Additional BLS data shows that electricity prices have climbed 29.1% in the past decade and 90.1% over the past two decades across the United States.

Bureau of Labor Statistics. (n.d.). Labor Force Statistics from the Current Population Survey. U.S. Department of Labor. Retrieved December 9, 2024, from https://data.bls.gov/pdq/SurveyOutputServlet

The Environmental Protection Agency (EPA) maintains that there are 17 states with deregulated electricity markets, meaning customers in those states can choose their electric company at a competitive rate.

Electricity rates by state 

The EIA confirms that the price difference between the states with the most and least expensive electricity — Hawaii and California being the highest and midwestern states being lower.

U.S. Energy Information Administration. (n.d.). Electricity Monthly Update: Table 5.6.A - Average Retail Price of Electricity to Ultimate Customers by End-Use Sector. Retrieved December 9, 2024, from https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_6_a

What Determines Energy Prices- noted by the EIA:
Electricity generation costs and prices vary significantly across the U.S. due to factors such as fuel availability, maintenance expenses, demand fluctuations, government regulation, and company profitability. States like Nebraska benefit from low rates, largely due to their renewable energy sources, including a strong wind energy sector and significant ethanol production. Conversely, states with high maintenance costs, especially those vulnerable to natural disasters like Wildfires in California face higher energy rates.

New Report Shows Utility Rates in California Are Set To Outpace Inflation Through 2027 As Residents Face $27 Billion Wildfire Fees

Additionally, electricity prices are regulated by state governments in 33 states, leading to inconsistencies, while 17 states operate under deregulated markets where companies can set prices to maximize profits. Increased electricity demand, particularly during extreme weather, further exacerbates price variability.

Regulated vs. deregulated energy markets

There are two main types of energy markets: regulated and deregulated. In a regulated market, each homeowner is served by a single company that handles energy production, delivery, marketing, sales and customer service. Prices in regulated markets are controlled by the local government.

In a deregulated energy market, independent for-profit companies sell electricity and handle customer service, leading to lower rates due to competition. Homeowners can choose their energy provider and compare rates and contract terms to find the best option for their needs.

Key factors to consider when comparing providers include:

• Cost per kWh

• Type of rate (variable or fixed)

• How you pay (prepaid plans or postservice payments)

• Deposit required to initiate service

• Length of the contract

• Percentage of renewable energy delivered

• Cancellation policies and fees

• Customer service

U.S. Environmental Protection Agency. (n.d.). Understanding electricity market frameworks and policies. Retrieved December 10, 2024, from https://www.epa.gov/greenpower/understanding-electricity-market-frameworks-policies

California: A Case Study of Rising Utility Rates

California serves as a crucial case study, particularly as it illustrates how external factors such as wildfires contribute to rising electricity costs.

A Look Back on California Energy Prices Regulated by CPUC:

California Public Utilities Commission. (n.d.). Historical Electric Cost Data [Excel file]. Retrieved December 9, 2024, from https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/electric-costs/historical-electric-cost-data

CPUC Stops Reporting Rate Increases in 2017- Even as Energy Rates Double

California's three major investor-owned utilities—Pacific Gas and Electric, Southern California Edison (SCE), and San Diego Gas and Electric—have been increasing rates to cover costs associated with wildfire prevention. A recent report indicates that electricity rates in California are projected to outpace inflation through 2027, largely due to ongoing wildfire-related expenditures.

California Public Utilities Commission. (n.d.). Historical Electric Cost Data [Excel file]. Retrieved December 9, 2024, from https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/electric-costs/historical-electric-cost-data

For instance, SCE raised its rates by 17% in 2022, resulting in an added $85 cost for most residential customers. Additional increases took effect on January 1, 2024, with average residential bills expected to rise from $143.33 to $175.39—a 7.21% increase.

The Monthly Impact of CPUC Rate Increases

The average single-family detached home in California uses around 10,000 kilowatt-hours (kWh) of electricity per year, or 833 kWh per month.

$150 more per month for the same amount of energy.

In 2017 the kwh rate was .17 cents meaning 10,000 kwh a year would cost $1,700 or $141 a month. The same 10,000 kwh a year at a rate of .35 cents a kwh now costs $3,500 which translates to $291 a month for the same amount of energy and more frequent blackouts. 

Rationale Behind Rate Increases

The CPUC and SCE justifies these hikes by citing the need for essential capital investments in infrastructure and the maintenance of a reliable electrical grid. This includes financing wildfire risk management and ensuring fair returns for shareholders. However, these rate increases pose challenges for consumers, particularly those who are already struggling to meet basic expenses.

Many Californians rely on programs like the California Alternate Rates for Energy (CARE), which help subsidize electricity costs. Unfortunately, even participants in such assistance programs are expected to see their bills rise, further burdening low-income households.

Strategies for Consumers to Manage Costs

Understanding local rates and exploring provider options can significantly impact electricity bills. In regulated states, enhancing home energy efficiency can yield substantial savings. In contrast, consumers in deregulated markets should actively compare electricity plans to find the best rates.

Tips for Navigating the Energy Market

• For Deregulated Markets: Take advantage of the competitive landscape by shopping around for the best deal. Look for fixed-rate contracts to avoid unexpected rate hikes.

For Regulated Markets: Focus on improving energy efficiency through upgrades to insulation, appliances, and smart home technologies. Homeowners are encouraged to leverage government grants for solar and battery backup solutions to lower their energy costs and reduce wildfires

Grants for California Residents to Reduce Energy Costs

The Inflation Reduction Act, along with the federal solar tax credit, has opened the door for homeowners to take advantage of Power Purchase Agreement (PPA) programs, allowing them to significantly lower their energy costs without the burdens of purchasing, leasing, or financing solar systems and battery backups.

Through these programs, homeowners can secure cheaper, more stable electricity with blackout protection and 25 years of rate increase protection compared to local California utilities. 

This model is particularly beneficial in California, where a significant portion of electricity costs stems from transmission and distribution charges.

By harnessing solar power generated directly from their roofs, homeowners can circumvent these delivery fees, creating substantial savings.

How To Qualify For Government Grants For Solar & Battery Backup

To qualify for PPA programs, homeowners must work with a licensed solar broker who holds a California Home Improvement license, ensuring that a tailored solar system is designed and approved by local utilities to meet their specific energy needs.

My Solar Solutions is dedicated to empowering homeowners and businesses in California to harness the benefits of solar energy through comprehensive and personalized services. Specializing in facilitating Power Purchase Agreements (PPAs), My Solar Solutions guides clients through every step of the solar journey, from initial consultation to system design and installation. 

Their team of experienced solar brokers, equipped with California Home Improvement licenses, works closely with homeowners to create customized solar systems that meet individual energy needs while ensuring compliance with local utility requirements. 

By focusing on education and transparency, My Solar Solutions helps clients understand the long-term financial benefits of solar energy, including reduced energy costs and increased resilience against rate hikes, all while contributing to a sustainable future.

Electricity prices across the United States reflect a complex interplay of factors, including energy sourcing, demand, and regulatory environments. As prices continue to rise, particularly in states like California, consumers must remain vigilant in managing their energy costs through informed choices and proactive measures. Understanding the nuances of local markets can empower consumers to make decisions that align with their financial needs and energy usage patterns.