Why is commercial electricity so expensive in California?
California businesses pay about twice the national average per kWh. Some of the reasons are statewide and out of your hands. Some are in how PG&E and SCE bill a facility, and those you can work with.
What runs a commercial electric bill up the most?
Often the demand charge, especially for facilities with sharp peaks. On most commercial and industrial rates, the single highest 15 minutes of power use in the month is billed per kilowatt, so one short peak can set a large share of the whole bill.
30.02¢
Average California commercial price per kWh in August 2026 (preliminary), against 14.47¢ for the U.S.
27%
Share of PG&E’s total revenue requirement that went to wildfire costs at the end of 2024 (17% for SCE).
$83.53/kW
PG&E B-19’s all-hours and 4–9 pm summer demand rates combined, as of March 1, 2026.
What is on a PG&E or SCE business bill
Generation and delivery are the two main parts. Demand charges and time-of-use explain how costs within them are calculated, so these four boxes help you read the bill; they are not four separate totals to add together.
Generation
The electricity itself, bought from PG&E or SCE or from a community choice aggregator such as Ava Community Energy or Clean Power Alliance. Priced by time of use.
Delivery
Distribution, transmission and statewide charges you pay whoever generates your power. PG&E’s B-19 includes a Wildfire Fund Charge (0.591¢/kWh) and a Wildfire Hardening Charge (0.297¢/kWh) on every kWh.
Demand charges
Demand charges bill power in kW rather than energy in kWh. Standard PG&E B-19 includes an all-hours maximum and separate time-related charges, including summer peak and part-peak demand. Other schedules and storage options differ; check your tariff’s intervals, minimums and billing rules.
Time-of-use pricing
Many business tariffs price the evening window more highly as solar output falls. The exact peak hours, weekdays, seasons and lower-price periods depend on the schedule. Time-of-use changes the price of energy within generation and delivery.
A widening gap with the U.S. average
California has cost more for years. Comparing complete calendar years shows how the gap has changed, without confusing one expensive month with the longer-term trend.
Average commercial electricity price, cents per kWh
Complete calendar years. Nominal prices, not adjusted for inflation.
From 2010 to 2025, California commercial electricity prices rose 100%, versus 31% nationally. California was 96% above the U.S. average in 2025, compared with 28% in 2010.
| Year | CA | U.S. | CA premium |
|---|---|---|---|
| 2010 | 13.09¢ | 10.19¢ | +28% |
| 2011 | 13.05¢ | 10.24¢ | +27% |
| 2012 | 13.41¢ | 10.09¢ | +33% |
| 2013 | 14.20¢ | 10.26¢ | +38% |
| 2014 | 15.62¢ | 10.74¢ | +45% |
| 2015 | 15.73¢ | 10.64¢ | +48% |
| 2016 | 15.07¢ | 10.43¢ | +44% |
| 2017 | 15.76¢ | 10.66¢ | +48% |
| 2018 | 16.34¢ | 10.67¢ | +53% |
| 2019 | 16.67¢ | 10.68¢ | +56% |
| 2020 | 17.53¢ | 10.59¢ | +66% |
| 2021 | 19.18¢ | 11.22¢ | +71% |
| 2022 | 21.81¢ | 12.41¢ | +76% |
| 2023 | 23.91¢ | 12.59¢ | +90% |
| 2024 | 25.54¢ | 12.75¢ | +100% |
| 2025 | 26.16¢ | 13.37¢ | +96% |
Why California costs more
The CPUC found average bundled rates at the three big utilities rose about 10% a year from 2020 to 2024, against about 4% inflation. These are the three main drivers it names, plus how rates price the evening.
01
Wildfire costs
The CPUC counts about $40 billion of wildfire costs authorized from 2019 to 2024: undergrounding, vegetation management, insurance and the state wildfire fund. They are recovered through rates.
02
Distribution spending
Replacing and expanding local wires, poles and substations for new load and reliability is another driver the CPUC names, and it lands on the delivery part of the bill and the demand charges.
03
Rooftop solar incentives
The CPUC lists the cost of rooftop solar incentives, including net metering, among the main drivers of rising rates. Like other program costs, it is recovered through every customer’s rates.
04
And: pricing for the evening peak
With so much midday solar, the hard hours are 4 to 9 pm. Rates price those hours highest, in energy and in demand, to pay for the capacity that covers them.
