Here’s why. Where the money really goes, who’s making money on it, whether solar is part of the problem, what’s coming in 2027, and the few things you can actually control.
California vs everyone else
Through August 2026, the average California home paid about 33 cents per kilowatt-hour. The national average was about 18 cents. Only Hawaii pays more.
| Average home electricity price, Jan-Aug 2026 | Cents per kWh |
|---|---|
| Hawaii | 46 |
| California | 33 |
| U.S. average | 18 |
Source: U.S. Energy Information Administration, Electric Power Monthly, Table 5.6.B (preliminary 2026 data). California’s number includes LADWP and other city-run electric companies.
And it didn’t happen overnight. Since 2014, home electric rates have gone up 117% at SDG&E, 97% at SCE and 93% at PG&E. Inflation went up about 42% over the same time, according to the CPUC’s Public Advocates Office (Q2 2026 report).
That’s real pain for a lot of families. About 2.4 million homes with the big three, roughly one in five, are behind on their energy bill (Public Advocates Office, May 2026 data).
Where the money goes
The power itself is the smaller part of your rate. Most of your rate pays for the grid, and for keeping that grid from starting fires.
The state’s ratepayer advocate, the Public Advocates Office, names three big reasons rates keep climbing:
- Wildfire costs
- The grid itself (transmission and distribution)
- Rooftop solar credits on the older net metering plans
Let’s take them one at a time.
Reason 1: Wildfires
California’s grid runs through some of the most fire-prone land in the country. When power lines start a fire, the electric utility company can owe billions in damages, and a lot of that cost ends up on your bill.
So you’re paying for two things: past fires, and preventing the next one. Prevention means trimming trees, burying lines, covering wires, adding cameras and buying insurance. None of that is cheap.
Add it all up, and wildfire-related costs for the big three now run more than 7 billion dollars a year (January 2026: about 4.0 billion at PG&E, 2.7 billion at SCE and 0.7 billion at SDG&E, per the Public Advocates Office).
To be fair, nobody wants their neighborhood to burn, and a lot of this work is needed. But it’s a big reason your rate keeps going up.
Reason 2: The grid, and who profits
The second reason is the grid itself: the poles, the wires, the substations, and the long power lines that bring it all in. A lot of that equipment is old. And the state wants to add a lot more for electric cars, heat pumps and big solar farms.
Here’s the part most people don’t know. Your electric utility company doesn’t make its profit selling you electricity. It makes its profit on what it builds.
The state lets the company’s shareholders earn about 10 percent a year on the money they put in. For 2026, the CPUC set that return at 9.98% for PG&E, 10.03% for SCE and 9.93% for SDG&E.
So the more they build, the more they can earn. That’s not a secret. It’s how the system is set up.
Think of a mechanic who earns more the more parts he replaces. You’d probably want a second opinion.
To be fair, the state has to approve every dollar, and consumer groups fight a lot of these requests. But the incentive is there.
Reason 3: Is rooftop solar part of the problem?
As a solar guy, I’m not going to skip this one.
You’ll hear that solar homes push costs onto everyone else. The argument goes like this: on the older net metering plans (NEM 1.0 and 2.0), solar homes get close to full retail price for the power they send back. So those homes pay less toward the grid, and everyone else picks up the difference.
How big is it? It depends who you ask:
| Who | 2024 estimate |
|---|---|
| Public Advocates Office | about 8.5 billion dollars shifted |
| UC Berkeley economist Severin Borenstein | about 4 billion dollars |
| A solar industry study | a net benefit to the grid |
Here’s my honest take. The older plans did shift some costs. That’s exactly why the state cut export credits with NEM 3.0. New solar today gets about 5 to 8 cents per kWh for what it sends back. (Here’s how NEM 1.0, 2.0 and 3.0 compare.)
But here’s what that argument leaves out. Wildfire and grid costs were climbing the whole time. Rooftop solar didn’t trim those trees or bury those power lines.
So here’s how I explain it to homeowners. When some homes make their own power, more of the grid’s cost lands on everyone else. One way or another, you’re going to help pay for the grid. The question is whether you’re making some of your own power while you do.
Are AI data centers raising your electric bill?
Prices are going up all over the country right now. In fact, from January to August 2026, the national average rose faster than California’s: about 6.8% vs 4.7% compared with the same months of 2025 (EIA).
One big reason in other parts of the country is data centers, the buildings that run AI. In the Mid-Atlantic grid (PJM, 13 states plus DC), the grid’s independent market monitor estimated that data centers drove about 63% of a big jump in capacity prices for 2025/26.
So is AI running up your electric bill? I asked it. It said no. Which is exactly what it would say.
Here in California, it’s still an open question. PG&E says new data centers could actually lower rates over time, by about 1 to 2 percent per gigawatt of new load, because grid costs get spread over a lot more power. That’s the company’s own projection. Consumer advocates say fine, as long as regular customers don’t pay for the equipment those data centers need. I’d keep an eye on this one.
Why LADWP costs less
If you’re with LADWP or another city-run electric company, your rate is usually lower. City-run electric companies don’t have shareholders to pay, and they can usually borrow money at lower rates.
LADWP’s standard home rate (R-1A) for October to December 2026 starts at about 27 cents per kWh, and it’s about 33 cents once you use more, plus a monthly charge.
But it’s not cheap anymore either. That’s up about 9 to 11 percent from the same months last year (about 24.6 and 30.5 cents).
What’s coming in 2027
Here’s what’s already on the table:
| What | Status |
|---|---|
| PG&E 2027 rate case | PG&E asked to collect about 8% more revenue in 2027. The CPUC is expected to decide in 2027. |
| Public Advocates Office estimate for PG&E | The average PG&E bill could rise about 16% in 2027 if all of PG&E’s requests are approved. That’s an estimate, not a decision. |
| SCE and the Eaton fire | Those costs are still being worked out. Nobody knows that number yet. |
| Wildfire Fund charge (all three) | Extended by state law (SB 254, 2025). It was set to end in 2035. Now it runs through 2045. |
To be fair, there’s some good news too. That same law lets the state help pay for new power lines with cheaper public money, which could keep some future costs down.
But nobody’s promising lower bills. I wouldn’t plan on it.
What you can actually control
Not much about the rates. But a few things about your bill:
- Check your rate plan. The wrong plan can cost you a lot.
- Move your big loads out of 4 to 9 PM when you can. That’s the most expensive time of day.
- Ask about CARE or FERA if your income qualifies. They’re discount programs.
- Make some of your own power. That’s the only one that takes you partly out of the rate game. (Is solar worth it for your home?)
