PG&E bills are on the rise. Here’s why and what you can do
Lately, I’ve been afraid to open my utility bills. I know many of you can relate.
“This is a major topic amongst us out here in the public, and we are beginning to get outraged,” one reader wrote me. “I really feel for people who were barely making their bills like my family of 4, and now a $130 a month power bill is now $520 all the sudden.”
PG&E’s social media channels are flooded with comments from similarly fed-up customers.
“Ridiculous rates right now. Should be illegal. Shame on you,” one woman wrote on a recent PG&E Facebook post touting a college scholarship program.
A company tweet with tips to “help reduce higher winter energy costs” drew similar ire: “I’m really disappointed that the message that you keep giving is that it’s not your fault + the consumer should just use less gas,” one of many comments reads.
“People are literally having to choose between freezing in their homes and paying outrageous bills.”
So, what’s going on?
Gas and electricity prices are affected by a number of factors, and rate changes requested by PG&E and other investor-owned utilities must be approved by the California Public Utilities Commission.
Recent price spikes are in major part due to rising commodity prices.
“What we've seen recently, on both the natural gas and the electricity side, is really almost an unprecedented increase in the cost of natural gas,” says Lynsey Paulo, a spokesperson for PG&E, who noted that natural gas prices are up 90% compared to last winter.
“What we pay for our customer's energy supply, both natural gas and electricity, we pass directly through to them. There's no markup with that cost,” she says.
Making matters worse, on the electric side, recent drought conditions have limited the amount of lower cost hydroelectric generation.
For residents, this is no small burden.
“All of this couldn’t be happening at a worse time,” says Steven Weissman, a lecturer with the Goldman School of Public Policy at the University of California, Berkeley.
“Not only do you have inflation that appears to be exceeding people's increased incomes, but also, this is a time when we're very interested in getting people to switch from using natural gas and gasoline to more electricity. So, if electricity rates keep going up, that doesn't make it easier to persuade people to make that switch.”
These higher natural gas and wholesale electricity prices are expected to continue into 2022, so unfortunately, any respite from higher bills will primarily come from the typically reduced use of gas in spring and summer months.
In fact, on Thursday, the Public Utilities Commission approved an electricity rate hike request from PG&E: a roughly 9% bump.
The result: Consumers will be digging deeper into their pocket to pay the power bill. The average residential bill of $152 per month now will spike to $166 per month starting in March.
While Paulo notes this is another pass-through cost, that might be little comfort to customers still coming to terms with the significant gas and electric rate increase that just went into effect in January.
“It’s outrageous,” says Mark Toney, executive director of the Utility Reform Network, who noted that customers will face an extra $20 to $30 on their monthly bill compared to what they paid last year and likely more in coming years.
“We're talking about pretty ugly impacts on people’s month's bill.” (Toney’s organization is pushing the Utilities Commission to put a cap on rate increases.)
While energy bills are unusually high right now, this is part of a larger upward trend for California utility customers. Last year was the first time that average PG&E bills topped $200 per month, the Mercury News reported, and the most recent rate increase will make them some of the country’s most expensive.
A May 2021 California Public Utilities Commission report found that PG&E rates increased by 37% since 2013 and are projected to increase by an average 3.7% annually between 2020 and 2030. (Other California investor-owned utilities’ rates have also gone up.)
“We’re in a pattern now of unusually high annual rate increases,” energy policy expert Weissman says.
Especially recently, the costs of upgrading PG&E’s infrastructure and mitigating the impacts of wildfires play a significant role in rate hikes.
The January rate change, for one, was driven by spiking gas commodity prices but also wildfire-related expenses. (Paulo of PG&E says that past wildfire liabilities have been handled through the bankruptcy process and not passed onto customers.)
With climate change, the wildfire threat and the need for a massive energy transition are only increasing, as are the associated costs.