Compare the Best Electricity Rates in California in 2024

If you live in the golden state, you may be used to high electricity prices. As California is abundant in renewable energy resources, the high price you may be paying may come as a surprise. However, there is always a reason for this, so let’s consider how you can save money by bringing your electric bill closer to the national average without compromising the quality of your life. 

Firstly, you may want to consider having an energy bill audit. Electricity and natural gas do not come cheap, so understanding what you are paying and to whom may be the key to saving. Start by looking at how much electricity you consume. Compare this to your neighbor’s energy use and see how you score here. We are not looking for higher energy use, but rather at who pays the least per kWh of energy used. 

California Energy Rates

If you use approximately the same amount of electricity as your neighbors, congratulations. If you pay significantly more, you may want to check out Electricrate.com in search of lower electricity rates. There is no need to overpay, and considering how expensive electricity in California is, you may still want to search for an alternative. 

The average electric rate in California is $0.30 per kWh. This is much higher than the national average of $0.1782 per kWh. This means that you may be paying as much as double what people in other states may be paying. Finding the best energy rates in CA means browsing and finding the right energy plan for your needs, not just a plan that charges the least. 

In any case, you should consider that an average person in CA pays $285 on their energy bill. If you have no one to compare this information to, However, consider that your home size may also have something to do with how high your energy bill is. The larger the house, the higher the energy bill. 

As the average home size in California is 1,625 square feet, and as the average energy use is around 7.16 kWh/sq foot/year, you can do the math and see whether you need an energy audit and ways to save energy or if you need solar panels or to consider new energy rates. In any case, if you use LESS electricity per square foot and still get a large bill every month, you may want to consider a new energy rate. If, on the other hand, you use MORE kWhs per square foot, you may need to schedule an energy audit first and see how and where you can save energy in your home. 

California Energy Market Data

Here are some bullet-point data points on the California energy market: 

• The average CA electricity rate is $0.30, almost double the national average rate, 
• The average CA household uses 970 kWh of electricity per month, 
• That same household pays $287 per month, 
• An average 6.5 kW solar array in CA can produce as much as 11 MWh of power, 
• That amount of power will grant you access to 11 RECs that you can sell, and 
• CA was the nation’s top solar energy producer in 2021. 

California Energy Companies

There are several energy companies working in California. Before moving there, you should check which of these companies will be covering the area you plan on moving to. The utility companies working in California include: 

1. Pacific Gas and Electric, 
2. San Diego Gas and Electric, 
3. Southern California Edison, and 
4. Southern California Gas Company. 

Energy Deregulation in California 

Back in 1996, California introduced energy deregulation to its electricity market. This made it the first of all US states to do so. Today, Californians enjoy the benefits of a deregulated energy market, such as good service, a lot of competition in the energy market, and a variety of energy plans. The entire deregulation was overviewed (and still is) by CPUC – California Public Utilities Commission. 

California Energy Market Overview 

Despite being the fourth largest electricity producer in the US, California is also the second largest consumer of electricity. It consumes so much electricity that it has to import a significant portion of it from other states and Mexico. California is the biggest importer of electricity in the US. 

Energy Plans & Products in California

Simply choosing the lowest electricity prices in the area is often not enough. Quite on the contrary, there are many more factors that you should consider before purchasing your next energy plan. Beware of the following factors that may increase your energy bill: 

• The right type of energy plan. There are fixed-rate, variable-rate, green energy, prepaid, business, and renewable (green) energy plans. 
• Contract term: ranging from 3 months to 5 years, different lengths of energy plans will include different pricing and be suited to different people, 
• Type of energy – renewable or non-renewable, 
• The power provider reputation – check out both their website and online reviews, 
• Energy products they offer, including freebies, smart thermostats, free energy audits, etc. 

Fixed Rate 

A fixed-rate plan is the best option for most California homeowners, as it protects your time and money and ensures that you do not end up with a very high energy bill at the end of the month, as is the case with variable-rate plans. In reality, you will be paying different amounts for the energy you use every month since your power use will be different. What is fixed in this type of plan is the energy rate you pay per each kWh of energy spent. 

Variable Rate

A variable-rate energy plan will enable you to save money during periods of low energy demand, which is usually during autumn and spring in most US states. On the other hand, you will also be paying much less during the winter and summer months, as this is a period when energy prices are generally on the rise. During extreme weather events, you may have to pay so much that all your previous savings are canceled out. For this reason, we do not recommend this type of energy plan. 

