Electric Utility Prices - January 2026
Electric Utility Prices: U.S. vs. California
A Comprehensive 20-Year Analysis with Focus on San Joaquin County & Lodi, CA
Prepared: January 2026
Executive Summary
California's electricity rates have diverged dramatically from national averages over the past two decades, creating significant economic implications for residents and businesses. This analysis examines the historical trends, current state, and future outlook for electricity pricing, with specific attention to San Joaquin County and the City of Lodi.
- California's residential electricity rates are nearly double the national average (32+ cents/kWh vs. ~18 cents/kWh)
- PG&E rates increased 100% in the last decade and nearly 40% between 2022-2025 alone
- Lodi Electric Utility rates (~20 cents/kWh) are 56% lower than PG&E (~45 cents/kWh)
- The Northern San Joaquin 230 kV Transmission Project represents critical infrastructure for Lodi's energy future
Section 1: Historical Price Trends (2004-2025)
1.1 National Electricity Price Evolution
Over the past 20 years, U.S. electricity prices have increased at an average annual rate of approximately 2.85%. The national average residential rate progressed from roughly 8 cents per kilowatt-hour (kWh) in 2004 to approximately 18 cents/kWh by late 2025—a total increase of about 125% over two decades.
U.S. vs. California Residential Electricity Rates (2004-2025)
1.2 California's Accelerating Rate Growth
California's electricity prices have followed a dramatically different trajectory. The state now holds the second-highest electricity rates in the nation (behind only Hawaii), with average residential rates close to double the national average.
Table 1: California vs. U.S. Average Residential Electricity Rates (cents/kWh)
| Year | U.S. Average | California | CA Premium |
|---|---|---|---|
| 2004 | 8.0 | 11.5 | +44% |
| 2010 | 10.5 | 14.5 | +38% |
| 2015 | 12.5 | 17.0 | +36% |
| 2020 | 13.5 | 21.0 | +56% |
| 2023 | 16.0 | 30.0 | +88% |
| 2025 | 18.0 | 32.0 | +78% |
Recent Rate Acceleration
- Rates increased 78% between 2013-2021
- An additional 16% in 2022
- Another 14% in 2023
- Scheduled increases: 17.6% (2024), 10.5% (2025), 9.2% (2026), 7.7% (2027)
California Premium Over U.S. Average (Percentage)
Section 2: Key Factors Driving California's High Utility Prices
California's electricity rate premium is attributable to multiple interconnected factors. According to the California Legislative Analyst's Office (LAO) January 2025 report, while specific reasons have not been precisely quantified, several key categories drive higher rates.
Factors Contributing to IOU Customer Bills (2023)
2.1 Wildfire-Related Costs
Wildfire costs represent the most significant driver of recent rate increases:
- Infrastructure Hardening: PG&E alone has proposed spending roughly $9 billion annually on wildfire mitigation activities, including undergrounding power lines
- Wildfire Fund Contributions: IOUs and their ratepayers contribute to the California Wildfire Fund established by AB 1054 (2019)
- Liability Exposure: California's "inverse condemnation" doctrine holds utilities liable for wildfire damages regardless of negligence
- Share of Bills: Wildfire-related costs grew from negligible pre-2019 to 7-17% of average IOU customer bills by 2023
- PG&E Specific: 117% increase in wildfire-related costs from January 2023 to April 2024
2.2 Clean Energy Mandates & GHG Reduction
California's aggressive climate policies impose costs not borne by utilities in other states:
- Renewable Portfolio Standard: Requires 60% renewable generation by 2030 and 100% carbon-free by 2045
- Transmission Infrastructure: Remote renewable sites require expensive new transmission lines
- Grid Reliability: Intermittent renewables require backup natural gas plants and battery storage
- Public Purpose Programs: Approximately 4% of IOU rates fund climate-related activities
2.3 Investor-Owned Utility (IOU) Structure
California's reliance on IOUs contributes significantly to rate disparities:
- Shareholder Returns: IOUs must generate 10-11% returns for shareholders, compared to 4-5% municipal bond rates for POUs
- Tax Status: IOUs pay corporate taxes; POUs are tax-exempt
- Capital Incentives: IOUs have incentive to maximize capital spending (which generates returns)
- Rate Premium: California IOU rates are 50%+ higher than POU rates on average
2.4 Solar Cost Shift
California's high rooftop solar adoption creates cross-subsidies:
- Net Energy Metering (NEM) 1.0 and 2.0 compensated solar customers at full retail rates
- Fixed grid costs shifted to non-solar customers
- Solar cost shift accounts for 10-20% of non-solar customer bills
- NEM 3.0 (2023) reduces but doesn't eliminate the cost shift
Section 3: Rate Variations Within California
Not all California ratepayers experience the same costs. Significant variations exist between utility types and geographic regions.
