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It’s 2026, and “lowering utilities bills” is the new “housing affordability” for Democratic politicians.
In the governor’s race, self-funded billionaire candidate Tom Steyer is declaring he’ll reduce electricity bills by 25%. The environmentalist investor has featured the head-turning figure in ads promising that he’ll “introduce competition” to the electricity market.
“We have to take on these electric monopolies,” he says in the ads. “If we break up these monopolistic power utilities, we’ll drive down costs.”
The TV and digital ads are tailored to feature each of the three major investor-owned utilities serving the region where the ads are airing: Pacific Gas & Electric, Southern California Edison and San Diego Gas and Electric.
Tackling electricity costs is a potent political issue with a populist message in a state with the second-highest power bills in the country. Electricity rates for the state’s three large investor-owned utilities — which serve the majority of California customers — rose between 48% and 67% between 2019 and 2023. That’s in large part because of the state’s increasingly destructive wildfires, some sparked by power lines, have prompted utilities to spend big on infrastructure improvements and raised liability costs.
California Environmental Voters, an advocacy group, released a poll this week that found 71% of surveyed likely voters prioritize controlling gas and electric bills. (Steyer, in the same poll, was supported by 8% of likely voters — behind Democrats Katie Porter and Eric Swalwell, and Republicans Chad Bianco and Steve Hilton.)
“The monopoly is part of the reason this issue has become so fever-pitched for communities, because they don’t have a choice,” said the group’s chief executive officer, Mary Creasman. “I think Mr. Steyer is seeing all of the polling we’re seeing.”
But despite saying so in his own ads, Steyer told reporters during a press conference this month that he’s not actually arguing for “breaking up” PG&E or having cities split off into their own municipal utilities, as San Francisco is considering.
Steyer, who is on leave from the investment firm he founded to fund clean energy projects, wants to force utility companies to choose cheaper ways of wildfire-proofing their infrastructure and give customers other options for buying power, including making it easier to build neighborhood-level solar projects or allowing more communities to operate their own local grids.
‘It’s a foolhardy promise’
So far, consumer advocates aren’t clamoring to get on board. Many said they’re waiting for Steyer or other candidates to release more detailed plans. Some are skeptical: Talk of “breaking up” utilities raises the specter of bad actors manipulating prices during the state’s early 2000s energy crisis. Utilities experts, meanwhile, warn that increased retail competition — one of Steyer’s main goals — wouldn’t target the bulk of customers' bills, which come from distributing the power on utility-owned lines.
“We’re happy to see all of them taking this issue seriously,” said Mark Toney, executive director of the consumer advocacy group The Utility Reform Network. “But a soundbite is not a proposal … It’s difficult to (lower rates) in one fell swoop, I will tell you that.”
Garry South, a Democratic strategist, said it’s hard to trust a candidate who says the government can lower power bills. South worked for Gray Davis, the former governor who was famously recalled from office the last time the state tried to break up its utility monopolies.
California’s electricity deregulation project of the 1990s led out-of-state companies to buy up power plants from utilities that were forced to divest them, manipulate the supply of electricity and jack up wholesale prices. The ensuing rolling blackouts cost the state billions of dollars in economic damage and Davis his political career, even though the market restructuring began years before his term.
“We’ve seen this movie before,” South said. “It’s a foolhardy promise for any candidate to make.”
But rates have risen so dramatically in recent years the issue could end up front and center in the governor’s race. Energy costs already played a role in Democratic victories nationally last year, with new Virginia Gov. Abigail Spanberger focusing on the issue in several ads. At a climate-focused gubernatorial forum hosted by the California Environmental Voters on Wednesday, Steyer and fellow Democrats Katie Porter, Eric Swalwell and Xavier Becerra all said energy should be more affordable; Becerra floated freezing utility rates if he becomes governor.
The issue gives politicians a chance to tout their affordability bona fides, while nodding to the climate change-driven natural disasters that are partly responsible for higher bills. For California Democrats specifically, lowering rates is key to maintaining the state’s climate goals and reducing greenhouse gas emissions by electrifying cars and appliances. And the high costs come amid anxiety about the potential effects of artificial intelligence data centers on power bills. Some state lawmakers this year are introducing bills that would require the centers to be charged higher rates.
In response to criticism from advocates and experts, Steyer’s spokesman Kevin Liao pointed to an op-ed Steyer authored outlining his goals and said he’s proposed more specifics than other candidates.
