Data Source: U.S. Energy Information Administration, State Energy Data System; U.S. Department of Commerce, Bureau of Economic Analysis.
Analysis by CEC Economics
Highlight
- In 2022, California had the tenth-lowest average monthly electricity bills for industrial customers. The average monthly bill in California ($6,809) was 32.1% lower than the U.S. average—even though the cost per kilowatt-hour ($0.17/kWh) was more than double the national average of $0.08/kWh.
Challenges
- In contrast to its price advantage in the industrial sector, California's average monthly commercial electricity bills have become considerably more expensive relative to the U.S. average during the last decade—from 14.4% higher in 2012 to 57.1% higher in 2022. This rise can be attributed to a disparity between the growth in the number of customers and the surge in prices during the same period. Moreover, California's once-held advantage of having a lower average residential electricity bill compared to the rest of the United States has also vanished in the wake of the pandemic. In 2012, residential electricity bills were 20.4% below the national average, but it has shifted to a 2.2% higher than the U.S. average in 2022.
- California has some of the highest electricity costs per kWh—third-highest for residential customers ($0.26/kWh), second-highest for commercial customers ($0.22/kWh), and the fourth-highest for industrial customers ($0.17/kWh). Because of the high electricity costs per kWh, California finishes in the middle of the pack (24th place) in terms of electricity bill per capita, a far cry from the sixth-place position it held pre-pandemic and the third-place position in 2016. Compared to Utah, which had the lowest per-capita electricity bill in 2022, California’s per-capita electricity bill was 67% higher—a significant spike compared to 2017, when California’s per-capita electricity bill was only 19% higher than Utah’s.
- In 2022, California finished in the middle (25th place) in terms of having the lowest per-capita energy bill. Rapidly rising energy costs are a serious concern, given that California had the lowest per-capita energy bill from 2007 to 2011. Compared to Massachusetts, which had the lowest per-capita energy bill in 2022, California’s per-capita energy bill was 44% higher. However, California’s per-capita energy bill was only 14% higher than Massachusetts in 2017.
- The state of California can no longer depend solely on mild weather and energy efficiency measures to mitigate the impact of high utility bills. In a previous Next 10 report, researchers found that price additions to each kilowatt-hour, effectively a tax on grid electricity which pays for the costs of climate change mitigation among other programs, are now the main driver of retail electricity price increases.113 More recently, rates have been driven by wildfire-related expenses, insurance, and solar adoption which reduces revenue for the utilities.
113 Paying for Electricity in California: How Residential Rate Design Impacts Equity and Electrification. The Energy Institute and Next 10. September 2022. Available at: https://www.next10.org/publications/electricity-rates-2
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