Misdirected Outrage

There is a ritual in San Diego households. Each month the SDG&E bill arrives and the total registers sharply because San Diego carries the highest residential electricity rates in the nation. According to the U.S. Bureau of Labor Statistics, SDG&E customers pay nearly 46 cents per kilowatt-hour, roughly 70% above the national average, a rate that exceeds even Hawaii. And the company whose name is on the envelope absorbs the blame for everything wrong with California energy policy.

San Diego Gas & Electric is among the most disliked companies in the region — a distinction earned not through malfeasance but through visibility. The monthly electric bill reflects decisions made entirely by our political class. The legislature sets policy; the California Public Utilities Commission converts policy into mandate. SDG&E executes the mandate and recovers its authorized costs through rates the CPUC itself approves. The driving force is Sacramento’s climate policy adventurism — renewable mandates, emissions targets, and the accelerated retirement of dispatchable generation — with the bill for that transformation landing on the ratepayer at every step. 

Consider the two largest mandated costs embedded in an SDG&E bill. Wildfire mitigation — grid hardening, vegetation management, weather networks, public safety shutoffs — accounts for up to 20% of the company’s revenue requirement. It is a legitimate cost of operating in difficult terrain, and no reasonable person disputes the need. San Diego County sits in some of the most fire-prone terrain in the country — chaparral, Santa Ana winds, and a wildland-urban interface that has turned downed lines into regional catastrophes, killing people and destroying property. The geography imposes a cost; the regulatory structure requires consumers to pay for it.

But wildfire mitigation is not the largest driver. Renewable procurement, the backup capacity needed to firm up intermittent generation, and the transmission buildout connecting remote solar and wind to coastal load centers are a cost stack that exceeds wildfire mitigation and grows with every new mandate. The customer is funding both. One imposed by geography, the other by ideology. SDG&E is simply the bill collector.

When a regulator orders a gas plant to be retired ahead of its useful life, the unrecovered investment doesn’t evaporate. It remains in the rate base — the total value of assets the CPUC has authorized SDG&E to earn a return on. Rate base is the pile of approved capital that customers collectively pay down, like a mortgage, except the pile keeps growing as new mandates are added and old ones linger. SDG&E’s allowed return — set by the CPUC, not by the company — is calculated against that pile. Customers aren’t just paying for electricity. They’re paying for every investment Sacramento and the CPUC have decided belongs in the approved asset stack.

The two grids — renewable and legacy — are on the same bill. They always will be, because the renewable system cannot replace the legacy system. The more California loads the grid with intermittent generation, the more indispensable backup becomes. Solar panels do not produce power at 7pm in January. No current battery deployment bridges that gap at scale. The legacy system cannot be retired without destroying the reliability margin that makes the grid function. So it will not be retired. It will be maintained, depreciated, and billed — alongside the system that was supposed to replace it. For the ratepayer, there is no opt-out. There is only the bill.

Energy cost is embedded in the price of everything produced, stored, and sold in California. At nearly 46 cents per kilowatt-hour, manufacturing in San Diego is not merely expensive — it is structurally uncompetitive. Businesses that run energy-intensive operations do not negotiate with their utility; they relocate. California has been losing private sector jobs, particularly in manufacturing, to Nevada, Texas, and Arizona for years, and energy cost is a primary reason.

High energy costs and high costs of living are not parallel problems — they are the same problem, compounding. Every mandate that drives the kilowatt-hour price higher makes San Diego less habitable for the middle class and less viable for the businesses that employ them.

To blame SDG&E for the price of California electricity is to blame the messenger, not the author. The policies that have made San Diego among the most expensive electricity markets in the developed world were written in Sacramento, ratified in San Francisco at CPUC headquarters, and then handed to SDG&E with instructions to implement them and send the bill.

The legislators who built this system, extended it, and refused to reckon with its cost are on the ballot each November. Make them the target of your outrage.