Why Your Electric Bill Keeps Going Up and What Researchers Say California Should Do About It

[Cropped photo from UC Berkeley study]

The Center for Law, Energy and the Environment (CLEE) at UC Berkeley Law released the report Thursday. It’s called Powering Down Prices: Policy Solutions to Lower California’s Electricity Rates. The report looks at why electric bills keep going up and what state lawmakers could do about it.

California electric rates have climbed 8% to 10% every year for the past decade. That’s more than double the rate of inflation. Average rates now run 35 to 45 cents per kilowatt hour. Businesses in California pay two and a half to three times more for electricity than businesses in nearby states.

“There is no single solution to California’s electricity affordability crisis,” said Travis Ritchie, one of the report’s authors and a research fellow at CLEE. “The recent period of rate shock built up over many years, and reversing it will take time. However, our report identifies a series of structural reforms that together can bend the cost curve toward more affordable outcomes.”

Wildfires are the biggest cost driver

The report says wildfire prevention and cleanup costs are the single biggest reason bills have gone up over the past five years. State regulators allowed utility companies to charge customers more than $40 billion for wildfire costs between 2019 and 2024.

About $26.6 billion of that paid for prevention work, like trimming trees and burying power lines. The other $13.6 billion covered insurance and payments to wildfire victims.

Wildfire costs now make up 14% to 19% of the average customer’s bill. That adds up to $250 to $500 more per year for each household.

The report suggests the state should lower how much profit utilities can make on wildfire-related projects. Right now, utilities earn extra money on this spending. The report argues that’s not fair, since preventing wildfires already saves utilities money by lowering their legal risk.

A bill moving through the Legislature, SB 905 (Becker), would do something similar.

“California has established clear wildfire mitigation goals, but there simply isn’t enough public funding available to achieve them,” said Sam Uden, Co-Founder and Managing Director of Net-Zero California. “Policymakers should leverage and coordinate private investment, including from utilities and insurers, which have a shared interest in reducing wildfire risk, and direct those resources toward mitigation projects that deliver the greatest reduction in losses.”

A loophole that costs billions

The report also points to a billing loophole. Normally, utilities set a budget every four years through a process called the General Rate Case. If they spend less than the budget, they keep the extra money as profit. This gives them a reason to control costs.

But utilities can also use special accounts to bill customers for certain costs later, without the same level of review. The report found that spending through these accounts jumped from $86.6 million a year in 2018 to nearly $2.4 billion in 2024.

“Memorandum and balancing accounts function like a credit card for utilities, with no spending limit and no real accountability,” said Mark Toney, Executive Director of The Utility Reform Network (TURN). “Utilities have exploited this loophole in the ratemaking process to dramatically increase their spending outside the budget constraints of the General Rate Case. California ratepayers operate within a budget. Utilities should too.”

Another bill, SB 1098 (Pérez), would limit how often utilities can use these special accounts.

Regulators need more help

The report says California’s utility regulator, the CPUC, doesn’t have enough staff or money to properly check utility spending. The companies the CPUC regulates have far more resources than the agency does.

The report recommends the state pay CPUC staff more, hire economists, and bring in outside experts to review utility spending more closely.

The report was written by Ritchie and Ethan Elkind, who leads CLEE’s Climate Program. It’s based on a meeting in December 2025 that brought together utility experts, former regulators, and groups that represent ratepayers.

The full report is available at clee.berkeley.edu.