 110%.
Incomes haven’t doubled over the decade for most of us, so it hurts. Nearly one in five California households is behind in paying the electric bill — more than 2.1 million people, statewide, owing an average of $747 each.
Why are rates so high? The Advocate’s analysis lists three main drivers: The costs of wildfire mitigation; investment in transmission and distribution systems; and subsidies to rooftop solar owners.
In May, the average cost per kilowatt in California was 29.49 cents, the third highest in the nation, according to data from EnergyBot.
Now, that’s up to 34.26 cents, second only to Hawaii’s 45.19 cents.
Edison spokesman Jeff Monford said the company recognizes the need to keep customers’ monthly bills manageable, and is taking action to keep rates as low as it can and ensure customers can get bill assistance if needed. Edison has some free programs it says can help customers save money and energy (details below).
As the Public Advocate pointed out, investments in wildfire prevention and strengthening the grid were big drivers. Since 2018, Edison’s investments have reduced the risk of losses from catastrophic wildfires by as much as 88%, Monford said.
Ouch
It’s important to point out here that electric companies don’t make money by selling electricity. Instead, they make money from the CPUC-set rate of the return on their capital investments; that’s their profit. So there’s a built-in incentive for utilities to spend more money on capital investments than they might need to.
Consider the bear of wildfire mitigation, a prime driver. The quicker and less expensive way for an electric company to harden its system is to use above-ground, insulated poles and wires rather than digging down in the dirt and burying lines. The safety profile is essentially the same, experts say.
But utilities make more money choosing expensive capital projects over cheaper ones. Edison, to its credit, decided to go the insulated overhead route as much as possible, costing some $800,000 a mile. PG&E, however, decided to bury many lines — slower and not measurably safer — costing some $4 million a mile, The Utility Reform Network’s Mark Toney recently told us.
The fault lies squarely with the CPUC, Toney said — the “overly generous” regulator responsible for reviewing and approving increases.
Campbell, of the Public Advocates Office, said the group is working on a raft of reforms, but it will take both Legislative and CPUC action to get it all done.
We should remove irrational incentives for the utilities. Perhaps the state could issue debt to fund major infrastructure projects, tax-free?
We should stop spending money on programs that aren’t cost-effective (many energy efficiency programs sound nice but don’t really do much).
Important policy priorities — say, reducing bills for low-income people and building out electric vehicle charging stations — should be paid for through the state’s general fund or with federal funds already committed to those projects, not by ratepayers.
“When you’re in a hole,” Campbell said, “stop digging.”
The CPUC’s recent decision to separate fixed charges for grid maintenance from the price of electricity itself won’t help until next summer, in Southern California at least, Campbell said. Besides, the fixed charge is not responsible for the bills folks face this summer. Instead, he explained, “it’s hot, and your rate did go up from last year.”
The CPUC’s recent decision to reduce subsidies for new rooftop solar systems — rather than from the vast army of older systems — continues a cost-shift of some $8 billion this year, shouldered by customers who don’t have solar.
“We’ve been saying there’s a rate crisis for years, and something changed in the last 12 months: Legislators are saying ‘We have a rate crisis,’ said Campbell.“It’s going to take new thinking, not, ‘How do we tweak around the edges?’ The amount the utilities collect has to be reduced.”
TURN’s Toney would agree. He’d love to see utilities face a cap in how much they can seek in increases, and new rules that would require utilities to use the least expensive solution when possible. He’d also like to see shareholders pay half of the cost of overruns when utilities overspend. That way it wouldn’t all fall on ratepayers.
“That would reduce costs immediately!” Toney told us. “The sad truth is, companies are more accountable to their shareholders than they are to their ratepayers.”
Risk reduction
Monford said Edison’s investments in transmission and distribution are meant to improve grid reliability and meet customer needs today and in the future. They’re also aimed at ensuring that the grid is ready to support widespread electrification and decarbonization.
Edison has installed some 5,900 miles of covered conductor in areas that are at a high risk for fires, and it expects to add 8,300 miles by the end of 2028. It also plans to complete about 100 miles of undergrounding by 2025 in especially high risk areas, and up to a total of 600 miles by the end of 2028.
Solar costs shifts increased bills for customers without solar by an average of $18 per month, he said (the overall cost shift for Edison customers was $1.8 billion in 2023). The fixed charge, which Edison will launch in late 2025, will provide bill relief for many, especially low-income and customers in hot inland zones (that’s expected to reduce the overall cost shift by about $270 million each year).
There are free programs, with no income limit, to help customers save energy and money, Monford said.
For folks with central A/C who rent or own a single family home (including manufactured and mobile homes), the Residential Direct Install Program and the Energy Savings Assistance Program can provide things like smart thermostats, smart fan controllers (to push cooled air into the home after the A/C unit has finished cycling), attic insulation and ductwork, duct testing and sealing, as well as testing for refrigerant leaks, replenishing refrigerant and repairing leaks where possible.
These optimize air conditioning operation, efficiency and comfort, Monford said. To schedule a free consultation, call (800) 818-4298 or visit https://bit.ly/3Yd8kRQ.
Customers who meet income thresholds may also qualify for the Energy Savings Assistance program, which provides energy-efficient appliances at no or minimal charge. For more information on that, see https://bit.ly/3SpS0cB.
Every little bit helps. Meantime, if you want change at the top, drop a line to your state legislators (find them at https://www.sos.ca.gov/elections/who-are-my-representatives) and the CPUC https://www.cpuc.ca.gov/about-cpuc/contacting-the-puc). They say we get the government we deserve.
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