Lately I’ve been scared to open my utility bills. I know many of you can relate.
“This is a major topic among us here in public, and we are beginning to get outraged,” one reader wrote to me. “I really feel for people who were barely paying their bills like my family of 4, and now a $130 a month electric bill is now $520 all of a sudden.”
PG&E’s social media channels are flooded with comments from equally weary 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 advice to “help reduce higher energy costs in winter” sparked similar anger: “I’m really disappointed that the message you keep giving is that it’s not your fault + the consumer should just use less gas,” read one of the many comments.
“People are literally having to choose between freezing at home and paying exorbitant 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 largely driven by rising commodity prices.
“What we’ve seen recently, both on the natural gas and electricity side, is really an almost unprecedented increase in the cost of natural gas,” said PG&E spokesperson Lynsey Paulo, who noted that natural gas prices had risen 90%. % compared to last winter.
“What we pay for our customers’ energy supply, both natural gas and electricity, we pass on directly to them. There is no markup with this cost,” she says.
Worse still, on the electricity side, recent drought conditions have limited the amount of lower-cost hydroelectric generation.
For residents, this is no small feat.
“All of this couldn’t come at a worse time,” says Steven Weissman, associate director of the Center for Law, Energy and the Environment at UC Berkeley.
“Not only do you have inflation that seems to be outpacing the increase in people’s incomes, but also, this is a time when we’re very interested in getting people to switch from natural gas and gasoline to more electricity. . So if electricity rates keep going up, it doesn’t make it easy to persuade people to make that change.
These higher wholesale natural gas and electricity prices are expected to continue through 2022, so unfortunately any respite from higher bills will come primarily from generally reduced gas usage in the spring and summer.
In fact, on Thursday, the Public Utilities Commission approved an application to raise electricity rates from PG&E: an increase of about 9%.
The result: consumers will dig deeper into their pockets to pay the electricity bill. The average residential bill of $152 per month will now reach $166 per month from March.
Although Paulo notes that this is another pass-through cost, it may not reassure customers who have yet to come to terms with the significant increase in gas and electricity prices that just took effect in January. .
“It’s outrageous,” said Mark Toney, executive director of the Utility Reform Network, who noted that customers will have to pay $20 to $30 more on their monthly bill than they paid last year. and probably more in the years to come.
“We’re talking about some pretty ugly impacts on people’s monthly bills.” (Toney’s organization is pushing the Utilities Commission to cap rate increases.)
Although energy bills are unusually high right now, it’s part of a larger upward trend for California utility customers. Last year was the first time PG&E’s average bills exceeded $200 a month, Mercury News reported, and the latest rate increase will make it one of the most expensive in the country.
A May 2021 California Public Utilities Commission report found that PG&E rates have increased 37% since 2013 and are expected to increase an average of 3.7% per year between 2020 and 2030. (Rates for other California-owned utilities to investors also increased.)
“We are now in a trend of unusually high annual rate increases,” says energy law professor Weissman.
Especially recently, the costs of upgrading PG&E’s infrastructure and mitigating the impacts of wildfires are playing a big role in the rate hikes.
January’s rate change, for its part, was driven by soaring gas commodity prices, but also by wildfire-related expenses. (PG&E’s Paulo says past wildfire liabilities were handled through the bankruptcy process and not passed on to customers.)
With climate change, the threat of wildfires and the need for a massive energy transition are only increasing, as are the associated costs.