CA Must Protect Its Energy Efficiency Programs Amidst the Rates Crisis

California's electricity bills are skyrocketing at an alarming rate, with most residents enduring a staggering 50% or more increase in just three years. This trend threatens not only household budgets but also our state's equity, affordability, and climate goals.

Bringing down electricity rates should be a top priority for California's leaders. Lawmakers are hearing daily from constituents about the urgent need for affordability solutions. However, it's vital that we take a thoughtful approach to this issue. There's a real risk that in our haste to cut costs, we could exacerbate the affordability problem rather than solve it.

Protecting Vital Energy Efficiency Programs

One critical area that must be protected from budget cuts: California's energy efficiency programs. These initiatives, funded through utility bills, encompass a wide range of efforts including rebates for upgrades to energy-efficient appliances, home weatherization services, and education and training programs for consumers and businesses. They are implemented by utilities, local governments, and third-party providers, all working to reduce energy consumption and lower costs for Californians.

These vital programs deliver billions of dollars in savings for customers. Without them, Californians would face even higher bills.

• California's energy efficiency programs generated $5 billion in benefits for ratepayers in 2023 alone.
• Every dollar invested yields an impressive $8.49 return.
• Since the 1970s, these programs have saved Californians over $100 billion.
• California's energy efficiency programs reduced peak electricity demand by nearly 700 MW in 2023. That's 30% of the entire capacity of California's Diablo Canyon nuclear power plant in energy savings.

Importantly, these benefits extend beyond direct program participants to all utility customers by reducing overall energy demand and avoiding costly investments in new energy resources and transmission capacity.

California's Energy Efficiency Success Story

Thanks to decades of investment in energy efficiency, California boasts the 4th lowest per capita energy consumption in the nation. This saves consumers money while at the same time reducing health-harming and climate-change causing pollution.

Over the past 40 years, the state has kept per capita electricity consumption nearly flat through wide-ranging energy-saving initiatives. In contrast, the other 49 states have seen their average per capita use increase by more than 50%.

Unfortunately, California's leadership on energy efficiency is now at risk.

Guiding Principles for Achieving Greater Affordability

While protecting energy efficiency programs is crucial, lawmakers should also focus on other avenues for cutting consumers' utility bills. In partnership with The Utility Reform Network (TURN) and Greenlining, NRDC has developed key guiding principles for addressing energy affordability:

1. Require utility companies and the California Public Utilities Commission (CPUC) to reduce costs while maintaining clean, safe, and reliable service.
2. Create affordable financing options for energy infrastructure, including a state authority to fund major long-term projects.
3. Establish a Climate Trust Fund to combine federal, state, and private investments for cleaner transportation and buildings.
4. Study and implement long-term solutions to reduce electricity costs, ensuring input from affected communities and their representatives, while continuing to support programs that help low-income and disadvantaged groups.

Thirty-five groups signed onto a letter outlining this approach that was sent to lawmakers last week.

At the heart of California's strategy for controlling costs should be holding utility companies and the CPUC accountable for reducing the price of receiving clean, safe, and reliable service. This is especially true with wildfire mitigation spending, which has become a primary driver of recent utility bill hikes. While upgrading the state's electricity grid to prevent wildfires is crucial, we must ensure this work is done cost-effectively, maximizing benefits for utility customers while minimizing costs.

NRDC will continue to work with lawmakers to achieve the savings on electricity bills that Californians desperately need. Our clean energy, equity, and climate goals depend on our success in this effort. By taking a balanced approach that protects vital energy efficiency programs while pursuing smart cost-cutting measures including upgrades to more modern technology, we can create a more affordable and sustainable future for all Californians.

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