Pacific Gas and Electric Company, or PG&E, has once again pleaded to the California Public Utilities Commission (CPUC) for another hike, even as the last increase will only take effect on January 1st, 2024. The utility provider has claimed it needs an additional $2 billion from customers to offset spending on wildfires and other mitigation measures.
The latest filing will not be up for approval until 2024. If approved, it will likely lead to another $50 to $60 increase in utility bills for those under California PG&E. This will severely impact the utility provider’s 16 million customers, many of whom are homeowners.
The Context
Earlier this year, PG&E requested a 17.9% rate increase for “executive expenses.” The utility provider stated that this increase in energy rates would be invested in placing electricity lines underground and reinforcing them with fireproof material.
In 2021, the company was held responsible for the Dixie Fire that burned down 960,000 acres of land and caused significant damage to property.
So, the CPUC approved PG&E’s request for a rate increase in November 2023. The commission capped it off at 12.8% instead of what the utility provider requested. CPUC Commissioner John Reynolds hoped the rate increase would help stabilize electricity rates in California and reduce energy bills in the long term.
But with this latest plea in December 2023, PG&E stated that it needs roughly another $2 billion to “stabilize its finances” after already being granted a rate increase to compensate for its expenses.
Since the PG&E rate increase plea for 2024 became public knowledge, it has led to significant distress among customers. Although the matter is currently only in the proposed state, residents are demanding a policy change to prevent even more unwarranted rate increases.
Why Is PG&E’s Sequential Rate Increase Concerning for Homeowners?
Independent research has shown that PG&E’s average electricity rates have increased by 38% from January 2021 to September 2023. For residential customers, the consecutive rate hikes can have several damning consequences. Especially because PG&E will start collecting these additional charges in March 2024.
If you’re a PG&E customer, you will be expected to do the following:
Pay More for the Same Energy Consumption
Californians spend an average of $232 every month on electricity bills. This is 33% higher than the national average of approximately $174. An additional $50 increase in utilities is a significant increase in spending.
Furthermore, residents are not looking at a uniform increase in utility rates across the board. Electricity consumption varies widely by:
- Your rate plan
- Your accommodation (standalone house vs. apartment)
- Number of residents
- The energy efficiency of your appliances
This means PG&E’s rate increase will affect its ratepayers in varying capacities. Some may have to account for less than a double-digit increase in electricity bills. For others, the increase may be well over 10%.
If you think that is unfair, imagine how compounding rate increases will affect fixed-income households!
Make Fewer Savings from NEM
PG&E’s rate increase affects grid-tied solar users, too.
When it came into effect in April 2023, NEM 3.0 lowered the value of the solar energy sent back to the grid by 75%. So, if you’re on NEM 3.0, you will no longer be able to make as much savings. That’s because the rate increase translates into high electricity consumption charges but does not offset it by offering compensatory utility rates.
As you can see, any additional increase in utility rates is a rightful cause of concern for all affected customers. The Utility Reform Network (TURN) might continue to influence regulators to affect change, but favorable outcomes cannot be guaranteed.
It’s also uncertain how long these changes will continue to affect users. As a PG&E consumer, it is more important than ever to prioritize measures for electricity cost savings.
Tackling PG&E’s Rate Increase in California
You cannot control PG&E’s demands. As residential customers, you must reckon with paying more than twice the national average for below-average electricity consumption.
But this does not mean you have to feel helpless and remain at the utility provider’s mercy for a human necessity like electricity.
You can consider the following tips to make sure the rate increase does not have a severe impact on your household:
Invest in an ESS
Solar Energy Storage Systems (ESSs) are extremely useful for saving all the extra power your solar array produces for future use. Instead of sending this energy back to the grid, you can utilize it yourself when your solar panel is not producing power. It maximizes the utility of your solar array and helps you make healthy returns on your initial investment.
There are different varieties of ESSs, but solar batteries often work best for residential setups.
Solar batteries can further increase energy efficiency, help you reduce your utility bills, and provide you with much-needed backup power. Given that California experiences frequent power disruptions due to storms or heat waves, off-the-grid power is undoubtedly a good investment.
You will have to spend around $8,000 to $20,000 on a robust solar battery setup for your home. But it’s a one-time investment that will pay for itself over time. PG&E may be unpredictable, but a reliable solar battery will always have your back.
Go Off the Grid
You can also choose to become fully energy-independent and go off the grid. To do that, you will need to create a solar power-generating ecosystem that includes the following:
- Solar panels
- Solar batteries or any other ESS
- Inverters
- Charge controllers
But it’s not easy to go off the grid—the process can be quite cost- and effort-intensive. You have to apply for permits and follow strict local solar regulations.
Consulting an experienced solar provider can save you time and energy you’d otherwise spend on becoming energy-independent.
But if you’re able to pull it off, you don’t have to worry about PG&E’s rate increase for at least a decade, possibly longer.
Reassess Your Home for Energy Efficiency
Cutting down on your electricity consumption might not be feasible for some households, but you can always increase your overall energy efficiency. The federal government incentivizes home energy upgrades with tax credits, discounts on purchases, and other rewards. Contact your local government and ask about similar programs you can benefit from.
You can make your home significantly more energy efficient, whether you’re a renter or a homeowner. Check out all the home energy programs and choose one that suits your requirements.
Apply for Assistance
Although the approved rate increase includes costs for capacity upgrades, it is difficult to know for sure if PG&E will deliver on its promise of better services. You can, however, explore the utility provider’s energy-saving programs.
PG&E offers several programs, including Energy Savings Assistance (ESA), Green Saver, and Demand Response. Read the fine print before signing up so you can utilize the resources to optimize your household’s energy consumption.
Preparing for The Future
PG&E’s seemingly endless rate increases can be rather disconcerting to residential consumers. While the CPUC might take time to finalize its decision on the matter, you have limited time to make the best of what’s about to come.
Talk to solar experts today to future proof your home against the rising energy costs tomorrow.
Read more of our coverage on PG&E rate increase in 2023.
Authored by Ryan Douglas
NRG Clean Power's resident writer and solar enthusiast, Ryan Douglas covers all things related to the clean energy industry.
