Climate Issues in the 2026 Governor’s Race: Electricity Affordability

Second in a series of posts outlining key challenges and opportunities facing California’s next governor.

Skyrocketing electricity costs pose a formidable political and economic barrier as California pushes to decarbonize its power supply and electrify homes and transportation. The stakes for the incoming governor are incredibly high: average residential rates for large investor-owned utilities (IOUs) increased 8%-10% annually over the last decade, far outpacing the 3.5% inflation rate. 

While the details of electric rate increases are complicated, the overarching cause is clear: climate change. It’s here, and it’s expensive. Wildfire costs now account for 14-19% of a residential customer’s bill, adding roughly $250-$500 on average to annual household costs. At the same time, the aging distribution and transmission systems (the “grid”) will require billions of dollars of new capital investment in the coming years.

There is some good news. Over the past decade, generation costs, the costs to actually create power, remained relatively flat in real terms thanks to the plummeting cost of renewable and other zero carbon energy sources. Demand for electricity also remained relatively flat as low cost energy efficiency measures, a mild climate (when it’s not on fire) and rooftop solar allowed Californians to achieve the second lowest per capita energy usage in the country. There are also promising signs that electrification of things like transportation could provide grid flexibility, reduce wildfire risks, and lower costs. 

The next governor will need to tackle several key issues:

• Utility Structure and Public Investment: Debate will continue on the future role of privately owned utilities versus public ownership and financing of grid assets. 
• Regulatory Streamlining: The California Public Utilities Commission (CPUC), the California Energy Commission (CEC) and the California Independent System Operator (CAISO) are a complicated bureaucracy that can lead to delays and frustration, yet they all play a vital role in planning and containing costs.
• Balancing Climate Adaptation with Affordability: The state must ultimately determine who will pay for the massive investments needed to manage wildfire risk, deal with climate catastrophes, and compensate victims. 

Ultimately, ensuring that electricity remains safe, clean, and affordable will demand bold leadership from California’s next state executive.

You can read more about electricity affordability issues facing California’s next governor and access all of CLEE’s climate issue briefs at California Climate Vote. Read the first post on transportation here.

2026 Governors Race, California, Climate Policy, Energy