Why California electricity costs so much, and what it means

If you live in California, the number on your electric bill probably feels high, and the data agree. This post explains, in plain terms, what the state’s own analysts say is behind it, what the CPUC has adopted and scheduled for a new monthly fixed charge, and what all of that means for the payback on solar and batteries. It is background, not a forecast. For numbers on your own home, use the California calculator.

Key takeaways

• California’s average residential price per kilowatt-hour is close to double the US average (about 1.9 times in 2024), mostly because of the three big investor-owned utilities.
• State analysts point to wildfire costs, grid spending, public purpose programs and the rooftop solar cost shift, though no one has precisely quantified each piece.
• A new income-graduated monthly fixed charge shifts some cost out of the per-kWh price, which may modestly change the math for solar.
• High rates raise the value of every kWh you avoid buying, but net billing (NEM 3.0) pays less for exports, so a battery can matter more in the California conversation.

What the EIA data show

The US Energy Information Administration (EIA) publishes average residential prices for every state. Using EIA’s 2024 average monthly bill table (Table 5A), which pairs price with usage and bill:

2024, residential	California	Florida	US average
Average price	31.97 cents/kWh	14.14 cents/kWh	16.48 cents/kWh
Average monthly use	503 kWh	1,104 kWh	863 kWh
Average monthly bill	$160.86	$156.09	$142.26

Two things stand out. California’s price per kWh is about twice the national figure. But the average bill is only moderately higher, because the typical California home uses far less electricity than the typical home in Florida or the US overall. Price per kWh matters most for solar, because it sets what each kWh you generate and use is worth.

The EIA’s monthly data for 2026 point the same direction. For January through August 2026 (preliminary), California averaged 32.58 cents/kWh versus 18.19 for the US and 15.32 for Florida. Month to month the ranking among the top states can move: in August 2026 alone, the EIA shows California at 29.75 cents, below Maine and Massachusetts for that month. Hawaii remains well above everyone. The Legislative Analyst’s Office (LAO), which advises the state legislature, said in January 2025 that California’s rates were second highest after Hawaii and “close to double” the national average.

Why the price is high: what state analysts say

The LAO’s January 2025 report is the most useful single overview. It is candid that no one has produced a full accounting: it says it did not find a comprehensive analysis quantifying every contributor. It does identify the main categories.

Wildfire costs

Before 2019, only a negligible part of the large utilities’ rates went to wildfire-related costs. The LAO now puts the figure at between 7 percent and 13 percent of an average non-CARE bill (CARE is the low-income discount program). It cites high wildfire risk, a liability standard that holds utilities responsible for the costs of fires they spark, and unprecedented spending on prevention, plus contributions to the state’s Wildfire Fund.

The CPUC’s own rates page gives another view. It says that as of 2024, wildfire-related expenses were 27 percent of PG&E’s total system costs and 17 percent for each of SCE and SDG&E, which it says translated to average residential bill increases of about $250 to $490 a year. (The CPUC page is undated, so treat these as the 2024 snapshot it describes.)

Transmission, distribution and an aging grid

The LAO explains that much of what utilities recover through rates is fixed: it cites 2021 UC Berkeley work estimating roughly two-thirds to three-quarters of investor-owned utility costs do not change with how much power you use. Poles, wires and substations are the clearest example. It also notes that new renewable generation often needs new or upgraded transmission lines to reach customers. The CPUC lists aging infrastructure and higher financing costs for investor-owned utilities among its drivers, without putting numbers on them.

Public purpose programs

Rates also pay for state-mandated programs such as energy efficiency, electric vehicle charging support and the CARE discount. The LAO estimates about 4 percent of the large utilities’ average rates in 2023 went to climate-related activities, roughly half of public purpose program funding, and that CARE added 2 to 4 percent to non-CARE customers’ bills in 2022. Publicly owned utilities generally do not carry the same program charges, which is one reason their rates run lower.

The rooftop solar cost shift

When solar customers were credited at full retail rates, they also avoided paying their share of fixed grid costs, and those costs landed on other customers. The CPUC says that in 2024 about $7 billion was shifted to customers without rooftop solar. The LAO reports CPUC estimates that this shift added 11 to 20 percent to non-solar, non-CARE customers’ bills in 2023. This is the policy reason California moved to net billing, covered below.

