California’s largest utilities have poured billions of dollars into wildfire prevention, and customers are feeling the burn. Since 2020, the state’s three biggest utilities have raised rates by 16 to 18 cents per kilowatt-hour. Average rate hikes for commercial and industrial customers have topped 50%. Californians now pay the highest electric rates in the nation outside Hawaii.
Wildfire prevention is costing California ratepayers billions, driving the highest electricity rates in the continental United States.
The numbers are staggering. The California Public Utilities Commission authorized $27 billion in wildfire prevention and insurance cost collection from 2019 to 2023. PG&E alone spent $11.7 billion on wildfire costs from 2020 through 2022. That’s more than double its authorized $4.66 billion. Wildfire-related spending now makes up 7 to 13% of the average residential customer’s monthly electricity bill.
Utility equipment causes less than 10% of California’s fires. But it’s responsible for nearly half of the most destructive ones. PG&E caused 16 fires during the October 2017 Northern California wildfires. Two PG&E outages in 2019 alone resulted in over $14 billion in costs. These disasters have pushed utilities to spend heavily on prevention. In 2023 alone, PG&E was linked to 374 wildfires, SCE to 90, and SDG&E to 16, underscoring how the burden of wildfire prevention continues to fall heavily on utility ratepayers.
Much of that spending goes to burying power lines underground. That costs $2 million to $6 million per mile. Southern California Edison plans to bury 600 miles of lines in high-risk areas. Capital spending makes up 55 to 86% of total wildfire mitigation budgets. The results have been mixed. Southern California Edison says it’s cut catastrophic wildfire risk by 85 to 90% since 2019. SDG&E’s equipment-caused fires dropped from 32 in 2015 to 16 recently.
If large utilities struggle with these costs, smaller ones face even tougher choices. They don’t have the same customer base to spread expenses across. Downgraded credit ratings raise borrowing costs, which get passed to ratepayers. The compounding effect of depreciation and returns on capital makes costs grow over time. Rising power bills also threaten to undermine California’s renewable energy goals, as climate activists warn that diminishing political will could slow the transition and discourage other states from pursuing similar policies.
State auditors have raised concerns about oversight. An audit of $2.5 billion in spending from 2019 to 2020 found problems with verifying completed work. Utilities have disputed the findings. Meanwhile, rates are expected to outpace inflation through 2027. For smaller utilities, the financial pressure isn’t letting up anytime soon.
References
- https://www.scalemicrogrids.com/blog/wildfires-rate-hikes-and-the-future-of-electricity-in-california
- https://calmatters.org/environment/2024/12/pge-utilities-wildfire-prevention-customer-bills-california/
- https://www.pnnl.gov/sites/default/files/media/file/Wildfire Risk Review of Utility Industry Trends_PNNL_July 2025.pdf
- https://information.auditor.ca.gov/reports/2021-117/index.html
- https://san.com/cc/wildfires-and-a-black-box-of-utility-spending-drive-californias-record-electric-rate-hikes/
- https://www.capradio.org/articles/2024/12/03/californians-pay-billions-for-power-companies-wildfire-prevention-efforts-are-they-cost-effective/
- https://www.aidash.com/four-ways-wildfires-are-affecting-the-utility-industry/
- https://www.spglobal.com/ratings/en/regulatory/article/241106-wildfire-exposed-u-s-investor-owned-utilities-face-increasing-credit-risks-without-comprehensive-solutions-s13297812
