Electric rate affordability is of keen interest to the Local Government Sustainable Energy Coalition (LGSEC). Higher energy prices place additional financial burdens on vulnerable populations and make some local government officials and their communities reluctant to electrify, a key strategy in reducing greenhouse gas emissions. 

LGSEC raised concerns about electricity affordability in several California Public Utilities Commission (CPUC) proceedings, with mixed results. Pacific Gas and Electric (PG&E) rates declined slightly from the beginning of 2024, but the investor-owned utility’s (IOU) system average prices are 28 percent higher than they were in January 2023. San Diego Gas & Electric’s (SDG&E) residential rates climbed by six percent in 2024; however, prices are 11 percent lower than 2023. Average household SDG&E electric bills will likely rise by almost three percent, with natural gas bills escalating by roughly nine percent. Higher rates will drive average Southern California Edison (SCE) residential bills up an estimated seven percent this year.  

Rate inflation is being driven by pressure on the utilities to expand their distribution capacity to accommodate new load, which is also a profitable practice for the IOUs. For example, in a docket in which LGSEC intervened, the CPUC approved new energization timelines for the three IOUs, with the goal of halving the time it takes to grid-connect new and upgraded electrical services. This is good news for local governments depending on energization for economic development and to power critical services. However, the Commission decision did not consider cost-effectiveness or alternatives to distribution investments.

In response to CPUC-endorsement of speeder energization, PG&E immediately motioned for permission to increase its Electric Capacity and New Business Interim Memorandum Account (ECNBIMA) capital cost caps, from $618 million to $2.1 billion in 2025 and raise the 2026 capital cost cap from $669 million to $2.3 billion. PG&E’s request will be considered in a 2025 proceeding in which LGSEC will be a party.

In 2024 the CPUC approved the formation of the Central California Rural Regional Energy Network (REN) to expand access to energy efficiency services for primarily disadvantaged, underserved, and hard-to-reach communities. San Diego Community Power was likewise authorized; SDREN will implement $124 million in energy efficiency programs through 2027. RENs emerged because of LGSEC advocacy, and the Coalition remains a strong supporter of them.

In October Governor Gavin Newsom issued an Executive Order (EO) that could pose an existential threat to RENs and Community Choice Aggregator-managed energy efficiency programs. The EO asserted that, 

Californians’ electric rate increases have been driven largely by the cost of some programs added over time, such as the subsidy provided through the legacy Net Energy Metering program for rooftop solar photovoltaic systems; and…rate increases have also been driven by historic investments that are critical to reduce wildfire risk and improve the safety and reliability of the electric grid, particularly in the wake of catastrophic wildfires that devastated communities throughout California in recent years and have been exacerbated by the increasing impacts of climate change. 

The EO directed the California Energy Commission (CEC) to identify electric ratepayer-funded programs and any other regulations that may be unduly adding to rates, and to find alternative funding sources for those that are costly.  The CPUC was ordered to do likewise, and

…take immediate action under existing authorities to modify or sunset any underperforming or underutilized programs or orders whose costs exceed the value and benefits to electric ratepayers. The California Public Utilities Commission is requested to pursue, and direct the regulated utilities to pursue, all federal funding opportunities that can help reduce and avoid electric service costs that would otherwise flow into electric ratepayer bills. 

In March 2024, the CEC launched a process to systematically incorporate non-energy benefits (NEBs) into future energy planning, including holding informational meetings to help weave NEBs consideration into its public analyses, policies, and programs. NEBs encompass investment benefits that are in addition to energy and demand savings, including health impacts, job creation, resilience, and economic development.  The state is funding research to assess the non-energy benefits of home electrification, including air quality, indoor comfort, and extreme heat hardiness. As stipulated in Senate Bill 100, the CEC, CPUC, and the California Air Resources Board are holding workshops to discuss the non-energy benefits and social costs of different resource scenarios. 

LGSEC generally supports NEBs as important for policymakers and investors to contemplate when making decisions about energy infrastructure and resource planning. For example, clean energy programs that reduce local pollution may be more cost-effective when NEBs are considered. 

Driven largely by demand from data centers, new life is being breathed into nuclear energy. Northern California has more than 160 data centers that demand substantial power, a number that’s expected to grow steadily throughout the state. In this context, PG&E has requested almost $12 billion to keep its aging Diablo Canyon nuclear plant online until 2030, more than twice the $5.2 billion estimate the IOU provided just one year ago.