California homeowners pay about 33.25 cents per kWh on average (EIA residential retail price, May 2026), the highest of any state in the continental US. The big investor-owned utilities run even higher: PG&E and Southern California Edison average in the low-to-mid 40-cent range, per the state’s own Q2 2026 rate report. Those high, time-of-use rates are the main reason solar still pencils out here even under NEM 3.0.
California has the most expensive electricity in the continental United States, and that single fact drives almost everything about whether solar is worth it here. This page is the deep dive on the rates themselves: what the statewide average actually is, how the three big investor-owned utilities (PG&E, Southern California Edison, and SDG&E) price power differently, how time-of-use billing works, why rates keep climbing year after year, and why those high rates still make solar pay off even after the state cut export credits under NEM 3.0. For the full cost-and-incentive picture, start at our California solar guide; this page zooms in on the electric rates that sit underneath it.
How high are California electricity rates in 2026?
The statewide residential average is about 33.25 cents per kWh (EIA residential retail price for California, as of May 2026). That is roughly double the national average and the highest of any state in the continental US; only Hawaii, which runs on imported fuel, is higher. The statewide number blends cheap municipal utilities with the expensive investor-owned ones, so most homeowners on a big IOU actually pay more than the average.
The three investor-owned utilities that serve about three-quarters of the state price power well above that average. In its Q2 2026 electric rates report, the California Public Advocates Office put average residential rates near the low-to-mid 40-cent range for PG&E and Southern California Edison, with SDG&E somewhat lower (CPUC Public Advocates Office, Q2 2026 rates report, verify the current figure for your utility). Because tariffs change several times a year, treat any single cents-per-kWh number as a snapshot to confirm on your own bill, not a fixed rate.
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PG&E, SCE, and SDG&E rates compared
Which utility you have matters more in California than in almost any other state, because the three big investor-owned utilities (IOUs) set very different prices and all use time-of-use billing. The table below shows the rough average residential rate and the typical peak window for each. Verify the current number on your own bill or your utility’s tariff before you plan around it.
| Utility | Type | Approx. avg residential rate (2026) | Common residential peak window |
|---|---|---|---|
| Pacific Gas & Electric (PG&E) | Investor-owned | Low-to-mid 40 cents per kWh (verify current) | 4 to 9 p.m. daily (E-TOU-C); 5 to 8 p.m. weekdays (E-TOU-D) |
| Southern California Edison (SCE) | Investor-owned | Mid 40 cents per kWh (verify current) | 4 to 9 p.m. weekdays |
| San Diego Gas & Electric (SDG&E) | Investor-owned | Low-to-mid 30 cents per kWh (verify current) | 4 to 9 p.m. weekdays |
| State residential average | All utilities blended | About 33.25 cents per kWh (May 2026) | Varies by plan |
Sources: EIA (state average, May 2026) and the CPUC Public Advocates Office Q2 2026 rates report (IOU averages). IOU figures are approximate and change with each tariff filing; confirm your current rate on your bill.
What a California electric rate means for solar payback
High rates are the reason rooftop solar still pays here. Every kilowatt-hour your panels make is one you do not buy at 33 to 45 cents, so California’s expensive power turns ordinary production into real savings. According to MySolarFY’s own analysis (as of August 2026), a 6 kW rooftop system in Fresno, in PG&E territory, is modeled to produce about 9,836 kWh a year (NREL PVWatts v8 run, NSRDB typical-year data). At the statewide average rate that offsets roughly $3,270 of grid power a year, and closer to $4,000 on a mid-40-cent PG&E rate, before any incentive. Your own roof’s pitch, shading, and rate plan change the result, so estimate yours with NREL’s free PVWatts calculator. To turn those annual savings into a full payback picture, weigh them against what a system costs in our California solar cost guide.
Time-of-use pricing raises the stakes on both sides. Because California IOUs charge the most from about 4 to 9 p.m., when your panels are winding down, the value of a solar-plus-battery setup is higher here than in flat-rate states: a battery lets you use your own stored power during those expensive peak hours instead of buying it. For what a system costs to install, see our California solar guide, and for the export-credit side of the equation read on.
Why California electricity rates keep rising
California rates have climbed faster than inflation for years, and the drivers are structural. The California Public Advocates Office, the state’s independent ratepayer watchdog, tracks these increases every quarter and has repeatedly flagged that residential rates have risen significantly (CPUC Public Advocates Office rate reports). The main cost pressures show up in almost every rate case:
- Wildfire safety and grid hardening: the IOUs are spending heavily on burying lines, vegetation management, and equipment upgrades to reduce wildfire risk, and those costs are recovered through rates.
- Transmission and distribution upgrades: an aging grid plus new electrification demand means large capital spending that flows into delivery charges.
- Wildfire liability and debt service: past wildfire costs and the financing behind them add to what ratepayers cover.
Regulators can shift charges between fixed monthly amounts and per-kWh rates, but that reshuffling does not remove the underlying cost pressure. The practical takeaway for a homeowner is simple: the rate you pay today is likely a floor, not a ceiling, which is part of why locking in your own generation appeals to so many Californians.
