San Diego's Rising Utility Costs: What Consumers Need to Know


Prepare for a bump in your SDG&E bill in 2026 – San Diego Union-Tribune

San Diego Gas & Electric customers face another round of rate increases in 2026, adding to what are already among the highest electricity costs in the nation. While the monthly increases may seem modest—about $3 for electricity and $1 for natural gas—they come at a time when nearly a quarter of residential accounts are behind on payments and consumer frustration with utility bills continues to mount.

What's Changing in 2026

For typical residential customers, SDG&E's system-wide average electricity delivery rate will increase from 21 cents per kilowatt-hour to 22 cents. Households using 400 kilowatt-hours monthly will see their average delivery charge rise from $133 to $136 per month.

Natural gas customers using 33 therms during winter months will experience a smaller increase, with average monthly bills rising from approximately $90 to $91. According to SDG&E officials, the natural gas increase stems primarily from state-mandated pipeline safety upgrades and program costs.

The electricity rate increase reflects grid infrastructure improvements, including new substations and circuit upgrades and additions. These increases will also affect customers enrolled in community choice aggregation programs—San Diego Community Power and the Clean Energy Alliance—since SDG&E remains responsible for transmission, distribution, and delivery costs regardless of the electricity generation source.

The Bigger Picture: California's High Energy Costs

These increases occur against a backdrop of nationwide concern about California's electricity prices. According to the U.S. Energy Information Administration, California had the highest average retail electricity price per kilowatt-hour in the continental United States in 2024. A 2023 analysis by the Haas Energy Institute at UC Berkeley identified SDG&E as having the highest electricity rate among California utilities.

"We definitely understand that people are struggling right now as the cost of goods and services continue to go up across the board," said Adam Pierce, SDG&E's vice president of energy procurement and rates. "That's why it's so important for us to continue to work hard and help stabilize bills and make sure customers are aware of the support that they have available to them."

Additional Rate Impacts on the Horizon

The 2026 rate landscape remains fluid, with several regulatory proceedings that could further affect consumer bills:

Wildfire Mitigation Costs: The California Public Utilities Commission is considering a proposal related to wildfire risk reduction expenses from 2019 through 2022. If approved, this could add approximately $5 per month to average residential bills. The CPUC's five voting members may vote on this as early as mid-December 2024.

General Rate Case Relief: A temporary reduction of about $3 per month is expected in August 2026. This stems from the CPUC's December 2024 approval of SDG&E's general rate case, which authorized electricity rate increases of 2.6% and natural gas increases of 1.8% for 2024-2027. Because the approval came late in 2024, costs were amortized over 18 months starting in 2025. When this period ends in mid-2026, bills should decrease accordingly.

Cost of Capital Adjustment: A pending CPUC decision on returns for debt and equity could reduce average residential bills by approximately 50 cents monthly.

CalSHAPE Refund: SDG&E is pressing state officials to expedite the return of approximately $100 million in unspent funds from CalSHAPE, a California Energy Commission program that funded HVAC upgrades and water efficiency improvements in K-12 schools. While the Energy Commission plans to return these funds by the end of 2026, SDG&E estimates earlier repayment could reduce residential bills by about $2 monthly.

Consumer Struggles and Utility Profits

The rate increases have drawn sharp criticism from San Diego city officials and consumer advocates. During a quarterly public meeting in December 2024, City Council members questioned the utility's profit margins while customers struggle with bills.

According to Securities and Exchange Commission filings, SDG&E earned $891 million in 2024. District 5 Councilmember Marni von Wilpert highlighted Sempra CEO Jeff Martin's compensation package, which included $1.5 million in base pay and total direct compensation of $18.2 million in 2023, including stock, options, and performance bonuses.

Council President Joe LaCava referenced a 2023 California state auditor's report finding that while SDG&E had done nothing illegal, improper, or unethical, the utility exceeded its CPUC-authorized rate of return nine times over a 10-year period. "There is a conversation the city should pursue about maybe some of that should flow back to the ratepayers, as opposed to rewarding shareholders and investors going forward," LaCava stated.

Brittany Applestein Syz, SDG&E's vice president of external affairs and communications, noted the utility has invested shareholder funds in customer assistance, including approximately $13 million over three to four years in its Neighbor-to-Neighbor program.

Payment Delinquency Trends

The affordability crisis is evident in payment patterns. As of January 2025, 23.6% of SDG&E's residential accounts were at least one month behind on payments—a decrease of 2.9% from the previous year. However, 173,422 residential accounts remained four or more months in arrears.

"As (SDG&E) profits continue to grow, we continue to struggle," said Barbara Pinto, a 79-year-old San Diego resident and member of Alliance of Californians for Community Empowerment (ACCE) Action.

SDG&E serves 3.7 million customers through 1.49 million electric meters and 905,000 natural gas meters across San Diego County and southern Orange County.

What Consumers Can Do

Consumers facing difficulty paying utility bills should investigate available assistance programs. SDG&E offers several support options for customers struggling with payments. The California Alternate Rates for Energy (CARE) program and Family Electric Rate Assistance (FERA) program provide discounts for income-qualified households. Additionally, the Medical Baseline program offers additional allowances for customers with qualifying medical needs.

Consumers can also consider energy efficiency improvements to reduce consumption, though the high fixed costs of electricity delivery mean savings may be modest. Community choice aggregation programs may offer alternative rate structures, though delivery charges remain the same regardless of generation provider.

The evolving regulatory landscape means consumers should stay informed about CPUC proceedings and participate in public comment periods when appropriate. City and state officials continue to scrutinize utility profit margins and regulatory oversight, suggesting potential reforms could emerge from ongoing policy debates.

Sources

  1. Nikolewski, R. (2024, December). "Prepare for a bump in your SDG&E bill in 2026." San Diego Union-Tribune. https://www.sandiegouniontribune.com/2024/12/16/business/story/sdge-bills-2026

  2. U.S. Energy Information Administration. (2024). State electricity profiles. https://www.eia.gov/electricity/state/

  3. Haas Energy Institute, UC Berkeley. (2023). California electricity rates analysis. https://haas.berkeley.edu/energy-institute/

  4. California Public Utilities Commission. (2024). SDG&E general rate case decision (December 2024). https://www.cpuc.ca.gov

  5. Sempra Energy. (2025). Form 10-Q quarterly report (Q1 2025). U.S. Securities and Exchange Commission. https://www.sec.gov/edgar/

  6. Sempra Energy. (2024). 2024 Proxy Statement. https://www.sempra.com/investors

  7. California State Auditor. (2023). Report on investor-owned utilities rate of return analysis. https://www.auditor.ca.gov

  8. California Energy Commission. CalSHAPE program information. https://www.energy.ca.gov

 

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