Wildfires Will Lead to Even Higher Electricity Rates

If you feel like you are paying more for electricity, it is because you are. By A LOT.

California's major utilities—SCE, SDG&E, and PG&E—are set to increase commercial rates by an average of 8.5% in 2025. This follows a staggering *85% cumulative rate hike since 2020.

Many businesses, including those with solar panels, have been voicing frustration over rising power costs. While some attribute the increases to more employees returning to offices, the primary driver is the surge in utility rates. A significant number of the wildfires, including at least one or more in Los Angeles, are linked to utility-related issues. As utilities face enormous lawsuit payouts from fire-related damages, they also must fund repairs to their failing infrastructure.

The result? Utility companies turn to their customers to cover these costs, translating into endless rate hikes—far higher than we’ve seen in the last 18 years that I have been in the renewable energy field. The ongoing fires in LA are likely to add another layer of complexity, pushing rates even higher for California businesses.

So, how can businesses address these soaring electricity costs? There are several strategies:

1. Start with a Utility Rate Analysis

   Utility companies have been adjusting peak hours alongside rate increases. What worked a few years ago might no longer be the most cost-effective option. A comprehensive rate and usage analysis can reveal if switching to a different rate structure might benefit your company.

   
   

2. Combine Solar with Batteries

   While solar can help offset power costs, changes to net metering agreements mean it's not as straightforward as before. Today, the most effective solution is often combining solar panels with battery storage. Additionally, new technologies are emerging that could offer even more cost-effective solutions. Assess whether self-generation—such as solar plus storage—makes sense for your facilities.

   
   

3. Leverage Energy Management Systems

   With the rise of AI-driven services, energy management systems have seen significant improvements. These systems can optimize your energy use, further reducing your overall electricity consumption. Investigate whether such a system could benefit your business.

As power demand continues to rise and utility infrastructure remains outdated, electricity prices will keep climbing. Future-proofing your company by implementing strategies to reduce energy costs now will provide peace of mind—and financial relief—in the years ahead.

• Data based on Energy Toolbase analysis.