Electricity Bills Now Surpassing Rent In California. Why Are Prices Higher Than Anywhere But Hawaii?

In recent years, many Californians have noticed a troubling trend: their electricity bills are climbing higher than ever, sometimes surpassing their rent. So, what’s causing this spike, and why are California’s electricity prices now among the highest in the nation, second only to Hawaii?

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Rising Costs and Climate Challenges 

Over the past five years, electricity prices have soared across the U.S., particularly in California, as extreme weather fueled by climate change has increased energy demand. 

Record-high temperatures have kept many Americans indoors, cranking up their air conditioners, which only adds to the burden. Nationwide, average household electricity prices jumped 21.9% between 2018 and 2023, according to a recent report from S&P Global.

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California stands out with a 47.8% increase in electricity prices during this period, one of the highest in the country. The state's push to transition to green energy is often blamed, but a new report from S&P Global shows that this is only part of the story. 

The state's efforts to protect against wildfires, intensified by climate change, also drive up costs. For example, nearly 13% of the monthly bill for PG&E residential customers in 2023 went toward wildfire mitigation. Additionally, California regulators approved PG&E to raise $2.6 billion through rate increases to make its operations safer.

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The Human Impact

The rising cost of electricity is hitting many households hard, making it increasingly difficult to keep up with the overall cost of living. According to a report from the National Energy Assistance Directors Association and the Center for Energy Poverty and Climate, nearly 24% of U.S. households reported being unable to pay at least one energy bill in the past year.

Residents like Jessica Simpson Nehrer in Borrego Springs feel the squeeze in California. She shared with WSJ that her electricity bill soared to $1,873.90 in June, surpassing her $1,200 rent. Grocery store owner Rodger Gucwa, also in Borrego Springs, is struggling with monthly power bills nearly as high as his rent despite efforts to cut costs.

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How California Compares

California’s situation isn’t unique. Other states have also seen sharp increases in electricity costs over the past five years. Maine saw a huge 65.6% jump in electricity prices, the biggest in the country, mainly because of delayed costs from importing natural gas and dealing with storm damage. At the same time, New Hampshire, Massachusetts and Connecticut also had big increases, all over 49%.

Interestingly, while states in the Northeast and California saw major increases, some states in the Midwest had much smaller increases or even decreases. For example, North Dakota and South Dakota saw minimal increases, while Wyoming and Kansas saw electricity costs decline slightly (1.2% and 2.1%, respectively).

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What’s Being Done?

California needs to protect its citizens against the increasing threat of wildfires. Lawmakers, regulators, and consumer groups must find ways to manage these rising costs for people and businesses. Some are already calling for more stringent oversight of utility spending. Others want changes to help lower-income households avoid being hit the hardest.

The situation is undoubtedly complicated, and with prices continuing to climb, people are left wondering how much more they can take.

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