Time for California to get serious about cheaper energy

Sammy Roth, Tribune News Service

Californians pay some of the nation’s highest electricity rates. They’re also being devastated by the consequences of fossil fueled climate change, including more deadly and expensive wildfires, droughts and heat waves. Politicians need to stop promising they’ll confront these challenges and start doing it. The recent fires in Los Angeles County should serve as a political rallying cry to accelerate the phaseout of oil and gas. Instead, they’re threatening to derail Sacramento’s long-promised focus on more affordable energy. Before the Palisades and Eaton fires broke out, lawmakers were gathering ideas to slow fast-rising electric rates. Now, though, wildfire response — and President Trump — are taking up most of the oxygen in Sacramento.

“The Legislature has only so much bandwidth,” said Matt Freedman, an attorney for the Utility Reform Network. Totally fair, given the scale of destruction in L.A. County — and the dangers posed by Trump. But especially now that Trump has derailed US efforts to fight climate change, the rest of the world is looking to California for leadership. If the Golden State can’t find ways to move more quickly toward climate-friendly energy, then the oppressively hot, dry conditions that kindle deadly fires will almost certainly keep getting worse. Bringing down electric rates, meanwhile, is crucial to climate progress. As rates keep rising, people are less likely to switch from gasoline-powered cars to electric vehicles, and from gas furnaces to electric heat pumps. Rising energy costs are also a significant factor in the state’s broader cost-of-living woes.

From 2019 through 2023, California’s residential electric rates rose by 47%, according to the Legislative Analyst’s Office. Customers of the state’s big investor-owned utilities — Pacific Gas & Electric, San Diego Gas & Electric and Southern California Edison — saw rates rise between 48% and 67%, the analyst’s office said. “Without intervention, rates are going to continue to increase. It’s not sustainable,” Linda Serizawa, who runs the California Public Utilities Commission’s independent ratepayer watchdog arm, said in an interview. Almost everyone agrees we need cheaper energy. But hardly anyone agrees on what to do about it. Some environmental groups see profit-hungry utility companies as the main villains. Other energy experts point out that worsening wildfire risks from climate change have prompted utilities to spend billions of dollars burying power lines and taking other steps to avoid ignitions — dollars that are ultimately charged to customers.

Rooftop solar incentives are another source of controversy. State officials and utility companies say monthly compensation payments to homes and businesses with rooftop solar, paid by Edison, PG&E and SDG&E, play a big role in driving up rates for everyone. They see rooftop solar as a lower priority than large-scale solar farms in the desert, which generate electricity at a lower cost. Those claims are contested by solar installers and environmental activists, who say rooftop solar customers lower electric rates for everyone by reducing the need for utilities to invest in expensive long-distance power lines.

“We are talking about people using their own money to put their own solar panels on their own roof so that they might rely less on distant power plants on hot summer days,” said Bernadette Del Chiaro, the outgoing executive director of the California Solar & Storage Assn., a trade group. One other complication: Some Sacramento Democrats, seemingly panicked by Trump’s rhetoric, have fallen into the unfortunate trap of framing affordability and climate-friendly energy as if they’re in conflict — despite the fact that solar and wind power are cheaper than fossil fuels. Assembly Speaker Robert Rivas (D-Hollister), for instance, has vowed that California “will continue to lead on climate, but not on the backs of poor and working people.” Fortunately, Sen. Josh Becker (D-Menlo Park), the new chair of the Senate energy committee, knows clean energy isn’t causing electric rates to rise. He sees no conflict between the state’s affordability and climate goals.

“I think we can pretty much do both,” Becker told me. Will the Legislature rise to the challenge? So far, a few lawmakers have offered up bills. SB 332 from Sen. Aisha Wahab (D-Hayward) would limit annual rate hikes for Edison, PG&E and SDG&E residential customers to no more than a measure of inflation. The bill would also require utility shareholders to cover 95% of future payments to California’s $21 billion wildfire fund, which is designed to help keep utilities out of bankruptcy if their power lines ignite destructive, costly wildfires. Currently, ratepayers cover 50% of those payments.

Critics say Edison, PG&E and SDG&E can afford to ease the burden on customers. Just this month, PG&E reported record profits of nearly $2.5 billion for 2024. Meanwhile, the company won approval last year for six separate rate hikes, with Gov. Gavin Newsom’s appointees to the California Public Utilities Commission giving their blessing.

“Those on a fixed income, our senior population, those on Social Security — those with even a union job, a good-paying union job, do not get six increases to their pay,” Wahab said at a legislative hearing last month. Utility companies counter that rate increases are driven largely by state policies encouraging or requiring them to invest in public policy priorities, such as trimming trees and burying power lines to prevent fire ignitions.

At the same time, those investments are profitable for utility shareholders, because the companies are allowed to charge customers a profit margin of around 10%. Burying a power line can cost millions of dollars per mile. Before the Eaton and Palisades fires, state officials were moving away from a mentality of “bury power lines at all costs,” out of a growing concern over electric rates. Now it’s possible they’ll return to embracing undergrounding — especially considering the possibility that Edison may have sparked the Eaton fire as claimed in litigation. “We do worry the fires will lead to a massive uptick in wildfire mitigation spending,” Freedman said.

Indeed, SB 256 from Sen. Sasha Renée Pérez (D-Pasadena), who represents the Eaton fire area, calls on utilities to prioritize burying power lines. That kind of work comes with a potentially high reward, but also a cost. “We do believe that in the highest-risk miles, undergrounding (power lines) is the most cost-effective,” said Carla Peterman, PG&E’s executive vice president of corporate affairs, at last month’s legislative hearing. Another intriguing proposal for cheaper energy comes from Becker and Sen. Henry Stern (D-Calabasas). SB 540 would make it easier for California to import low-cost solar and wind power from other Western states — a controversial idea in the past, in part due to opposition from labor unions that haven’t wanted to see renewable energy jobs shipped out of state. But after years of negotiations to ensure good-paying jobs across the West, the politically powerful International Brotherhood of Electrical Workers Local 1245 now supports the plan.

Some of the most contentious proposals to lower electric rates could involve popular clean energy programs. In a recent report, California Public Utilities Commission staff recommended that the agency reduce the amount that Edison, PG&E and SDG&E are required to pay customers who generate solar power — specifically customers who installed solar panels years ago. That would infuriate solar installers and environmental groups, who are still fuming at Newsom’s appointees for voting in 2022 to slash incentives for new rooftop solar systems.

Commission staff also suggested finding new funding sources for other beneficial-but-costly programs currently funded by all Edison, PG&E and SDG&E customers through electric rates — possibly including utility bill discounts for low-income households, as well as investments in electric vehicle infrastructure and energy efficiency. Environmental groups will almost certainly be wary about cutting off money for these types of programs — until and unless the Legislature steps in with a promise of long-term funding, never an easy political lift.