Who is affected most

The LAO found large gaps by utility: investor-owned utility rates are more than 50 percent higher on average than publicly owned utilities’, and between 2019 and 2023 PG&E, SCE and SDG&E average rates rose 48 to 67 percent, versus about 18 percent for overall prices. If you are served by a municipal utility such as LADWP or SMUD, this post’s rate figures apply less to you, and the calculator’s California utilities may not match your bill.

The new fixed charge, in plain terms

California law (AB 205) let the CPUC add a monthly fixed charge that depends on income and, in exchange, lower the per-kWh price. The CPUC adopted it in May 2024 in decision D.24-05-028. It was first called the income-graduated fixed charge and has since been renamed the Base Services Charge. According to a CPUC Energy Division presentation, the charge for the three large utilities has three tiers:

• $6.00 a month for customers on the CARE discount
• $12.08 a month for customers on FERA or in affordable housing
• $24.15 a month for everyone else

That December 2025 presentation lists go-live dates of October 1, 2025 for SDG&E, November 15, 2025 for SCE and March 1, 2026 for PG&E, so the charge is now in effect for all three; the exact monthly amount on your bill depends on your utility. Our PG&E, SCE and SDG&E pages list a fixed monthly charge of about $24.03 to $24.13 (the SCE figure is unconfirmed, because that page notes prices may be out of date), compared with the presentation’s $24.15, so check your own bill. It estimated that the per-kWh reduction would be about 8 to 10 percent at summer peak, for example a $0.047 per kWh reduction, to $0.437 per kWh at summer peak for PG&E, based on 2023 revenue requirements. These are estimates, and the CPUC says a successor proceeding is planned to revise the design.

Illustrative arithmetic, not a bill estimate: $24.15 a month is $289.80 a year ($24.15 x 12) that you owe whether or not you have solar. The offset is a lower price on each kWh. Your net change depends on how much you use; the CPUC’s bill-impact tables for average-usage customers show that, by climate zone, some average non-CARE households pay less and others more. For CARE and FERA customers, the CPUC presentation describes modest changes at lower usage and potential reductions at higher usage.

What this means for solar

Solar saves money by replacing kWh you would otherwise buy. Because California’s per-kWh price is high, each kWh your panels offset is worth more than it would in a low-rate state. That is one reason solar can still pencil out here without the federal credit, though it depends on your usage, rate plan and system cost. Two effects pull the other way:

• The fixed charge cannot be offset. Solar cannot reduce the $24.15 (or $12.08 or $6.00). So a bill never falls to zero, and slightly lower per-kWh prices trim the value of each solar kWh a little. The CPUC presentation says this design also lowers the bill impact of electrifying appliances and vehicles, which can raise your usage and make a system more useful.
• Exports earn less. Since April 15, 2023, new interconnections take service on the Net Billing Tariff (NEM 3.0) rather than net metering. The CPUC says exports are compensated at the value of the generation to the grid, not the retail rate. The LAO describes the credit as notably lower than under NEM 1.0 and 2.0, which were roughly retail. We do not state a specific export rate here because it varies by utility, hour and month; the methodology page lists the sources for the export credits our calculator uses.

What it means for batteries

Under net billing, solar you use at home is worth the retail rate, and solar you export is worth less. A battery stores midday solar for evening use, so more of your generation is valued at the higher rate. That is why batteries are a bigger part of the California conversation than in Florida, where retail net metering still applies. It is not a guarantee: a battery adds cost, and whether it pays back depends on your usage pattern, rate plan and what you pay for it. See our guide on NEM 3.0 and batteries for the mechanics, and is solar worth it without the tax credit for the broader picture.

Utility pages with the specifics of each territory: PG&E, SCE and SDG&E.

A note on uncertainty

Rates rose faster than inflation from 2019 to 2023, and the LAO said the trends were on track to continue, but it did not forecast specific prices. Wildfire spending, rate cases and the fixed-charge design are all subject to change by regulators and the legislature. That is why our results show ranges, with a range of yearly rate increases, instead of a single number.

Next steps

1. Find your utility and rate plan on your bill, and note your annual kWh use and any CARE or FERA status.
2. Run the California calculator to see low, likely and high payback for solar, with and without a battery.
3. If you get quotes, compare them line by line, and ask installers how they modeled the fixed charge and export credits. Our quotes page explains how that process works.
4. Read the methodology to see what is and is not included in our estimates.

Related reading: home battery costs and backup.