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The Truth Behind Your Electricity Bill

  • Sophia 

This past year has been so crazy it is easy to miss events that would-be front-page news any other year. Here in California we have been experiencing the worst of it. From long lasting lockdowns and missing friends and family, to crazy natural disasters it seems like every other day something tragic happens. With the financial burden of small businesses being closed and record unemployment every extra dollar seems to count. So why then are electricity bills increasing at a pace far beyond inflation?

As contradicting as it may seem, electric companies are actually passing the costs of COVID-19 and the wildfires onto the customers.

Actual electricity rate increases:
  • The PG&E E-6 plan’s off-peak summer rates have more than doubled from 8.5 cents in 2008 to 18 cents in 2019.
  • The peak rates have increased from 29.3 cents to 37.1 cents in the same time frame.
  • That’s rate increases of 100% and 26.6%

To make matters worse, PG&E is again inflating rates by another whopping 8% starting March 1st 2021.

Why are they increasing the rates so much?
  1. They are raising the guaranteed return on equity for capital investments under California law from 10.25% to 12%. They are doing this, so the wealthy shareholders are not losing money on their stock, as PG&E struggles to pay for its negligence.
  2. PG&E was responsible for many fires including Campfire that burned nearly 14,000 homes and killed scores of people. The costs associated with this caused PG&E to file bankruptcy and plunged their stock price from $70.64 in 2017 to $11.64 in 2021.
  3. Instead of being responsible and paying for their mistakes out of their own pocket, PG&E is transferring these costs onto current customers making the burden heavier and heavier as more people switch to better energy providers.
Are rate hikes helping?

In short, no.

Despite these crazy rate hikes, customers in California have endured rotating power outages – the first since the 2001 energy crisis – during record breaking heat waves. PG&E has claimed that rate increases are going towards wildfire prevention, which makes their decision to shut off power to millions of Californians as “fire prevention” suspicious.

In addition to fire prevention, blackouts are also due to electric companies failing to provide sufficient power supplies. To combat the extra high demand due to extreme weather and people staying at home due to COVID, electric companies are relying on energy from power plants outside of California. This is not only depleting other state’s power leading to disasters like the 2021 Texas Power crisis but is also causing increases on your bill. In fact 50% of your monthly bill is going towards transporting your energy from another state..

In short, electric companies have a very outdated system and are not a sustainable way of getting power. 2020 has been a year of revelations guiding us to progress as a society. Clean, green energy is the best way to combat global warming while preventing huge monopolies from charging outrageous prices just because they can, giving Americans reliable power at a reasonable price.

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