A big change is coming to your SDG&E bill. Will you pay more or less? It depends – San Diego Union-Tribune

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SDG&E Implements New $24 Monthly Fixed Charge as Solar Customers Face Additional Billing Hurdle

Controversial billing restructure reduces electricity rates but adds unavoidable monthly fee for all residential customers

San Diego - San Diego Gas & Electric customers will see a significant restructuring of their monthly electricity bills starting in October 2025, with the introduction of a controversial $24.15 "Base Services Charge" that cannot be offset by rooftop solar systems or energy conservation efforts.

The changes, mandated by California Assembly Bill 205 and approved by the California Public Utilities Commission (CPUC) in May 2024, aim to encourage home electrification and provide relief to low-income customers. However, the new billing structure has drawn criticism from solar advocates and energy conservation groups who argue it will undermine incentives for renewable energy adoption and penalize efficient energy users.

Impact on San Diego Solar Customers

For the estimated 150,000 SDG&E customers with rooftop solar systems, the new fixed charge presents a particular challenge. Unlike variable electricity rates that solar customers can offset by generating their own power, the $24.15 monthly fee applies regardless of how much electricity a home produces or consumes.

"The Solar Billing Plan monthly bill will reflect charges for electricity used (imported) and apply credits for electricity delivered back (exported) to the grid. The bill will also include a $16 basic monthly service fee as part of the TOU plan," according to SDG&E's current solar billing structure. The new Base Services Charge will replace and increase this existing fee for all residential customers, regardless of whether they have solar panels.

Michael Powers, co-founder of Oceanside-based Stellar Solar, expressed concerns about the change's impact on solar economics. "It's not the fixed charge that's necessarily the problem," Powers said, but emphasized that if set too high, monthly fees undermine customers' primary motivation for installing solar: dramatically reducing monthly electric bills.

Winners and Losers Under New Structure

The billing restructure creates distinct winners and losers based on electricity consumption patterns. For example, a chart from SDG&E estimates that a typical residential customer living in the inland climate zone who uses 400 kilowatt-hours of electricity in a month (which is about average for SDG&E's service territory) will have a bill of $175 under the new base services charge structure. That's $4 more than before.

Higher-usage customers will see savings under the new structure. If a customer in the inland zone consumes 600 kilowatt-hours per month, their new bill will be $269, or about $8 less than under the old bill structure.

However, conservation-minded customers and those with lower electricity usage face significant increases. A low-usage customer who consumes 200 kilowatt-hours would experience a $14 increase in their monthly bill, from $84 under the old system to $98.

This pattern particularly affects households along San Diego's temperate coast, energy-conscious customers, and solar homeowners who have already invested in reducing their grid consumption.

Relief for Low-Income Customers

The legislation includes significant relief for customers enrolled in assistance programs. Customers enrolled in the California Alternate Rates for Energy (CARE) low-income assistance program will benefit from a discounted flat rate of $6 per month, while those in the Family Electric Rate Assistance (FERA) program will pay $12 monthly. Some 26% of SDG&E customers are enrolled in the CARE or FERA programs.

Rationale and Opposition

State regulators justify the change as necessary for California's clean energy transition. "This billing adjustment that's required by the Legislature is really, at its foundation, a key lever to propel us toward our decarbonization goals," CPUC President Alice Busching Reynolds said on the day of the vote.

The restructuring reduces electricity rates by approximately 10%, or about 5 cents per kilowatt-hour, designed to make electric vehicles and heat pumps more affordable for all customers. Adam Pierce, SDG&E's vice president of energy procurement and rates, explained: "If you look at where the state is looking to go — towards space and water heating, appliances, electric vehicles — we expect (electricity) usage for the typical customer to increase over time."

However, critics argue the policy undermines conservation incentives. "The problem is that there's not a way to really know if folks are using a lot of electricity because they have an electric car that they're plugging in … or they're just running their AC all day long when they don't need to be," said Jenn Engstrom, state director of the California Public Interest Research Group.

Legislative Controversy and Future Concerns

Assembly Bill 205 passed under unusual circumstances in 2022 as part of a massive omnibus bill that received little specific debate about the billing changes. Most of the floor debate focused on a section of the bill that created a strategic reliability reserve to be overseen by the California Department of Water Resources and the portion establishing a fixed monthly charge on residential electricity bills was overlooked.

