California's electricity rates are almost double the national average, placing the state second highest in the nation for residential power bills, according to a new state report. The report found that electricity costs have been surging at a rapid rate in recent years due to factors including wildfire-related costs and ambitious policies to reduce greenhouse emissions. The report also found that high electricity rates were obstructing the state’s endeavors to meet its climate goals and that those in low-income areas and those who live in extremely hot environments were the ones who were most affected by expensive energy bills.
California's electricity rates are nearly double the national average, placing the state second highest in the nation for residential power bills, according to a new state report. The findings by California’s nonpartisan Legislative Analyst’s Office (LAO) also showed that electricity costs have been surging at a rapid rate in recent years, due to factors including wildfire-related costs and ambitious policies to reduce greenhouse emissions.
The report found that from 2019 to 2023, the power rates for California's three large investor-owned utilities (IOU), which include PG&E, have increased by between 48% and 67%. California's electricity rates have historically been higher than the national average, but the gap has been significantly larger in recent years, outpacing increases in other states, according to state figures. While the cause of the recent Los Angeles fires has not yet been identified, they broke out amid powerful Santa Ana winds, and investigators will likely look into whether fallen power lines ignited flames. Here in Northern California, rates have increased following massive wildfires related to PG&E equipment. Those fires include the deadly 2018 Camp Fire in Butte County and the 2019 Kincade Fire in Sonoma County. 'The magnitude of the damages and risks from utility‑sparked wildfires have increased substantially in recent years,' the report found, noting, 'Correspondingly, IOUs have spent unprecedented amounts in recent years on wildfire mitigation‑related activities to try to reduce the likelihood of future utility‑caused wildfires, with the associated costs often passed along to ratepayers.' The agency also pointed out that both the state, the private utilities, and their ratepayers pay for insurance against impending wildfires, including contributing to the California Wildfire Fund, which helps cover the costs of some utility‑sparked wildfire damages. In another report by the state’s Public Advocates Office issued last year, that agency found that from January 2023 to April 2024, PG&E saw a 117% increase in wildfire-related costs. 'One of the biggest drivers of increased utility rates is the costs associated with wildfires,' the agency said. Those costs include tree trimming and other vegetation management and construction for underground power lines as well as rebuilding infrastructure damaged by wildfires. 'In future years, we anticipate wildfire-related costs to continue to increase as the impacts of climate change, such as drier and hotter weather, contribute to increased wildfire risk,' the Public Advocates Office noted. The Legislative Analyst's Office found California's high residential electricity rates were obstructing the state’s endeavors to meet its climate goals. The LAO noted that those in low-income areas and those who live in extremely hot environments were the ones who were most affected by expensive energy bills and that soaring rates were serving as road-blocks to the implementation of the state's aggressive Greenhouse Gas (GHG) reduction targets. 'California ratepayers not only pay for activities associated with shifting to more renewable sources of electricity, but also bear other costs related to supporting the state’s efforts to meet its GHG targets,' the report said. California has set a goal to cut greenhouse gases by 48% below 1990 levels by 2030, on its way to achieving carbon neutrality by 2045. As part of the plan, Governor Gavin Newsom has moved to require all new car sales be zero-emission by 2035. The soaring costs of energy impede these policies by discouraging many households from making greener decisions as consumers hold off on switching out their older fossil fuel-powered vehicles and appliances for new greener, more energy-efficient products, the report found. 'High electricity rates can discourage households from investing in electrification because they increase the operating costs of electric-powered cars and appliances, making it harder for Californians to justify spending more on typically higher up-front purchase costs for such goods,' the LAO said, adding, 'This dynamic could slow progress on the state’s climate goals.' The findings also suggest that power companies transitioning to renewable resources face costs that are being passed down to their customers. 'While the costs of generating electricity from renewable resources have declined in recent years, this transition still has added costs for ratepayers,' the report explained, adding, 'Renewable sources of electricity often require additional investments in other infrastructure for transmission and reliability, which can be costly.' The LAO said that the current factors of California’s strict climate rules, growing power demand, and increased wildfire-related costs put the state on track to see continual hikes in residential electricity rates. 'To the extent that these factors raise electricity rates, that will increase already high cost burdens on Californians and make meeting the state’s ambitious climate goals through electrification even more difficult,' the agency said. The office said that will put pressure on state lawmakers to find avenues for a delicate balance between battling climate change while keeping costs affordable for its residents. 'In the coming years, the Legislature likely will confront difficult decisions about how to approach electricity rates in order to best support its varied goals,' the report found, 'including balancing the desire to both mitigate and adapt to climate change as well as preserve affordability.
CALIFORNIA ELECTRICITY RATES CLIMATE CHANGE WILDFIRES RENEWABLE ENERGY COST OF LIVING
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