3.1 IOU vs. POU Rate Comparison (2024)
California Utility Rates Comparison (cents/kWh)
Table 2: California Utility Rate Comparison
| Utility | Type | Rate (¢/kWh) |
|---|---|---|
| SDG&E | IOU | ~50 |
| PG&E | IOU | ~45 |
| SCE | IOU | ~35 |
| Lodi Electric Utility | POU | ~20 |
| LADWP (Los Angeles) | POU | ~19 |
| Modesto Irrigation District | POU | ~18 |
| SMUD (Sacramento) | POU | ~17 |
| Turlock Irrigation District | POU | ~15 |
Key Insight
Lodi Electric Utility's residential rates of approximately 19.6 cents/kWh are 56% lower than PG&E's bundled rate of approximately 44.8 cents/kWh—demonstrating the substantial advantage of municipal utility ownership.
Section 4: Future Outlook for California
4.1 Statewide Projections
Multiple forecasts suggest continued rate pressure for California:
- Short-term (2026-2027): PG&E projects rates stabilizing with an $8/month decrease in 2026, but 2027 General Rate Case proposes increases
- Medium-term (2028-2030): Residential rates forecast to be 10-20% higher than 2020 levels adjusted for inflation
- Long-term (2030-2045): Meeting 100% clean energy mandates will require massive transmission and storage investments
- Demand Growth: CEC projects 15% peak demand increase by 2030 and 75%+ electricity demand growth by 2045 due to electrification
4.2 San Joaquin County Considerations
San Joaquin County faces unique challenges:
- Agricultural Demand: Significant irrigation and processing loads
- Growth Pressure: Population and commercial growth increasing electricity demand
- Grid Constraints: Existing 60 kV infrastructure experiencing thermal overloads and voltage issues
- Summer Peak Stress: Hot Central Valley climate creates extreme summer demand
Section 5: Lodi Electric Utility – Current Status & Future
Lodi Electric Utility Profile
Lodi Electric Utility (LEU) is a community-owned, not-for-profit municipal electric service provider.
5.1 Lodi's Current Rate Advantage
Lodi maintains significant rate advantages over surrounding PG&E territory:
Lodi Electric Utility
~19.6¢/kWhMunicipal (POU) • Not-for-profit
PG&E (Surrounding Area)
~44.8¢/kWhInvestor-Owned (IOU) • For-profit
Reasons for Lodi's Lower Rates:
- Not-for-profit structure (no shareholder returns)
- Lower wildfire exposure and mitigation costs
- No California Wildfire Fund contributions
- Local governance and operational control
- Access to tax-exempt municipal financing
- Exemption from certain CPUC-mandated programs
Section 6: The Northern San Joaquin 230 kV Transmission Project
Project Overview
The Northern San Joaquin 230 kV Transmission Project is a joint infrastructure initiative involving PG&E and Lodi Electric Utility to address critical grid reliability issues in the region.