Green Energy

Green energy plans enable you to purchase green or renewable electricity. As such, these plans can reduce your carbon footprint, as well as help combat climate change. Versatile and available to home and business owners across the country, green energy plans cost a bit more per kWh but are certain to get cheaper in the future. As with all other plans, here you can purchase fixed and variable-rate green energy plans. 

Prepaid Plans

Prepaid plans are not for those who would like to make some savings. These plans, thanks to the comfort that they enable you, can cost a bit more than other plans. The biggest benefit of a prepaid energy plan is that they enable you to control how much power you spend in a month. SMS notifications and energy provider apps always let you know how many credits and kilowatt hours you have left over on your prepaid plan. 

Business Energy Plans

Business energy plans are a way to go for all business owners in California. When looking for this type of electricity, you should bear in mind that finding the best option online can be difficult. Instead, you should contact several power providers and see what offers they can make. As businesses usually use more energy than an average home, energy quotes you will be able to get are customized to your business only. 

Additionally, these plans can provide you with extra benefits and freebies. You will be able to save a lot of money with some of these offers, as a free energy audit that some power providers offer is sure to streamline your business and optimize your energy expenses. Furthermore, some power providers may even offer free electricity during nights and weekends – a perfect offer for businesses that are closed during these periods – you get to run your CCTV and security lights free of charge. 

Renewable Energy Credits

Most green energy plans in the US do not really deliver green energy straight to your home. Rather, your electricity provider may choose to purchase Renewable Energy Credits – RECs – instead. This means that the rights to carbon offset now belong to you and that nobody else can use them. This is the reason why some green energy plans are more expensive than conventional electricity. 

Another benefit of living in a state where there are RECs is that you can make them, too, and sell them when you think the price is right. If you want to do this, you should install a solar system array and join a RECs market. As your smart electricity meter calculates how many kWh your system has produced, you enter the readings into the REC market platform. For every 1,000 kWh your system produces, you will get one REC. An average 6.5 kWh solar array can produce around 11 RECs per year. 

Time of Use Tariffs

The time of use tariffs is a very useful way to save energy. As you will notice, some energy plan offer peak and off-peak energy prices. Off-peak prices are usually much lower than on-peak, so if you want to have time-of-use tariffs, you should maybe purchase a timer or two yourself. This way, your large appliances can only work during off-peak times and you will be able to enjoy a lower electric bill month after month. 

Is Switching Providers Worth It? 

When switching providers, there are several things that you should pay attention to. Firstly, do not switch a plan for a cent or two in savings per kWh. Sure these add up, but even if you use 1,000 kWh per month, this is barely $10 in savings. And to make the switch, you should pay attention to one more thing – the cancellation fee or early termination fee. As these can upwards of $100, you should not switch your energy plans too much and too often. 

Rather, find a better electricity rate and see if your current energy provider can match it. If yes, go for it. If not, decide to make the switch, but beware of hidden expenses. Look online for different reviews and do not focus on overly positive or overly negative reviews – rather, try to get a general direction that all the comments focus on – are they generally positive or negative? 

How to Choose the Right Plan for your Home? 

When you decide to switch, you should already have a clear idea of what kind of energy plan you would like to switch to. You should understand the power of choice and consider several factors before making the final decision and filing a power provider switch request. Some common things that people like to pay attention to when switching energy plans and energy providers include: 

1. The type of electricity – renewable or nonrenewable, 
2. Contract term – the longer the better, especially if you’ve had business with the company before and are sure there are no hidden costs with them, 
3. The type of energy plan – fixed or variable-rate plan, 
4. Freebies and time-based tariffs, 
5. Free energy products, such as Google Nest or other smart devices that can help you save energy, 
6. Free energy audit, especially if you intend to run a business with this electricity, and 
7. The energy rate or how much you will be paying per kWh. 

Analyze Your Current Costs

Analyzing your current costs is the first step that you should undertake before you start looking for a new energy plan. After all, how will you know if the energy plan is good or not if you have nothing to compare it to? Look for details on how much you pay per kWh. This is your NOMINAL energy rate. This is the rate that you will see on websites, such as Electricrate when browsing for a new energy plan. 

Alternatively, you should also consider your EFFECTIVE energy rate. This is the rate you get when you divide your total monthly electric bill by how many kWhs, you’ve used in a month. This effective rate will include all fixed expenses and other tariffs that you may be paying to your provider and to your utility company every month. Switching to a lower rate with higher fixed expenses will not result in a lower bill, so this is something to pay attention to, as well. 

Review Your Current Contract and Plan

Using the important factors when choosing the right plan for you, try to consider your current plan. Look at the energy rate, fixed expenses, and freebies that you may be getting. Does the plan enable you to save a considerable sum every month? Does it enable you to use renewable electricity at a low green premium? If yes, you may be good staying with the current energy provider. Check and compare – this is the key to finding the best energy plan for your household. 