Initially, the legislation called for income-based charges that could have reached much higher levels. SDG&E, for example, initially called for monthly charges as high as $128 and then revised the figure to as much as $73 per month for upper-income earners. After significant public opposition, regulators settled on the flat $24.15 rate for most customers.

Critics warn that the $24.15 figure may be just the beginning. "What is $24 today will turn into $80 tomorrow," warned the Coalition for Environmental Equity and Economics. "There's nothing in what the PUC approved that prevents them from raising it next year to $50 or $100," State Senate Minority Leader Brian Jones, R-Santee, said when the change was adopted.

Implementation Timeline

The new billing structure takes effect for SDG&E customers in October 2025, with charges appearing on bills shortly thereafter. The charge will appear on your bill as "Base Services Charge" in the "Delivery Charges" section of your electronic pdf or paper bill.

Southern California Edison will implement similar changes in November 2025, while Pacific Gas & Electric has delayed its rollout until March 2026 due to technical challenges.

Broader Market Context

The changes occur against a backdrop of California's broader challenges with solar policy. The state already implemented Net Energy Metering 3.0 (NEM 3.0) in April 2023, which significantly reduced the value of solar exports by about 75% compared to the previous program. The addition of unavoidable fixed charges creates another economic headwind for residential solar adoption.

"Smaller households, Californians living along the temperate coast, energy conscious customers and people with solar panels on their rooftops are all more likely to see their total utility bills rise," according to analysis of the policy impact.

Looking Ahead

The CPUC has indicated this is the first iteration of the new billing structure and will be subject to review and potential modifications. "As part of this proceeding, we'll be doing a lot of analysis, studying and reporting back to the commission about how this is working and what potential tweaks need to be made to make this more effective in the future," Pierce of SDG&E said.

For San Diego's solar customers and energy-conscious residents, the October implementation represents a fundamental shift in how electricity is billed in California, with implications that extend far beyond monthly utility statements to the broader economics of residential renewable energy and conservation efforts.

The $890 Million Utility: How SDG&E's New Base Services Charge Reflects a Pattern of CPUC Regulatory Capture

San Diego Gas & Electric's record profits and guaranteed revenue streams reveal how California's utility regulator has become captive to the industries it oversees

SAN DIEGO — San Diego Gas & Electric's introduction of a mandatory $24 monthly "Base Services Charge" represents more than just another bill increase for ratepayers. It exemplifies a regulatory system that has systematically favored utility profits over consumer protection, generating nearly $900 million in annual profits for SDG&E while imposing unavoidable fees that cannot be offset by conservation or rooftop solar.

The new charge, mandated by the California Public Utilities Commission and taking effect in October 2025, will generate an estimated $430 million annually for SDG&E alone—revenue that flows directly to the utility's bottom line with no possibility of customer avoidance through energy efficiency or renewable energy adoption.

A Billion-Dollar Revenue Stream

SDG&E serves approximately 1.5 million residential customers across San Diego County. With most paying $24 monthly, the Base Services Charge represents a guaranteed revenue stream of roughly $430 million annually—money that cannot be reduced through conservation efforts or solar panel installations.

The timing couldn't be more beneficial for SDG&E's financial performance. The utility reported $891 million in profits for 2024, down from a record $936 million in 2023, but still representing some of the highest earnings in the company's history. Parent company Sempra Energy spent $1.6 million on lobbying California legislators and the CPUC in 2024, focusing specifically on rate increases and regulatory matters.

"This is a profit-making machine for SDG&E," said Dave Rosenfeld, Executive Director of the Solar Rights Alliance. "We call it a utility tax because that's actually what it is."

The commission's approval of the charge follows a pattern of decisions that have consistently favored utility financial interests over consumer protection. Since 2019, the CPUC has approved cumulative rate increases for SDG&E totaling nearly $3.1 billion through 2027, including a recent 7.5% increase in the utility's revenue requirement.