Estimated City of Lodi Cost: Approximately $30 million
6.1 Project Components
- PG&E Infrastructure: ~10.6 miles of new double-circuit 230 kV transmission lines
- Lockeford Substation: Expansion to loop existing Brighton-Bellota 230 kV line
- Thurman Switching Station: New PG&E switching station at LEU's Industrial Substation
- LEU Guild Substation: New 230/60 kV substation to be constructed by Lodi
- 60 kV Reconfiguration: Existing local PG&E system will be reorganized
6.2 Project Timeline
6.3 Why This Project Is Necessary
The California Independent System Operator (CAISO) identified critical reliability issues in the Lockeford-Lodi area in 2012-2013:
- Thermal Overloads: Five PG&E 60 kV lines between Lockeford and Lodi substations experiencing capacity constraints
- Voltage Issues: System experiencing voltage deviations during contingency events
- NERC Compliance: Current configuration creates reliability standard violations
- Growth Constraints: Existing infrastructure cannot support projected development
Section 7: Potential Rate Impacts from 230 kV Project
7.1 Cost Recovery Analysis
The $30 million investment by Lodi Electric Utility will need to be recovered through rates. Analyzing the potential impact:
Key Assumptions
- Capital cost: $30 million
- Financing period: 20-30 years (typical for transmission infrastructure)
- Municipal bond rates: 4-5% (current market)
- Annual energy sales: ~436,000 MWh
Estimated Annual Cost Recovery
- Annual debt service: ~$2.0-2.5 million (principal + interest)
- Operations & maintenance: ~$0.5-1.0 million
- Total annual cost: ~$2.5-3.5 million
Potential Rate Impact
- Per-kWh increase: 0.6-0.8 cents/kWh
- Percentage increase: 3-4% over current rates
- Average residential impact: $3-5/month
7.2 Rate Impact Scenarios
Table 3: Projected Rate Scenarios
| Scenario | Current Rate | Projected Rate | vs. PG&E |
|---|---|---|---|
| Low Impact | 19.6¢ | 20.2¢ | 55% lower |
| Medium Impact | 19.6¢ | 20.4¢ | 54% lower |
| High Impact | 19.6¢ | 20.8¢ | 53% lower |
Lodi Rate Projections vs. PG&E
7.3 Offsetting Benefits
The 230 kV project provides substantial benefits that may offset rate increases:
- Improved Reliability: Reduced outages and voltage issues
- Growth Capacity: Enables residential and commercial development
- Wholesale Options: Access to more competitive power markets
- Peak Capacity: Better access to grid resources during summer heat events
- Avoided Costs: Reduced reliance on expensive peaker plants during constraints
Section 8: Conclusions & Recommendations
Summary of Key Findings
- National vs. California Gap Widening: California's electricity rates have grown from ~44% above national average (2004) to ~78% above (2025)
- IOU Structure a Major Factor: California's reliance on investor-owned utilities adds 50%+ to rates compared to municipal utilities
- Wildfire Costs Accelerating: Now represent 7-17% of IOU customer bills
- Lodi's Advantage Substantial: 56% lower rates than neighboring PG&E territory
- 230 kV Project Essential: Critical for reliability and growth
8.1 Rate Outlook for Lodi
Short-term (2026-2028): Modest increases (3-5%) likely as 230 kV costs are absorbed. Lodi will maintain significant advantage over PG&E.
Medium-term (2029-2032): Rate stability expected as infrastructure investment pays dividends. Possible wholesale power savings as transmission options expand.
Long-term (2033+): Continued advantage over IOUs expected. Clean energy mandates will apply but at lower cost than IOUs due to operational structure.
8.2 Key Takeaways for Lodi Residents & Businesses
- Municipal Utility Advantage Preserved: Even with 230 kV project costs, Lodi rates will remain 50%+ below PG&E
- Reliability Investment Necessary: Current grid constraints pose risks; investment now prevents larger problems later
- Growth Enabled: New transmission capacity supports Lodi's development plans
- Local Control Continues: Lodi retains rate-setting authority as a municipal utility
Data Sources & References
- U.S. Energy Information Administration (EIA) - Electricity Data
- California Legislative Analyst's Office (LAO) - Residential Electricity Rates in California (January 2025)
- California Public Utilities Commission (CPUC)
- California Energy Commission (CEC)
- PG&E - Northern San Joaquin 230 kV Transmission Project
- CPUC - Northern San Joaquin 230 kV Transmission Project Environmental Review
- City of Lodi Electric Utility
- City of Lodi Electric Rates
- Choose Energy - Electricity Rates by State
- Inside Climate News - IOU vs POU Rate Analysis
Report prepared for Lodi411.com • January 2026