Consumers are being Forced to Overpay: Why Utility Rates won't Stop Increasing in 2023

In recent years, homeowners and businesses alike have witnessed a steady increase in their electricity bills. This upward trend has led many to question why their utility bills continue to rise year after year. In this blog post, we will delve into the underlying reasons behind these escalating rates and shed light on the impact of solar energy adoption, maintenance costs, and historical data from California's SCE and SDGE.

Shifting Customer Base

The Solar Factor As more individuals and businesses embrace solar energy, traditional electricity companies find themselves with a changing customer base. Customers who install solar panels generate their own electricity, reducing their reliance on the grid. While this transition benefits solar adopters by lowering their energy costs, it poses a challenge for electricity companies. These companies still bear the responsibility of maintaining the grid and producing energy for non-solar customers. Consequently, the cost burden is shifted to the remaining customers, resulting in increased rates. This shift in cost allocation can help explain the rising electricity rates experienced by many consumers - meaning that customers

The Price of Grid Maintenance

Another factor contributing to the escalating electricity rates is the maintenance and repair costs associated with the electrical grid. Natural disasters, such as wildfires, hurricanes, and severe storms, can inflict significant damage on the infrastructure. Repairing and upgrading the grid to ensure reliable electricity delivery comes at a considerable expense.To cover these maintenance costs, electricity companies pass on the financial burden to their customers. Consequently, as the frequency and severity of natural disasters increase, the rates charged to customers also tend to rise - as in, customers are directly paying for the grid's maintenance.

Analyzing Historical Data

California's SCE and SDGE Taking a closer look at the historical data from California's two major electricity companies, Southern California Edison (SCE) and San Diego Gas & Electric (SDGE), further substantiates the upward trajectory of electricity rates. Over the past five years, both SCE and SDGE have witnessed a consistent increase in their rates. Factors such as inflation, rising operational costs, and the aforementioned factors, such as solar adoption and grid maintenance, contribute to this upward trend. By examining these examples, we gain a clearer understanding of the long-term impact on customers and the challenges faced by electricity companies in balancing costs and service delivery.

The increasing rates charged by electricity companies reflect a complex interplay of various factors. The rise in solar adoption, as customers generate their own electricity, forces traditional electricity providers to distribute costs across a smaller customer base. Additionally, the maintenance and repair costs incurred due to natural disasters contribute to the upward trend in electricity rates. By examining historical data, such as that of SCE and SDGE, we can observe a consistent increase in rates over time.

For example in 2022 alone SCE increased its rates by 17% an increase of ≈$85 for customer's electricity bills. Further increases were effective January 1st, 2023, resulting in an extra 7.21% increase. Similar rate hikes can be seen by SDGE in San Diego.

As customers become more aware of these underlying factors, it becomes crucial to explore alternative energy solutions like solar power and advocate for a resilient electrical grid. Understanding the challenges faced by electricity companies can help consumers make informed decisions and promote a sustainable and affordable energy future.