Customer Electricity Costs Case Study - Southern California Edison (SCE)
Southern California Edison (SCE) & other Investor Owned Utilities (IOU’s) have consistently increased electricity rates for commercial, industrial and agricultural businesses throughout California. This internal case study on the rising electricity rates from SCE offered to one of our customers revealed their electricity costs had increased by 37% in just 5 years from 2018 to 2022.
California's Rapidly Rising Electricity Rates
California businesses have seen electricity rates rapidly rising to new heights, prompting them to look for ways to recover those costs. The majority of California’s electrical grid is serviced by three investor-owned utilities; Southern California Edison, Pacific Gas & Electric, and San Diego Gas & Electric.
Revel Energy wanted a tangible example of just how much these rates have changed, so we looked into the rate history for our past clients. This customer is one example of many, and while not every rate change resulted in an increase in costs, the trend still shows a shocking 37% increase just from 2018 to 2022, thats an average increase of more than 7% per year.
As the cost of electricity in California for businesses increases, many agricultural, commercial and industrial businesses are fighting these rising rates sustainably with commercial solar and energy storage.
For a majority of utility customers in California, businesses included, the average commercial retail price of electricity has increased on average by about 3.5% per year from 2001 to 2020. However, after global events in 2020 such as the coronavirus pandemic, rates through 2023 have risen much higher than previous averages. Some customers are paying annual increases as high as 23%.
This was revealed to us in a case study conducted by our team looking at customer utility data through the past few years.
Learn how 2024 electricity rates are increasing for businesses in different IOU territories such as San Diego Gas and Electric, Southern California Edison or Pacific Gas and Electric.
Competitive Businesses Looking for Commercial Solutions
This commercial business was prepared to face these increases and inevitable future rising rates, as their commercial solar system was able to start offsetting electricity use in early 2020. Thanks to lucrative incentives and programs like the Solar Investment Tax Credit (ITC), the Self-Generation Incentive Program (SGIP), state and federal bonus depreciation – the net cost of the system was brought down to help provide a quick payback period for increased ROI.
A History of Consistently Increasing Costs
Revenue requirements for IOU’s have put pressure on rates, costs like modernizing the energy transmission system and transmission use charges are passed on to all ratepayers, residential, commercial, industrial and agricultural – every sector is effected.
Looking at a broader perspective on rate increases, we averaged together the California IOU’s rate increases across similar commercial and industrial rate plans over the last 20 years.
Electricity rates over the long term are expected to rise to match inflation and meet growing demand. However, as more businesses find ways to save money on their electricity bill, utilities will look to recuperate those costs any way they can. Historically, rate increases are the go-to and most effective way for these utilities bring in revenue.
In recent news, California briefly ran on 100% clean energy for the first time, with solar providing a majority of the state’s electricity demand on a sunny Saturday afternoon. California and the world still have quite a way to go to achieve climate and sustainability goals, but its clear that increasing electricity are driving businesses to look for sustainable solutions.
Revel Energy’s team of commercial, industrial and agricultural solar specialists offer turnkey solutions for California businesses to lower their electricity costs, ultimately increasing cash flow. For a free comprehensive analysis, contact a Revel Energy commercial solar specialist today.
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