How California lawmakers can address sky-high electricity bills right now | Opinion
Rising electricity costs in California is a problem that is only getting worse. PG&E has raised rates six times in the last 18 months, and electricity prices across the state have increased 30 percentage points faster than inflation since 2019. As a result, 4.3 million Californians have fallen behind on their payments — and they want lawmakers to take action.
Across the state, 79% of voters say that the government should do more to limit price increases by for-profit utility companies, according to a recent poll from The Utility Reform Network and California Environmental Voters.
Thankfully, California lawmakers have options at their fingertips to provide both immediate rate relief and address longer-term affordability without any new programs or funding.
In 2006, Assembly Bill 32, the Global Warming Solutions Act, was signed into law. Under the landmark cap-and-trade program created by the legislation, the state specifies a total limit on climate pollution, and polluters must pay for their emissions through a carbon market. The value of California’s cap and trade program is nearly $10 billion per year, generating a significant amount of revenue for the state.
This year, the state will return $1.4 billion of these funds to millions of utility customers as “climate credits” on their electric bills. The electricity credit shows up as twice-a-year credits, with every household served by a participating utility (including PG&E, SoCal Edison and San Diego Gas & Electric Company) getting the same amount, regardless of how much electricity they use. This was designed for an earlier era when electricity prices were lower and there was a need to preserve the price signal to conserve.
Today, however, electricity prices are too high. And higher electricity prices mean customers buy fewer electric vehicles, heat pumps and other electric technologies needed to phase out fossil fuel burning.
Lawmakers could make two simple changes to how electricity climate credits are distributed to better support California households — especially low-income families and those in the hottest regions who face the highest cooling costs. This is especially relevant as extreme heat becomes more common.
Reduce residential electricity prices
The first simple change would be to use the current electricity climate credit to directly reduce residential electricity prices. A recent analysis from my research group, the Environmental Markets Lab at UC Santa Barbara, finds that this change would result in significant savings for all residential customers.
If applied year-round to all households, we find that funds from the climate credit together with the electricity rate reform set to go into effect in 2026 (which will reduce prices by 10% on average) would lower electricity prices by 18-26%.
The program could also be structured to provide year-round relief just for low-income households (as defined by the California Alternate Rates for Energy program), for which electricity bills represent a far greater percentage of monthly income.
With this program design, climate credits aimed at rate relief by themselves (even without the already planned 2026 rate reforms) would lower electricity prices by 27-44%. And if relief were focused for all households on just the summer months when electricity use is highest, climate credit funds on their own could lower prices by 13-19%, allowing households — particularly those exposed to extreme heat — to either save money or run their air conditioning longer and cooler.
Electricity rate relief
Second, if a portion of the climate credit that is currently delivered to reduce customers’ gas bills is reallocated to electricity rate relief, it would provide additional support to the millions of Californians struggling with their electric bills and further incentivize the transition to cleaner, healthier, more efficient electric vehicles and appliances.
California is widely viewed as a climate leader, in large part because our cap-and-trade program is a proven, successful policy that is both reducing emissions in a cost-effective manner and funding important climate priorities. California can better use this existing program to help lower electricity prices while continuing to reduce pollution.
This story was originally published July 8, 2025 at 5:00 AM with the headline "How California lawmakers can address sky-high electricity bills right now | Opinion."