PG&E says rates will stabilize next year after a record 2024 of California rate increases

After a year of record rate hikes, California customers of Pacific Gas and Electric Co. are likely to see steadier monthly bills and even some decreases in 2025, the utility said Monday.

The year-end projections come as Gov. Gavin Newsom and state lawmakers promise to focus on making energy prices more affordable for Californians, who pay some of the highest electricity and gas prices in the country.

“We’ve heard from our customers that this is a major concern for them,” said Lynsey Paulo, a spokesperson for the company. “We understand that, and we’re taking a lot of different steps and a lot of different actions to try to stabilize bills for customers.”

In its end-of-year rate update, PG&E representatives said combined electricity and gas customers would see a 1% higher bill on Wednesday compared to last January 1. Enrolled customers of a low-income program would see a $1.50 a month decrease.

Residential gas rates, however, will increase by 8.6% starting in January as the utility replaces old pipelines.

A recently published report by the public advocates arm of the California Public Utilities Commission shows PG&E’s average electric rates are projected to fall next year and into 2026.

Operating cost reductions by roughly $1 billion this year, efforts to lower fire risks and a likely $15 billion federal loan are why customers should expect more stable bills this year, representatives said.

Customers of PG&E saw record increases on their monthly bills in 2024, about $400 more annually than the year prior, according to PG&E estimates. That’s after state regulators approved an increase in electricity rates back in December 2023.

Rising electricity rates this year have intensified affordability debates in California’s energy politics, fueling calls for increased regulatory oversight and greater support for affordability programs like CARE.

The program offers those who qualify a 20% discount on their bills. According to a recent analysis, approximately 20% of California households were behind on their energy bills, with an average debt of nearly $800.

The CARE program rate reduction is the result of a law passed by the state legislature passed in 2022, Assembly Bill 205, which required incremental bill reductions for low-income customers through an income-graduated fixed charge measure.

Some of the rate increases on the way next year include roughly $40, amounting to about $3.20 per month, to keep the Diablo Canyon nuclear power plant in San Luis Obispo County running.

The California Public Utilities Commission authorized PG&E to collect that money earlier this month, though it was less than what the utility requested.

Commissioners also approved PG&E’s plan to charge average residential customers $18 next year, about $1.50 monthly, to cover other annual costs for generating and buying electricity.

PG&E’s average residential electricity rate is $0.397 per kilowatt-hour, higher than San Diego Gas & Electric’s $0.383 and Southern California Edison’s $0.338. The utility’s customers pay about 80% more than the national average.

At the end of last year’s legislative session, Newsom dropped his draft plan to lower utility rates after PG&E and its labor union opposed it. Newsom proposed to lower monthly bills through a financial process called securitization that would lower interest rates on utilities’ long-term capital investments and cut shareholder profits in the process.

Matthew Freedman, a staff attorney with The Utility Reform Network, an advocacy group for ratepayers, called on the PUC, lawmakers and Newsom to take action to lower the costs of meeting California’s clean energy and reliability needs.

“PG&E’s rates are climbing with no relief in sight for its customers,” said Freedman. “Despite its claimed commitment to affordability, PG&E continues to seek approval for huge new expenditures that will drive rates higher in the months and years to come.”

This story was originally published December 30, 2024 at 4:12 PM with the headline "PG&E says rates will stabilize next year after a record 2024 of California rate increases."