PG&E’s demand charges remain historically high
The all-hours and summer peak-period rates on secondary-voltage B-19 reached $96.66 per kW-month in March 1, 2025, then fell to $83.53 in March 1, 2026. Comparing every rate change shows the steps that annual snapshots miss.
Summer demand charges on B-19, per kW-month
Maximum demand plus the 4–9 PM summer peak charge, secondary voltage, at every rate change.
B-19 summer demand charges at secondary voltage went from $46.66 per kW-month in Jan 2020 to a high of $96.66 in Mar 2025, then fell to $83.53 in Mar 2026: 14% below the high, 79% above 2020.
| Effective | Maximum demand | Summer peak | Summer total | Winter peak |
|---|---|---|---|---|
| Jan 2020 | $21.08 | $25.58 | $46.66 | $1.79 |
| May 2020 | $21.44 | $25.79 | $47.23 | $1.77 |
| Oct 2020 | $21.64 | $25.95 | $47.59 | $1.77 |
| Jan 2021 | $21.40 | $25.12 | $46.52 | $1.69 |
| Mar 2021 | $22.77 | $26.56 | $49.33 | $1.72 |
| Aug 2021 | $22.98 | $26.69 | $49.67 | $1.72 |
| Jan 2022 | $26.03 | $27.46 | $53.49 | $1.72 |
| Mar 2022 | $25.59 | $31.45 | $57.04 | $2.24 |
| Jun 2022 | $26.07 | $32.90 | $58.97 | $2.22 |
| Jan 2023 | $26.46 | $35.21 | $61.67 | $2.53 |
| Mar 2023 | $28.17 | $36.83 | $65.00 | $2.53 |
| Jun 2023 | $27.10 | $35.81 | $62.91 | $2.53 |
| Jul 2023 | $30.20 | $38.75 | $68.95 | $2.53 |
| Sep 2023 | $31.13 | $39.63 | $70.76 | $2.53 |
| Jan 2024 | $37.85 | $51.60 | $89.45 | $3.02 |
| Mar 2024 | $37.99 | $51.88 | $89.87 | $3.02 |
| Apr 2024 | $39.16 | $52.98 | $92.14 | $3.02 |
| Jul 2024 | $36.35 | $47.26 | $83.61 | $2.65 |
| Sep 2024 | $36.94 | $47.82 | $84.76 | $2.65 |
| Oct 2024 | $38.91 | $49.68 | $88.59 | $2.65 |
| Jan 2025 | $40.57 | $55.45 | $96.02 | $3.20 |
| Mar 2025 | $40.90 | $55.76 | $96.66 | $3.20 |
| Sep 2025 | $39.22 | $54.17 | $93.39 | $3.20 |
| Jan 2026 | $38.50 | $47.24 | $85.74 | $2.31 |
| Mar 2026 | $37.37 | $46.16 | $83.53 | $2.31 |
PG&E Schedule B-19, secondary voltage, bundled totals per kW-month, every rate change from January 2020 to March 2026. Compiled from PG&E's historical commercial rate tables; 2024 onward cross-checked against the filed advice letters (rates database), March 2026 against the tariff sheet. Source: PG&E, historical electric rates (Commercial B-19 rate tables) (opens in a new tab).
Could a different rate lower your bill?
Compare your current operation under each eligible rate before modeling a battery. A lower demand rate can come with higher energy charges or a different billing window, so use a full year of interval data.
Check the whole rate and supply offer
Compare all-hours, peak and part-peak charges, customer fees and energy prices. For CCA or Direct Access supply, include the generation offer and applicable utility charges rather than comparing only a headline price.
Storage options still have conditions
PG&E Option S adds daily demand calculations while retaining monthly maximum-demand charges. Check qualifying storage requirements and current enrollment availability. Other PG&E and SCE options have their own rules.
The part you can control
Wildfire costs, grid spending and state policy are set for you. These are not.
01
Your peaks
Identify the intervals that set each demand component on your tariff. Reducing them can lower billed demand, subject to minimums, power-factor rules and any monthly charges that remain under a storage option.
02
When you use power
Move flexible loads to cheaper tariff periods where production allows. Check whether the new schedule creates an all-hours or part-peak maximum elsewhere.
