12.8% Utility Rate Increases Confirmed for January 1, 2024
Pacific Gas & Electric Company (PG&E), the largest utility provider in California, has been authorized by the California Public Utilities Commission to increase rates starting January 1, 2024 by 12.8%.
The hike is intended to cover costs for grid safety, reliability, and resilience upgrades, including efforts to reduce wildfire risks. This includes infrastructure projects like undergrounding power lines in high fire-risk areas, pipeline replacements, and increasing electric capacity.
The agricultural sector in California is particularly concerned about the impact of this rate hike. Agricultural and commercial customers usually bear the majority of rate increases, and with PG&E's rates potentially rising up to 45% by 2026, there are worries that this will once again significantly burden the industry.
California's agricultural sector already faces some of the highest electricity rates in the United States, and the proposed increase could make it difficult for growers to compete with those in other states where electricity costs are much lower. Add to that the recent CPUC ruling limiting solar offsets to single meters only from February 2024, and farms and agribusinesses are starting to have their hands tied behind their backs.
PG&E's rate case submission also coincides with the company facing significant new costs related to its role in sparking catastrophic fires in recent years. The company has acknowledged that its equipment may have been responsible for several major fires, leading to substantial financial and legal repercussions. This has raised concerns about the fairness of increasing rates for customers, especially in the agricultural sector, which argues that it acts as a buffer for wildfires but is not compensated for this service.
But PG&E is not the only utility hiking up electricity rates for 2024 and beyond.
Southern California Edison's approved 9% rate increase goes into effect in 2024 with similar rate increases requested for the following years too:
2025: $10.267 billion, a $1.9 billion (23%) increase over 2024 rates
2026: $10.985 billion, a $2.5 billion (30%) increase over 2024 rates
2027: $11.549 billion, a $3.2 billion (38%) increase over 2024 rates
2028: $12.253 billion, a $3.9 billion (45%) increase over 2024 rates
SDG&E, which has increased rates by more than 100% since 2020, is not planning on slowing down either with proposed increases of:
2024: 17.6% increase over 2023 rates
2025: 30% increase over 2023 rates
2026: 42.9% increase over 2023 rates
2027: 52.9% increase over 2023 rates
It goes to show that the more savings opportunities are taken away by utilities and CPUC, the more they are needed.
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