The Revolving Door Problem

A November 2024 analysis by Food & Water Watch revealed the extent of the revolving door between the CPUC and utility interests. Of the 14 commissioners who have served since California's 2015 Aliso Canyon gas leak—one of the largest environmental disasters in state history—more than half worked for utility companies or firms that advocate for gas and utility interests before joining the commission.

Perhaps more troubling, nearly half of former commissioners have been hired by these same industries after leaving their regulatory posts. The pattern suggests a system where regulators may be influenced by future employment prospects with the very companies they oversee.

"The revolving door between the CPUC and California's largest utility companies—and the law and lobbying firms that support them—is alive and well," said Andrea Vega, Southern California Senior Organizer for Food & Water Watch.

Current commissioners earn $234,689 annually, but many go on to far more lucrative positions with utilities or their representatives after their terms expire. The commission currently requires only a one-year cooling-off period before former commissioners can work for companies they previously regulated—a timeframe many consumer advocates consider inadequate.

Regulatory Capture in Action

The CPUC's handling of SDG&E's General Rate Case applications reveals how thoroughly the commission has adopted utility-friendly practices. Rather than conducting rigorous independent analysis of utility spending proposals, the commission increasingly relies on "interim rate decisions" that automatically approve utility requests with minimal scrutiny.

In December 2024, the CPUC approved SDG&E's request for a $2.699 billion revenue requirement for 2024—$308 million lower than the utility's $3.007 billion request, but still representing a 7.5% increase over 2023 levels. The commission also approved automatic annual increases of 3% through 2027, reaching $3.086 billion by the final year.

Former CPUC President Loretta Lynch, writing in CalMatters, described how the commission has abdicated its fundamental oversight role: "The CPUC has increasingly obliged, allowing the utilities to choose for themselves what they will spend money on or decide how much they will charge for electric and gas service—gold-plating profit potential without sticking to job one: safe and reliable service at a reasonable cost."

The Base Services Charge exemplifies this dynamic. While SDG&E claims the fee is merely a "reallocation" of existing costs, the structure ensures the utility receives guaranteed revenue regardless of customer behavior or energy usage. This contradicts basic regulatory principles that link utility compensation to performance and customer satisfaction.

The Mathematics of Guaranteed Profits

SDG&E's regulatory model guarantees the utility a return on virtually every dollar it spends on infrastructure. The commission has authorized a 10.65% rate of return for the utility—a figure that significantly exceeds market standards and contributes to California having electricity rates 67% higher than public utilities.

The utility's guaranteed profit structure works as follows: SDG&E proposes infrastructure investments, the CPUC typically approves them with minimal modification, and the utility then earns its authorized return on the approved spending. The more SDG&E spends, the more it earns—creating perverse incentives for gold-plated projects rather than cost-effective solutions.

This dynamic explains why SDG&E initially requested $1.9 billion to underground 605 miles of power lines over four years, but settled for $154.5 million annually to underground just 35 miles with covered conductor on 100 additional miles. The utility can return with future requests for more ambitious projects, each generating additional guaranteed returns.

Commissioner Darcie Houck recently acknowledged that "authorized returns significantly exceed market standards and are fueling the state's electricity affordability crisis." The CPUC announced it will launch a proceeding in late March to evaluate the rate of return structure, though such reviews have historically resulted in minimal changes.

Legislative Laundering

The Base Services Charge's origins reveal how utilities have learned to circumvent public opposition through legislative maneuvering. Assembly Bill 205, which mandated the charges, passed in 2022 as part of a massive omnibus bill that received virtually no specific debate about billing changes.

Most legislative discussion focused on other provisions in the 60-page bill, while the section establishing fixed monthly charges on residential electricity bills was essentially overlooked. The legislation initially called for income-based charges that could have reached $128 monthly for higher earners, but was scaled back to the current flat rate after public opposition.

State Senator Brian Jones, R-Santee, warned during the adoption process: "What is $24 today will turn into $80 tomorrow. There's nothing in what the PUC approved that prevents them from raising it next year to $50 or $100."

The legislative end-run allowed utilities to avoid the more intensive public scrutiny that typically accompanies CPUC rate proceedings. By securing legislative mandate for the charges, utilities effectively constrained the commission's discretion to reject or significantly modify the fees.