03
Your rate and supply choices
Compare eligible rate options, Peak Day Pricing and available supply offers using a full year of bills and interval data. Include event charges, fees and remaining monthly demand charges.
How to lower your business electric bill in California How peak shaving works Why is my business electric bill so high?
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Questions about California electricity costs
Why is California’s commercial electric bill so high?
California’s average commercial price was 30.02¢ per kWh in August 2026, about twice the U.S. average. The CPUC names three main drivers: wildfire costs, distribution spending and rooftop solar incentives. Many business tariffs also include demand and time-of-use charges. A facility with evening or spiky load can pay more than the statewide average, which already includes those charges.
What is the average commercial electricity rate in California?
The EIA put it at 30.02¢ per kWh in August 2026 (preliminary) and 26.16¢ for 2025 as a whole. That average blends energy, demand and fixed charges; a large facility’s own rate depends on its schedule and load.
Why are PG&E demand charges so high?
The all-hours and summer peak-period rates on bundled, secondary-voltage B-19 add to $83.53 per kW-month as of March 1, 2026. That sum reached $96.66 in March 1, 2025 before falling.
What are the wildfire charges on a PG&E business bill?
B-19 lists a Wildfire Fund Charge of 0.591¢ and a Wildfire Hardening Charge of 0.297¢ on every kWh at secondary voltage. Much more wildfire spending is folded into the distribution charges themselves.
When is peak time on PG&E and SCE business rates?
Summer runs June through September on both. PG&E’s B-19 peak is 4 to 9 pm every day, weekends included; SCE’s TOU-8 on-peak is 4 to 9 pm on weekdays. Those are schedule-specific examples. Other tariffs and storage options can use different demand calculations; check your own rate and service area.
What is Peak Day Pricing?
The default for eligible PG&E B-19 customers on utility supply: credits on summer peak and part-peak demand charges, in exchange for an additional $0.90 per kWh on top of normal energy charges for usage from 4 to 9 pm on 9 to 15 event days a year, called the day before. Customers can opt out; CCA and Direct Access customers are not eligible. SCE has a similar critical peak pricing option.
Is business electricity more expensive than residential in California?
Not per kWh on average: in 2025 California commercial customers paid 26.16¢ per kWh against 31.35¢ for homes, per the EIA. Single months can flip. A facility with sharp peaks can pay well above that average because of demand charges, which most homes don’t pay.
Sources (12)· Last reviewed October 26, 2026
- U.S. EIA, annual average retail electricity prices by state and sector (opens in a new tab), 2010–2020, Total Electric Industry, commercial column, CA and US. Annual prices are sales revenue divided by electricity sold, including supply, delivery and demand charges. Commercial-sector averages describe different customer mixes; they are not facility quotes or industrial rates.
- U.S. EIA, Electric Power Annual 2021, Table 2.10 (opens in a new tab), 2021 commercial prices
- U.S. EIA, Electric Power Annual 2023, Table 2.10 (opens in a new tab), 2022–2023 commercial prices
- U.S. EIA, Electric Power Annual 2025, Table 2.10 (opens in a new tab), 2024–2025 commercial prices, final
- PG&E, commercial battery storage and Option S enrollment (opens in a new tab)
- U.S. EIA, Electric Power Monthly, Table 5.6.A (opens in a new tab), August 2026, preliminary
- U.S. EIA, Electric Power Annual 2025, Table 2.10 (opens in a new tab)
- CPUC, 2025 SB 695 Report (September 2025) (opens in a new tab)
- CPUC, 2024 Electric and Gas Utility Costs Report (opens in a new tab)
- PG&E Electric Schedule B-19: rates Sheet 4 (Cal. P.U.C. 61071-E), Option S rates Sheet 11 (61078-E), time periods Sheet 15 (57123-E), Option S terms Section 20, Sheet 23 (57131-E). Advice 7846-E, effective March 1, 2026 (opens in a new tab), effective March 1, 2026, including wildfire charges and Peak Day Pricing
- PG&E, historical electric rates (Commercial B-19 rate tables) (opens in a new tab), B-19, every rate change from 2020 to March 2026
- SCE, business time-of-use rate plans (opens in a new tab)
Take control of your power
Find out how much of your bill is in your control
Send a recent PG&E or SCE bill. We compare demand charges, time-of-use costs, eligible rate options and supply choices to show where your facility could lower its electricity costs.