In 2025, affordability is the top concern for Californians. From housing and childcare to groceries, costs are climbing across the board. And now, skyrocketing energy prices have emerged as a central factor in the state’s broader affordability crisis.

California currently has the second-highest electricity rates in the nation—trailing only Hawaii. A significant driver of this is the cost of wildfire mitigation. Between 2019 and 2024, ratepayers shouldered more than $27 billion in wildfire-related expenses. Investor-owned utility monopolies like Pacific Gas and Electric (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E) are passing these costs on to consumers—covering grid upgrades and bankruptcy liabilities stemming from fires ignited by their own equipment.

Over the past decade, these utilities have raised customer rates dramatically: PG&E by 110%, SCE by 90%, and SDG&E by 82%, according to the California Public Utilities Commission (CPUC). Meanwhile, PG&E is reporting record profits and signaling intentions for continued growth.

Despite the clear connection between wildfire spending, utility mismanagement, and rising electricity rates, blame is increasingly—and unfairly—being shifted onto distributed solar.

Rooftop solar and net metering have come under fire, but criticisms often rely on inconsistent assumptions and conflicting analyses. Rather than targeting solar, policymakers should focus on the true cost drivers and pursue meaningful reforms that will actually lower rates.

Changing the rules for nearly 2 million legacy solar customers by retroactively altering contract terms does nothing to solve the affordability crisis—and only erodes public trust. These customers made good-faith investments under clear rules. Respecting those agreements is not only fair, but also essential to preserving confidence in future clean energy initiatives.

Policy Certainty is Critical for Clean Energy Progress

As California rolls out new technologies like Virtual Power Plants (VPPs), home electrification, and efficiency programs, customer confidence is essential. If the state signals that program terms can be changed at any time, public participation—and the success of these efforts—will suffer.

Real Solutions to California’s Energy Affordability Crisis

To address rising costs and improve equity, state leaders should consider the following strategies:

1. Fund Programs Through Taxes, Not Utility Bills

Rather than continuing to load new program costs onto electricity bills, California should use general tax revenue to fund essential programs. This would help stabilize rates and ensure costs are distributed more equitably.

2. Pursue Innovative Transmission Financing

Building out transmission is essential for delivering low-cost renewable energy, but it doesn’t need to break the bank. Alternative ownership models and lower-cost capital, such as allowing third parties to develop transmission infrastructure, could significantly reduce expenses—according to a recent Clean Air Task Force study.

3. Refocus Climate Credits for Maximum Impact

Instead of the current twice-a-year $50 credit, California should restructure climate credits to provide more support to low-income households and regions with the highest energy costs. This targeted relief would deliver immediate and meaningful savings to those who need it most.

4. Fix the Tax Code to Unlock Federal Clean Energy Incentives

California’s mismatch with the federal tax code limits the value of new federal clean energy incentives. Passing legislation like SB 302, introduced by Senator Padilla, would allow clean energy developers to take full advantage of these tax credits—lowering project costs and saving consumers money.

5. Promote Battery Storage and VPP Participation

Expanding battery storage adoption among rooftop solar owners will increase grid flexibility and improve household resilience. Incentivizing participation in VPP programs—which combine power from thousands of homes to stabilize the grid—offers another path to lower system costs.

6. Link Utility Profits to Performance, Not Spending

Currently, utility profits are tied to how much they spend, not how well they serve customers. This model should be replaced with performance-based metrics—like improved reliability, faster interconnection, and support for electrification—that reward outcomes, not just investment levels.

It’s Time to Rebalance the System

The structure that allows utility shareholders to profit while ratepayers absorb the risk must be reevaluated. The status quo is no longer sustainable, especially as more Californians struggle with energy costs.

California has long been a leader in clean energy—particularly solar—and it can remain at the forefront while addressing affordability. But doing so requires confronting the actual causes of high energy costs and resisting efforts to scapegoat solutions like distributed solar, which are part of the fix, not the problem.

With smart, targeted policies and a renewed focus on fairness, the state can ensure an energy system that is affordable, reliable, and equitable for all.