“Tom Steyer is the only candidate for governor who’s put forward a detailed vision for busting the utility monopolies to deliver real savings for Californians struggling with high utility bills,” Liao said.
More choices, more renewables
Steyer says there are some ways to force the major investor-owned utilities to lower rates: by giving customers more options of who to buy power from; hooking up new renewable generation sources to the grid faster; and, with the advent of better solar and battery technology, allowing more power to be bought and sold at the neighborhood level.
“We have a lot of flat roofs in this state and those flat roofs can do solar,” he said at a press conference this month. “It’s not some small thing … People owning roofs are going to charge people for electricity, and do it dramatically cheaper than monopoly electricity providers.”
Some experts said retail competition could prompt utilities to be more consumer-friendly, but most aren’t convinced it will make a big difference in the bills.
“That just isn’t a big part of the bill in California,” said Severin Borenstein, an energy economist at UC Berkeley.
The most expensive part of getting electricity isn’t the power itself, but the long-distance transmission and local distribution lines that deliver it to each home or business. Customers who buy power from a source other than the investor-owned utilities, as residents in a few dozen cities do through local, nonprofit buying collectives called Community Choice Aggregators, still must pay a utility for transmitting the electricity to them through the utility’s lines.
Of the nearly 40 cents-per-kilowatt-hour charged to the average Californian who uses electricity from one of the three major private utilities, “the amount that’s up for competition is probably in the range of 12 to 15 cents,” Borenstein said.
Borenstein said though proposals for residents and business owners to generate and sell power locally could improve energy reliability, he’s concerned they could also just shift the fixed costs of wildfire improvements and maintaining power lines onto other users.
He pointed to one consequence of more widespread adoption of rooftop solar panels: Under a state program, utilities give customers with solar panels — typically higher-income homeowners — credits for the power they generate, but because those customers also buy less electricity, utilities recoup less of the fixed distribution costs through their bills. That leaves utilities to raise rates for customers without solar panels to make more of that money back.
State regulators in 2023 lowered the rooftop solar credit for new panels, but reports indicate the program is still a factor in high rates. Last year, the California Chamber of Commerce and the environmental group National Resources Defense Council found in separate reports that the solar “cost shift” accounts for 14% to 16% of current electricity bills.
“You can sell power within your neighborhood, but somebody’s still got to pay for the grid,” Borenstein said.
Deadly wildfires push rates higher
By far the biggest driver of rising electricity rates in California is the enormous cost of wildfire-proofing utility infrastructure, liability for past fires and insurance for future fires. Most consumer advocates say that’s where they’d like to see the state tackle rates.
The investor-owned utilities have been undergoing projects to make their infrastructure safer, including putting power lines underground, which can cost between $2 million and $6 million per mile. As with other investments, the utilities are allowed to profit from those projects, using higher rates to give shareholders a return on the capital investments. It’s an arrangement critics, including Steyer, say provides an incentive for utilities to choose the costliest improvements.
Steyer says as governor, he would appoint state regulators to the Public Utilities Commission who would push utilities to consider cheaper options, such as covering up existing power lines to make them less prone to sparking fires, rather than burying them underground, and focus their efforts on safety and maintenance.
Swalwell also said Wednesday that he would scrutinize costly infrastructure spending. But neither has said how they would want regulators to change the profit incentives. Last year, the commission voted to keep utility profit margins near 10%, ignoring advocates’ calls to cut them to 6%, a decision Steyer criticized.
California lawmakers have also begun to consider whether wildfire-proofing costs can be borne by the public instead. Last year, Gov. Gavin Newsom signed a law allowing some state financing of utility infrastructure projects, which could lower some costs and also couldn’t be used to raise customer rates.
Britt Marra, executive director of the Small Business Utilities Advocates, another consumer group, said she wants candidates for governor to scrutinize utility infrastructure spending. Her group supports public financing.
“California is facing a lot of wildfire mitigation and costs to make a reliable, safe grid,” she said. “Figuring out how to make those investments in a way that doesn’t drive our bills up is how we have to look at things.”
Small business owners are especially squeezed by high rates, Marra said, because they are charged more than residential customers and often operate on fixed schedules, so they can’t shift their electricity usage during the day to off-peak hours.
“We’re really excited utility affordability is becoming a part of mainstream conversation in the upcoming election,” she said. “We’re still waiting to see a clear plan of how that 25% is actually going to be reduced.”
This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.