Impact on California's Clean Energy Goals

The Base Services Charge undermines California's stated clean energy objectives by penalizing conservation and renewable energy adoption. Unlike traditional utility charges that can be reduced through efficiency improvements or rooftop solar, the monthly fee applies equally to all customers regardless of their environmental choices.

For the estimated 150,000 SDG&E customers with rooftop solar systems, the charge represents a fundamental shift in solar economics. These customers have already faced significant challenges from the implementation of Net Energy Metering 3.0, which reduced the value of solar exports by approximately 75%. The additional fixed charge creates another economic headwind for residential renewable energy adoption.

"This utility tax we don't think it's going to be welcomed by people once they see the impact it has on their bills," said Rosenfeld of the Solar Rights Alliance.

The charge particularly affects conservation-minded customers and those living in San Diego's temperate coastal areas, where lower energy usage results in proportionally higher impact from fixed fees. A coastal customer using 200 kWh monthly will see their bill increase by approximately $14 monthly, while high-usage customers may actually see slight decreases.

Sempra's Political Investment Strategy

SDG&E's parent company Sempra Energy has developed a sophisticated approach to regulatory influence that extends far beyond traditional lobbying. The company spent $1.6 million on lobbying in 2024, but its political strategy encompasses multiple channels of influence.

When San Diego voters considered a municipal utility initiative in 2024, Sempra funneled $500,000 to "Responsible Energy San Diego," a political action committee opposing the measure. The committee claimed broad community support, but campaign finance records show SDG&E as its sole funding source.

The utility has also funded extensive opposition research and public relations campaigns designed to discredit municipal utility proposals. These efforts leverage SDG&E's ratepayer-funded resources to protect its monopoly position against potential public alternatives.

Meanwhile, studies commissioned by the city of San Diego suggest a public takeover could save ratepayers more than $180 million over 30 years—savings that would come primarily from eliminating guaranteed profit margins and excessive executive compensation.

CPUC's Structural Limitations

The commission's governance structure contributes to its regulatory capture problems. Five commissioners appointed by the governor serve six-year terms, making them somewhat insulated from public accountability. Most commissioners lack extensive backgrounds in utility regulation, making them dependent on utility-provided information and analysis.

The CPUC's budget of $3.7 billion is funded primarily by utility ratepayers, not taxpayers, creating a structural dynamic where the commission's funding comes from the same source as utility profits. This arrangement reduces legislative oversight and public scrutiny of commission operations.

Recent reforms have attempted to address some transparency issues, but fundamental problems remain. Mark Toney, Executive Director of The Utility Reform Network, advocates for extending the cooling-off period for former commissioners from one year to ten years, and requiring public explanation of rate decisions rather than approving them through consent calendar procedures.

The commission has also struggled with basic transparency requirements. Two of four rate increases approved in 2024 passed with no public explanation from commissioners, and the commission frequently bundles controversial items with routine matters to minimize scrutiny.

Financial Engineering and Customer Impact

SDG&E's financial engineering extends beyond simple rate increases to sophisticated mechanisms that guarantee revenue regardless of customer behavior or economic conditions. The Base Services Charge represents the culmination of this approach—creating an unavoidable revenue stream that grows with inflation but cannot be reduced through customer actions.

The utility industry's evolution toward "decoupling" mechanisms—where profits are separated from sales volumes—has reached its logical endpoint with fixed charges that provide guaranteed cash flow. This structure benefits utility shareholders and executives but eliminates market incentives for efficiency and conservation.

SDG&E executives earned substantial compensation while implementing these customer-unfriendly policies. The utility's leadership structure provides millions in annual compensation tied to financial performance rather than customer satisfaction or environmental outcomes.

For residential customers, the cumulative impact has been severe. SDG&E rates have increased 82% over the past decade, far exceeding inflation or income growth in the region. The new Base Services Charge adds another layer of unavoidable costs that will compound over time.

Regional and National Implications

California's utility regulatory model is being closely watched by other states, many of which are considering similar fixed charge structures. The CPUC's approval of SDG&E's guaranteed revenue mechanisms may signal broader industry transformation toward utility-friendly regulation at customer expense.