Compare Energy Plans

Finally, if you are sure that you want to make the switch, compare the electricity plans that you have found so far. As in some areas, you may get hundreds of plans offered to you, and you may want to streamline the choice to be able to find the best plan for you. Electricity rates are important but are not the sole determiner, so head over to Electricrate and enter your ZIP code. You will be able to shortlist the plans available in your ZIP code area by things that you find important. Then, simply browse a dozen plans instead of six dozen of them. 

Getting To Know Your California Electricity Bill

We have advised you before to always analyze your current electric bill before browsing other plans. When here, you will be able to see that there are usually 2-4 different charges that you have to pay. While 1-2 goes for the utility delivery charges, the remaining items on your electricity bill are supply charges – they go to the energy provider. 

Utility Delivery Charges

Your utility delivery charges usually have two parts – the fixed and the variable charges. The fixed charge is the same every month and is usually some $5-$10 per month. The variable part is the part you pay per kWh of energy used. The more you use, the higher the charge. 

Supply Charges

Your electricity bill will also have supply charges. These charges also have a fixed and a variable part. As the latter is also based and charged on your actual energy use, you should understand that each kilowatt-hour of energy you save brings double savings. The same goes for solar panels – every kilowatt-hour of electricity they produce is a kilowatt-hour less to pay at the end of the month. 

Factors that Affect Electricity Rates

As you browse the electricity rates offered in California, you may notice that they come in very varied prices. The same can be said of variable-rate energy plans, as the energy rate you pay each month can change month in and month out. In addition to this, the price can also be dictated by the energy source mix that supplies your area.  Here are the factors that affect these energy prices: 

• Fuels, 
• Power plant prices, 
• Local transmission and distribution systems, 
• Area regulations, and 
• Weather conditions. 

Fuels 

Fuels influence the price of electricity you pay because their own price fluctuates in the wholesale market. As it normally goes, power plants have to purchase them in huge quantities, which results in higher material or input costs whenever the price of these energy resources (coal, natural gas, biomass, etc.) increases. With renewables, there is the issue of intermittency and weather events. 

Power Plant Prices

Power plants are very expensive to build so they are paid off over longer periods of time. This payoff takes place whenever a power plant produces even a single kilowatt-hour of electricity and sells it – to you. In addition to this, power plants have to pay for their personnel, maintenance and fuels, explained above. 

Local Transmission and Distribution Systems

All electricity that is produced in these power plants has to be supplied to you somehow. This is always done by means of the grid, or the local transmission and distribution system. As this system is often called the ‘biggest machine man has ever created,’ it costs a lot to build, extend, maintain, and modernize. These costs fall down on the purchaser of electricity as well. 

Area Regulations

Local area regulations can also dictate the price, although they do not have to rise them. Sure, the price of electricity also entails the price of running some controlling bodies, but what they do in return is make sure that the market is fair and that you are not overcharged for the electricity you consume. This is especially true in deregulated electricity markets. 

Weather Conditions

Local and state weather conditions also influence the cost of electricity your utilities deliver to you. The best example is the 2021 Texas Blackout, which increased the price so much that customers on variable-rate energy plans saw their energy bills increase by hundreds to thousands of dollars, as the wind, solar, and all other generation dropped and the bills went sky-high. 

Energy Providers vs Utility Companies 

Many people who move to the states where energy deregulation took place find themselves a bit confused at the difference between energy providers and utility companies. Although both companies work in the same market and both are necessary to deliver power to you, it is necessary to understand there are differences between them as well. Let’s dive right in. 

Firstly, a utility company is a company that builds and maintains the infrastructure that is needed to bring the electricity from its generation place (the power plant) to the consumer (you). This infrastructure is called the grid. The utility company also charges for the electricity that travels through the grid, similarly to how the highway authorities charge a toll for every vehicle that uses the highway. 

Secondly, your power provider is the company that purchases electricity in the wholesale market. They do so in your name and take a small percentage of the electricity price for themselves. They use the grid to bring the electricity to you. You can choose your power provider, although you cannot choose your utility company. 

FAQs

Conclusion

If you plan on moving to California or already live there and would like to seek a new energy plan for your household, we’ve got you covered. As there are many things to consider before making a move and deciding on your new energy provider, our guide to doing just that may come in handy. With a high average electric rate, almost double the US average, you can certainly benefit from switching to a more affordable electricity rate. 

Updated on 10-17-22