CPUC Raises PGE Rates, Revises VNEM, NEMA & Provides Prevailing Wage Guidance
November 17, 2023
Tackling Rising Electricity Costs with Solar PPAs in California’s Evolving Energy Landscape
January 16, 20242024 Rising Electricity Rates for California Businesses
Rising Electricity Rates for California Businesses in 2024
Understanding the Surge in Electricity Costs
California’s electricity rates are on a steep upward curve. With the big three IOUs – Pacific Gas & Electric (PGE), Southern California Edison (SCE), and San Diego Gas & Electric (SDGE) – continually raising rates for both residential and commercial customers, the impact is palpable.
The recent approval by the California Public Utilities Commission (CPUC) for an 11% rate increase for PGE in 2024 is a clear indicator of this trend. According to a study by the California Solar and Storage Association (CALSSA), the rate of increase in electricity costs from 2013 to 2024 far exceeded the expected 3% annual rise. On average, SDGE’s rates soared by 9% every year, followed by PGE at 7% and SCE at 6% as shown on the graph below.
The Driving Forces Behind Constantly Rising Rates
Utility companies, including California’s IOUs, attribute these hikes to escalating overhead costs driven by significant investments in infrastructure projects and system modernization. These increases are not just numbers on paper – they’re directly impacting businesses and households.
Communities are starting to feel the pinch, with notable pushback, such as a petition in San Diego to replace SDG&E with a non-profit utility, gaining attention in December 2023. Anticipating the rising tide of commercial electricity rates, the Revel Energy team has seen many businesses experience higher and higher costs, while helping many reduce their reliance on rates controlled by investor-owned utilities.
In their November 2023 decision, the CPUC noted that PGE has under-delivered on their investments and cost targets in the past, and to achieve what is proposed would be unprecedented – but a key step to rebuilding public trust. Investor-owned utilities have to rely on economies of scale to keep their costs low and not pass the excess onto their customers.
A Sustainable Alternative for Businesses
As a clean-energy developer with a history of aiding California businesses in reducing their electricity costs, we recognize the urgency for affordable, sustainable solutions. Our expertise lies in designing and implementing bespoke commercial solar and energy storage systems, tailored to fit the unique needs of any facility in California.
For businesses, reducing dependence on California’s investor-owned utilities is a strategic move to control and potentially lower their electricity expenditures. Our solar and energy storage solutions provide a hedge against fluctuating energy costs, offering long-term financial and environmental benefits. For businesses that continue to pay rising rates, their competitors who adapt will benefit from reduced costs as our team has seen in electricity cost case studies for SDGE and SCE commercial customers.
The Power of Power Purchase Agreements (PPAs)
An increasing number of businesses and residences are turning to Power Purchase Agreements (PPAs) as a viable solution. PPAs offer a way to utilize existing budgeted operating expenses to gradually finance a more sustainable electricity source. By entering into a PPA, businesses can secure solar energy at a fixed, predictable rate, often lower than the utility’s rate. This approach not only mitigates the impact of rising electricity rates but also aligns with environmental sustainability goals.
- No Upfront Capital Investment: PPAs allow businesses to adopt solar energy solutions without the hefty initial capital expenditure. This is particularly beneficial for businesses looking to preserve capital for core business activities.
- Reduced Energy Costs: With PPAs, businesses benefit from a lower electricity rate, providing immediate cost savings. This is especially valuable in the face of the soaring rates imposed by California’s IOUs.
- Predictable Energy Pricing: PPAs provide predictable energy costs over the term of the contract, which can range from 10 to 25 years. This predictability is a significant advantage, offering businesses a hedge against the volatile energy market.
- Opportunity to Use Operating Expenses: PPAs allow businesses to use their operational budgets, which are already allocated for energy costs – to pay for cleaner & more sustainable energy. This approach effectively utilizes existing budgeted expenses to fund a transition to green energy.
Embracing a Brighter, Sustainable Future Through A Commercial Solar PPA
In the face of rising electricity rates in 2024, PPAs present a financially savvy and environmentally responsible option for California businesses. By locking in lower electricity rates, reducing reliance on grid-supplied power, and embracing sustainable energy solutions – businesses can not only mitigate the impact of rising costs but also position themselves as forward-thinking leaders in environmental stewardship.
The unrelenting rate hikes in California present a challenge, but also an opportunity for businesses to rethink their energy strategy. By transitioning to solar power and innovative energy storage solutions, businesses can take control of their energy costs, contribute to a greener future, and enjoy the financial benefits of sustainable energy solutions. Contact our expert team today to learn what solutions may be available to your business
Commercial grade rooftop solar is ideal for: manufacturing, warehousing, logistics, industrial, retail, hospitality buildings and more with over 10,000 sq. ft. rooftops.
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Crucial for reducing peak demand charges. Automated to supply electricity when your panels won’t. Energy storage is ideal for businesses that incur significant peak charges.
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Client Testimonial: Kelemen Company
Corporate Business Park in Irvine, CA has created significant electricity cost savings through commercial solar installed across the 5-building business park.
Client Testimonial: Tice Gardner & Fujimoto LLP
See how this CPA firm saved on electricity and gained valuable tax credits through commercial solar that they used to keep cash in the businesses.
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