The implications extend beyond electricity bills to broader questions about regulatory capture and corporate influence over government decision-making. The utilities sector's success in securing guaranteed profits through regulatory manipulation provides a template for other industries seeking similar protections.

San Diego's consideration of municipal utilities reflects growing public awareness that current regulatory arrangements serve utility shareholders rather than customers or environmental goals. Similar initiatives are emerging in other California communities served by investor-owned utilities.

Looking Forward

The CPUC's March 2025 proceeding on utility rates of return represents a potential inflection point, but past performance suggests meaningful reform faces significant obstacles. The commission's institutional culture, industry influence, and funding structure all favor continuation of utility-friendly policies.

Consumer advocates argue that fundamental reform requires legislative intervention to restructure the commission's governance, extend cooling-off periods for former commissioners, and require more rigorous cost-benefit analysis of utility spending proposals.

The Base Services Charge's implementation will provide a real-world test of public tolerance for unavoidable utility fees. If customer opposition proves significant, it could generate political pressure for broader reforms. However, utilities' experience suggests that gradual implementation and public relations campaigns can successfully normalize even unpopular policies.

For SDG&E, the charge represents validation of a successful regulatory strategy that has generated nearly $900 million in annual profits while imposing increasing costs on customers. The utility's ability to secure guaranteed revenue streams through regulatory manipulation demonstrates the effectiveness of sustained political investment and regulatory influence.

The question now is whether California's political system retains sufficient independence to restore utility regulation that serves customers rather than shareholders—or whether SDG&E's model will continue spreading to other utilities and other states.

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Sources

1. NBC San Diego. "Your SDG&E bill will be going up in 2025. Here's what was approved." NBC 7 San Diego, December 21, 2024. https://www.nbcsandiego.com/nbc-7-responds-2/sdge-rate-hike-approved-electric-bill-going-up/3705944/
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SIDEBAR: Can San Diego Residents Disconnect from SDG&E to Avoid These Charges?

The Short Answer: It's Legally Complex and Practically Difficult

San Diego residents cannot easily or completely disconnect from SDG&E to avoid the new Base Services Charge, due to several legal and practical barriers:

Legal Barriers Under California Law

California Title 24 Energy Code Requirements: California's Title 24 Energy Code Section 110.10 requires that "construction documents shall indicate a location for inverters and metering equipment and a pathway for routing of conduit from the solar zone to the point of interconnection with the electrical service." This effectively mandates grid connection infrastructure for new construction.

Updated Off-Grid Laws: Off-grid electricity "used to be illegal in California under Title 24" because "the law required residential homes to have an 'interconnection pathway.' However, the law has recently been updated and now specifically allows off-grid electricity."

The Catch - Existing Grid Connections: The critical limitation is that "in CA, if you are connected to a utility, you cannot disconnect." This creates a legal trap for most existing San Diego homes that already have utility connections.

Practical Challenges

Building Code Compliance: Even for off-grid systems, homeowners must meet extensive requirements including California Building Code, Residential Code, Electrical Code, Mechanical Code, Plumbing Code, Energy Code, and Fire Code - all requiring professional installation by licensed contractors and extensive permitting.

Municipal Infrastructure Requirements: In many areas, "you may also encounter a law that requires you to connect to the municipal sewer system if one is located nearby, which would thus make it illegal for you to go completely off-grid in CA."

Urban Area Restrictions: The ability to disconnect depends on location: "The more remote the building, the easier it is. The more densely populated, the more challenging." San Diego's urban and suburban areas face more restrictions than rural locations.

What Residents Can Actually Do

• New Construction Only: The clearest path is with new construction in appropriate areas where you can design an off-grid home from the ground up
• Partial Solutions: Install battery backup systems, maximize solar production, or consider relocating to rural areas outside SDG&E territory
• Reality Check: For most existing San Diego homes connected to SDG&E, completely disconnecting to avoid the $24.15 Base Services Charge is not legally permissible under current California law

The new charges were specifically designed to be unavoidable - applying to all residential customers regardless of their energy consumption or production, including customers with rooftop solar who might otherwise eliminate their grid usage.

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Sources

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14. A big change is coming to your SDG&E bill. Will you pay more or less? It depends – San Diego Union-Tribune