Sacramento’s Decarbonization Mandates Punish Working Families
Over the last ten years, residential electricity rates in California have nearly doubled, and the average California household now pays nearly 15% more than the national average on their monthly electricity bills, according to the Energy Information Administration.
A key driver behind this is state climate policy and decarbonization mandates. Specifically, in 2015, the legislature enacted SB 350, amending California’s Renewable Portfolio Standard (RPS) to require that utilities derive 50% of their electricity from zero-carbon sources by 2030. In 2018, it enacted SB 100, imposing a 100% zero-carbon electricity mandate by 2045; this was reinforced by the passage of SB 1020 in 2022, setting legally binding interim targets of 90% and 95% zero-carbon electricity by 2035 and 2040, respectively.
These mandates force utility providers to overhaul their energy generation, storage, and transmission systems, all of which are costly endeavors at the scale required. For example, PG&E plans to invest $73 billion in capital expenditures through 2030 to re-engineer its systems and bring them into compliance with state mandates. Additionally, the nearer deadlines imposed by SB 1020 front-load clean energy procurement and build-out, increasing cost pressures for utility providers in the short to medium term.
Utility providers recover these costs by raising household electricity rates. PG&E, Southern California Edison, and San Diego Gas & Electric — the state’s three major electricity providers — have increased their average residential rates by 104%, 83%, and 71%, respectively, according to the California Public Utilities Commission.
The consequences of these rate increases are genuine and immediate. An August 2024 survey of utility caregivers found that nearly 96% have difficulty paying for electricity. This disproportionately affects low-income households, often with young children. Fox reporting indicates that households earning below the Federal Poverty Level spend 4.4% of their annual income on electricity, compared to 1.8% for the average household.
This places an especially heavy burden on renters whose landlords cannot install efficiency upgrades in buildings with aging systems, and on senior citizens on fixed incomes who must stretch limited resources to cover utilities alongside other necessities.
California offers programs to try to offset high energy costs for its lowest-income ratepayers. CARE (California Alternate Rates for Energy) provides qualifying households with discounts of roughly 30-35% on electricity bills, while FERA (Family Electric Rate Assistance) offers an 18% discount for moderate-income households that earn too much to qualify for CARE. But these subsidies do not come free — they are funded in part through surcharges spread across other customers’ bills.
The real burden of Sacramento’s energy policies falls squarely on working families, small business owners, and middle-class ratepayers who do not qualify for assistance but are unable to absorb bills that have more than doubled over the past decade. These Californians pay the higher base rates that state climate mandates have produced, and they also underwrite the cost of low-income subsidies through surcharges on those same bills. This is evidenced by the income-graduated fixed charge, enacted through AB 205, which assesses an additional monthly fee of $24.15 for non-low-income customers (and adds $12 and $6 to the monthly bills of low-income households enrolled in FERA and CARE, respectively). This measure has been heavily criticized by legislators, policy analysts, and ratepayers for indiscriminately raising rates with no correlation to electricity usage. If Sacramento had not driven electricity costs to their current extremes, the need for such extensive ratepayer-funded assistance would be far less pressing — and far less costly as well.
Instead of imposing new income-based charges, the state would be well advised to reform existing climate policy. For example, it could set a hard cap on the cost of Renewable Portfolio Standard (RPS) implementation that utilities may pass on to ratepayers. If the incremental cost of RPS compliance exceeds that cap, utilities would be allowed to temporarily pause additional RPS-related procurement.
Additionally, each new proposed rule should undergo a rate impact analysis. If modeled impacts exceed certain statutory thresholds — for example, a 5-10% increase in rates over a ten-year window — the agency must either redesign the policy or seek legislative approval acknowledging the higher costs. This places vital checks on administrative agencies’ authority and provides for greater transparency and public participation in the rulemaking process.
As an alternative to layering new charges onto already-high electricity bills, the state should cease using utility rates as a tax base for social and climate programs. Costs from items like RPS compliance, wildfire hardening, and low-income subsidies should be shifted away from monthly household bills and into the state budget, where they can be debated through the normal legislative process and funded from a broader tax base rather than electricity ratepayers alone. Utilities would then back those charges out of rates, lowering per-kWh prices and easing “rate shock.”
At its core, California’s high electricity rates are artificially driven by irrational policies that ignore the economic realities facing the state’s 40 million residents. With the confluence of the current affordability crisis, wildfire prevention projects, and surging AI-driven electricity demand, the more pragmatic approach is to reform existing mandates, tightly scrutinize future rules, and produce a more balanced and cost-efficient energy grid that draws on a diverse set of sources — including oil, natural gas, solar, and nuclear energy — to effectively address both environmental and economic imperatives.
Without urgent policy corrections, California ratepayers will continue to bear the burden of overzealous Sacramento initiatives that elevate climate action over a crushing cost of living that has made the state unaffordable for millions of Californians.
Sahil Shah is a senior at UCLA, studying Political Science and International Relations. He interned at the California Policy Center in the Fall 2025 term, during which he closely researched and analyzed state energy, housing, and economic policy.