CPUC, energy expert say PG&E customers are safe from wholesale bill spikes

Mar 4, 2021

Texas residents have faced thousands of dollars in unexpected electric bills from an unprecedented winter storm last month.

But it’s unlikely California PG&E customers would experience similar spikes due to outages.

Utility price surges in Texas come from two things: the type of market and its level of regulation.

Many Texas energy companies are part of a wholesale electricity market, so prices fluctuate with supply and demand.

This means electricity companies pay the wholesale cost of electricity and pass that cost along to customers.

According to the California Public Utilities Commission, or CPUC, the retail energy market in Texas is deregulated. So companies aren’t obligated to maintain consistent prices.

California’s energy market is different. Dale Dolan, a professor from the Electrical Engineering Department at Cal Poly, said California’s market is highly regulated, so the electricity prices PG&E customers see are not subject to such drastic increases in the event of a mass outage.

“[PG&E’s] rate structures are regulated. Those go through a commission. They’re approved,” Dolan said. “So whatever rate you’re on right now, in a period of really crazy demand, [PG&E] won’t renegotiate.”

In a statement to KCBX, the California Public Utilities Commission said it sets PG&E’s rates and PG&E cannot change them based on short-term price spikes.

Dolan said California’s regulation prevents customers from seeing severe spikes in their electricity bills.

“[Rates are] kind of locked in so I think largely, in California, you wouldn’t have the same type of response to the outage,” Dolan said.

PG&E does have several different rate structures that customers can choose from including time-of-use and tiered rate plans. PG&E says prices can vary depending on what time a customer uses energy or the amount of energy used. But those rates are still regulated by the CPUC.

Dolan said California’s energy system may not be any better equipped than Texas’s to prevent blackouts or outages, but the difference would be seen in less variable customer costs.

PG&E Communications Representative Mark Mesesan said the utility’s goal is to provide customers with reliable and affordable energy.

“We work hard every day in the effort to earn back our customers’ trust through our planning, our recognition of issues, proactively and responsibly, to keep our customers, communities and employees safe,” Mesesan said.

More information on PG&E’s various rate plans can be found on the utility’s website.