As temperatures start to rise across the state, homeowners in California face a new reality when it comes to their electricity costs. With a variety of factors at play, understanding the current landscape of electric costs in the Golden State is crucial. In this article, we’ll dive into California’s electric costs in 2023, the reasons behind the rate increases, and solutions to help keep your electric costs down.
An Overview of Electric Costs in California
According to EnergySage, the average California homeowner spends about $210 per month on electricity, which adds up to $2,520 per year. This is 24% higher than the national average electric bill of $2,027. The average California electric rates cost $0.30 per kilowatt-hour (kWh), which means the average homeowner uses 702 kWh of electricity per month, and 8,424 kWh over the course of a year. However, these costs are set to rise even more.
Why Are Electric Costs Rising?
In a 2023 Rate Change Advisory issued by the California Public Utilities Commission (CPUC), Pacific Gas and Electric (PG&E) implemented new electric rates and associated tariffs from previously authorized decisions, resolutions, and advice letters. The changes resulted in an electric rate and bill increase that began on March 1, 2023.
A few key decisions led to this increase. One is the General Rate Case (GRC) Phase I Wildfire Insurance Settlement Decision, which allows PG&E to include $400 million in rates for a wildfire liability self-insurance program. The other is the 2020 Wildfire Mitigation and Catastrophic Event (WMCE) Decision, which increased PG&E’s average residential bills by 1.6%. As a result, the average residential non-CARE electric bill went up by $8.26 (4.6%) to $187.50, and the average residential CARE electric bill increased by $5.38 (4.6%) to $121.94.
The Impact of Climate Change on Electric Costs
Climate change isn’t just an environmental issue; it’s an economic one as well. The increased frequency and intensity of extreme weather events (including floods, wildfires, etc.), combined with the overall rise in global temperatures, have a direct impact on our energy consumption patterns and the overall cost of electricity.
Climate change has increased the likelihood of wildfires in California, making them a more common occurrence every season. PG&E has had to invest heavily in wildfire mitigation strategies to protect their infrastructure and prevent future catastrophic events. These strategies include creating defensible space around power lines, upgrading equipment to be more fire-resistant, and implementing Public Safety Power Shutoffs (PSPS) during high-risk conditions. There are substantial costs associated with these mitigation efforts that contribute heavily to the rising electricity costs in the state.
How to Keep Your Electric Costs Down
Now that we understand the current electric costs and the reasons for PG&E’s rate increases, here are three solutions to help keep your electric costs down:
Boost Your Energy Efficiency
One of the most effective ways to reduce your electric costs is by making your home more energy-efficient. You could upgrade to energy-efficient appliances, enhance your home insulation, or install a programmable thermostat. Utilizing energy-efficient appliances like these consume less electricity, which leads to lower energy bills.
Similarly, a well-insulated home retains heat during the winter and stays cooler during the hot summer months, reducing the need for heating and air conditioning systems. A programmable thermostat also allows you to set your home’s temperature for different times of the day and reduces energy consumption when you’re not home.
Here are several other ways to increase your energy efficiency and reduce your electric costs:
- Use Energy-Efficient Light Bulbs: Switching to LED or compact fluorescent light bulbs can significantly reduce your energy consumption. These bulbs use less energy and last longer than traditional incandescent bulbs.
- Unplug Electronics When Not in Use: Many electronics continue to draw power even when they’re turned off. Unplugging these devices when you’re not using them helps save electricity.
- Use Smart Power Strips: These devices can detect when a device is in standby mode and cut off power to save more energy.
- Install Energy-Efficient Windows: Energy-efficient windows help keep your home at a comfortable temperature and reduce the need for heating and cooling.
- Regular Maintenance of HVAC Systems: Regularly maintaining your heating, ventilation, and air conditioning (HVAC) system ensures it runs efficiently through every season and reduces your overall energy consumption.
Take Advantage of Time-of-Use Rates
PG&E offers time-of-use rate plans that charge different prices for electricity based on the time of day. By shifting your energy use to off-peak hours when electricity is cheaper, you can save money on your electric bill. For example, you could run your dishwasher, washing machine, or other high-energy appliances during off-peak hours.
Install a Solar Panel System
The most impactful solution is installing a solar panel system. Solar energy allows you to generate your own electricity, which can reduce or even eliminate your monthly electric bill.
In 2023, the price for residential solar panel systems in California averages from $17,430 to $23,870, after factoring in the federal solar tax credit. The initial cost might seem high, but the savings add up fast. The average household can save anywhere from $20,000 to $100,000 on electricity costs over the lifetime of their solar system.
With recent changes to solar billing, adding an energy storage solution can help you save even more. By storing the excess energy your system produces, instead of exporting that energy back to the grid, you can use it during the higher-cost peak hours. If you’re considering making the switch to a cleaner energy solution, make sure you explore what your options look like with a solar plus energy storage solution as well.
The Solar Industry: A Bright Future
As we navigate these rising electric costs, the solar industry continues to grow and expand across the state. More homeowners want cleaner energy options to power their homes and businesses, and with plenty of sunshine available in the Golden State, solar energy is an abundant and renewable resource that can save you money, help the environment, and more.
As a homeowner in 2023, you might be considering a solar panel installation for many reasons, like reducing those expensive electricity bills, shrinking your carbon footprint, or gaining independence from the electrical grid. Embracing solar energy has never been more accessible or popular, and it’s a great way to boost your home value while producing clean, renewable energy to power your home.
Take Control of Your Electric Costs
While electric costs will continue to rise in California, there are effective solutions available to help homeowners manage these increases. By making energy-efficient upgrades to your home, utilizing time-of-use rates, and offsetting your electric bills with solar energy, you can take control of your electric costs.
Our Bay Area team has a great understanding of utility rates throughout California and experience in designing and installing the right size of home solar system to meet your family’s growing needs. Schedule an online appointment today to learn more.