How Wildfire Costs in California Could Impact Utility Rates and What Californians Can Do About It

Wildfires in California are causing utility rates to rise, leaving customers paying more for electricity each year.

With Southern California Edison (SCE) and other investor-owned utilities passing their wildfire costs onto ratepayers, homeowners are seeing higher utility bills. This article breaks down why Californians pay some of the highest electricity prices in the country, how wildfire-related expenses are impacting residential rates, and why solar energy might be the best way to offset rising costs.

How Much Will Utility Rates Increase for California Customers?

As wildfire costs climb, utilities like SCE and PG&E are requesting approval to raise electricity rates. If the California Public Utilities Commission (CPUC) grants these requests, customer rates will increase significantly.

Between 2019 through 2023, California’s electric rate hikes outpaced inflation, putting a heavy burden on residential customers. PG&E’s rates, for example, have increased by over 30% in just a few years. The cost of wildfire prevention and legal settlements related to past wildfires across the state are major reasons for this price of electricity hike.

Why Are Wildfires Driving Up Utility Costs?

Utilities argue that rising operating costs stem from wildfire risk and climate change. Their reasoning includes:

• Billions of dollars spent on upgrading utility equipment to prevent future wildfires
• Compensation for victims of fires caused by utility companies
• Legal settlements from the Woolsey Fire in 2018 and other disasters

Critics argue that utility customers shouldn’t be responsible for paying for risks from utility‑sparked wildfires, but history shows that these costs are recovered through residential rates.

Which California Utilities Are Raising Rates?

Several major investor-owned utilities are increasing customer rates to cover costs related to wildfires:

• Southern California Edison (SCE) has proposed a rate hike of over 12%
• Pacific Gas & Electric (PG&E) and San Diego Gas & Electric (SDG&E) are also increasing prices
• Some residential rates could double the national average in the coming years

The California Public Utilities Commission plays a key role in approving these utility rates, but historically, they have allowed these increases to go forward.

How Do Transmission and Distribution Costs Affect Electricity Prices?

Beyond wildfire costs, California’s electricity system is aging, and updating transmission and distribution networks is expensive. Upgrading power lines to prevent utility-sparked wildfires have increased substantially in recent years, leading to higher utility cost for customers.

The California Independent System Operator reports that energy infrastructure investments are necessary, but critics argue that ratepayers are unfairly shouldering these costs.

Why Californians Pay the Highest Electricity Prices in the U.S.

The reason that Californians pay so much for electricity goes beyond wildfire costs. The state’s shift toward renewable energy and modernizing the grid has led to significant investment. While these efforts help the state adapt to climate change, they also make electricity prices higher than in other states.

Customers in California have historically paid for public purpose programs that fund clean energy projects, which adds additional charges to bills in California.

Will More Power Shutoffs Be Used to Prevent Wildfires?

One solution utilities have used to reduce wildfire risk is cut power during high-risk conditions. These power shutoffs help prevent fires but also disrupt daily life for residents, especially in areas like Santa Barbara and Ventura and Santa Barbara counties.

While shutoffs can prevent wildfires, they highlight the need for backup power sources like solar with battery storage. Investing in a battery storage system can help homeowners stay powered during outages and reduce reliance on the grid.

Can Rooftop Solar and Battery Storage Help California Residents Reduce Electricity Costs?

With utility rates continuing to rise, solar energy paired with battery storage offers one of the most effective ways for residential customers to reduce reliance on the grid and control their electricity costs. While rooftop solar helps homeowners generate their own energy, batteries provide backup power and maximize savings by storing excess energy for later use—especially when rates are highest.

Why Battery Storage is Key to Beating High Utility Rates

• Protection from Peak Rates – Utilities charge more during peak hours, but a battery storage system allows homeowners to use stored energy instead of drawing from the grid.
• Avoiding Power Shutoffs – With wildfires increasing the risk of power shutoffs, a battery ensures your home stays powered even when the grid is down.
• Maximizing Solar Savings – Without a battery, any unused solar power is sent back to the grid at a lower rate. With storage, you keep and use more of the power your system generates.

Solar Plus Battery: A Long-Term Solution to Rising Utility Costs

Combining residential solar with battery storage provides energy independence and protects homeowners from unpredictable utility rates. Even as California’s electricity system evolves, those with solar and storage will have more control over their energy costs, making it a smart financial decision in the face of ongoing rate increases.

How Will Future Wildfires Affect Utility Rates?

Given California’s history of devastating wildfires, utilities are expected to request more rate hikes in the coming years. The wildfire fund established to help utilities recover costs is not enough to cover all liabilities, meaning ratepayers will continue to see higher electricity prices.

Maintaining solar panel efficiency is also crucial in offsetting higher energy costs. Regular solar system inspections and solar system maintenance help ensure peak performance and long-term savings.

Common Myths About Solar and Rising Utility Rates

Some homeowners hesitate to switch to solar due to outdated misconceptions. In reality, solar installation is more affordable and efficient than ever. Learn more by checking out our Solar Myths & Misconceptions page.

Key Takeaways

• Wildfire costs are driving up utility rates in California, making electricity prices among the highest in the country.
• Southern California Edison, PG&E, and SDG&E are increasing customer rates to recover past and future wildfire costs.
• Transmission and distribution upgrades and energy infrastructure investments are also contributing to rising electricity rates.
• Rooftop solar and battery storage offer a way to reduce reliance on utility customers and protect against rate increases.
• Regular solar system maintenance and solar inspections ensure long-term savings and efficiency.

As California customers face ongoing rate hikes, investing in solar installation can be a smart move to lock in lower electricity costs and gain energy independence.