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Customers of California’s investor-owned utilities, such as PG&E and Edison, get a reprieve from soaring utility bills twice a year thanks to a credit from the state’s cap and trade program, which requires large polluters to pay for their emissions. But lawmakers could do much more with this program.

This legislative session offers a crucial opportunity to update the climate credit program and use these funds to lower electric rates, delivering meaningful relief where families need it most: on their electricity bills. That change, combined with other rate reforms taking effect next year, could reduce costs for most households by 20%, UC Santa Barbara researchers found.

That’s real savings that can improve lives across California. And it starts with thoughtfully reauthorizing the cap and trade program so funding can reach utility customers.

Addressing the affordability crisis requires action on multiple fronts. In addition to reforming the climate credit, state lawmakers should also advance structural changes by regionalizing California’s electric grid and protecting electric vehicle programs, which lower costs for everyone.

PG&E Rates Outpace Inflation by 40%

The urgency is clear. PG&E rates have climbed 40% above inflation since 2018. Rates for other investor-owned utilities are increasing at a similarly dire pace. For families struggling to make ends meet, these increases are crushing.

California’s leaders can take decisive action in the coming weeks.

It begins with restructuring the climate credit program to deliver monthly relief, instead of twice a year, by using polluter fees to directly reduce electricity prices. This creates predictable savings and importantly can help inland families afford air conditioning during the brutal summer heat.

Lower electricity prices also could accelerate California’s clean energy transition by making electric cars more affordable, helping the state meet its climate goals.

Legislators also could shift funds currently applied to gas bills toward electricity relief, where families need help the most. Electricity represents the largest utility expense for most California households. This shift would be more equitable since nearly all households pay electric bills, but many don’t use gas.

California Should Join a Regional Electricity Grid

State leaders should pair these climate credit reforms with structural electric system changes, including participating in a regionalized grid that enables clean energy sharing across the West. It will help California develop more renewable energy to use or sell to other states, while reducing fossil fuel dependence and improving air quality.

Finally, state policymakers should prioritize state funding for California’s electric vehicle programs, which deliver direct savings to all electricity customers.

Every electric car and truck on the road helps lower everyone’s bills because EV owners pay more in electricity costs than they actually cost the grid to serve, essentially subsidizing cheaper prices for all Californians. As more families make the switch to electric vehicles, these savings compound, creating a virtuous cycle of falling electricity prices that benefits every household, regardless of what they drive.

California lawmakers and Gov. Gavin Newsom began this session focusing on affordability. By updating the state’s climate credit program, reauthorizing cap and trade and leading a clean energy partnership for the West, not only can they stem the tide of relentless rate increases, they can also deliver meaningful savings to utility customers.

About the Author

Victoria Rome is the director of California governmental affairs at the Natural Resources Defense Council.

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This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.