How high rates drive solar economics under NEM 3.0
California changed its solar export rules in 2023, and the switch makes rates matter even more. Under the old net metering, IOU customers were credited for exported power at close to the full retail rate. Under the current rules, often called NEM 3.0 or the Net Billing Tariff, the three big IOUs credit exports at avoided-cost values that run well below retail, on the order of 75 percent lower on average (CPUC Net Billing Tariff). See how California’s NEM 3.0 net billing works for the full mechanics.
The result is that self-consumption beats export, and that is where high rates and batteries come together. Because you save the full 33-to-45-cent retail rate on every kilowatt-hour you use yourself but earn only a small credit for what you send back, the winning strategy under NEM 3.0 is to use your solar directly and store the rest. The table below shows why the value of a kilowatt-hour depends entirely on what you do with it.
| What happens to a kWh | How it is valued under NEM 3.0 (IOU customers) |
|---|---|
| You use it in your home as it is made | You avoid buying that kWh at the full retail rate, roughly 33 to 45 cents depending on your utility and time of day |
| You export it to the grid | Credited at an avoided-cost value that runs well below retail, on the order of 75 percent lower on average |
| You store it in a battery and use it at peak | You avoid buying that kWh during the 4-to-9 p.m. peak, the most expensive window of the day |
Illustrative of how the CPUC Net Billing Tariff values self-use versus export; exact credit values vary by utility and hour, so confirm your own.
That is why high rates and batteries come together in California. A battery lets you push your own power through the expensive 4-to-9 p.m. peak instead of buying it, so the higher your utility’s rate, the faster that battery pays for itself. This is why most new California IOU installs now include storage. For customers of municipal utilities, the math is different, as the next section explains.
Municipal utilities: the net-metering exception
NEM 3.0 only applies to the three big investor-owned utilities. California’s municipal utilities are not regulated by the CPUC, so they set their own solar rules, and several still offer more generous net metering than the IOUs. If you are served by the Los Angeles Department of Water and Power (LADWP), the Sacramento Municipal Utility District (SMUD), Modesto Irrigation District (MID), Anaheim Public Utilities, or Riverside Public Utilities, your export credits and rate structure are set by that utility, not by the state’s Net Billing Tariff. Confirm your own utility’s current net-metering terms before you size a system, because they change and vary widely.
Frequently asked questions
What is the average electricity rate in California in 2026? The statewide residential average is about 33.25 cents per kWh as of May 2026 (EIA), the highest of any state in the continental US and roughly double the national average. Customers of the big investor-owned utilities usually pay more than that: PG&E and Southern California Edison average in the low-to-mid 40-cent range and SDG&E somewhat lower, per the CPUC Public Advocates Office. Rates change several times a year, so confirm your current rate on your bill.
Which California utility has the highest rates? Among the three big investor-owned utilities, Southern California Edison and PG&E generally carry the highest average residential rates, in the mid-40-cent range in 2026, with SDG&E lower. Municipal utilities like LADWP and SMUD are typically cheaper than the IOUs. Because tariffs are updated throughout the year, treat these as approximate and verify the current figure with your own utility.
Why are California electricity rates so high? California IOU rates are driven up mainly by wildfire safety and grid-hardening spending, transmission and distribution upgrades, and the cost of past wildfire liabilities and the debt behind them, all recovered through rates. The California Public Advocates Office tracks these increases and has flagged that residential rates keep rising. Regulators can move charges between fixed and per-kWh components, but that does not remove the underlying cost pressure.
Does solar still make sense in California under NEM 3.0? For many homeowners, yes, because the state’s very high electricity rates mean every kilowatt-hour you generate and use yourself avoids a 33-to-45-cent purchase. Under NEM 3.0 the big IOUs credit exported power well below retail, so the strategy shifted toward using your own solar and storing the rest in a battery, especially to cover the expensive 4-to-9 p.m. peak. Whether it pays for your specific home depends on your roof, your utility, and your usage.
Do time-of-use rates apply to California solar customers? Yes. The three big IOUs put residential customers on time-of-use plans, with the most expensive prices generally from 4 to 9 p.m. on weekdays (PG&E, SCE, and SDG&E all use a late-afternoon-to-evening peak, with some variation by plan). That peak window falls after solar production drops off, which is why pairing panels with a battery is common in California. Confirm your plan’s exact peak hours and prices with your utility.
Did the federal solar tax credit change affect California rates? No, the two are separate. The 30 percent federal Residential Clean Energy Credit (Section 25D) ended for expenditures made after December 31, 2025 (IRS), so a California homeowner who buys solar with cash or a loan in 2026 cannot claim it, but that has no effect on your electricity rate. Your utility rate, California’s net-billing rules, and any municipal net metering are set separately from federal tax law.
Reviewed by the MySolarFY team. Figures were verified against the linked EIA, NREL PVWatts, CPUC Public Advocates Office, CPUC, and IRS sources as of August 2026; California utility tariffs and net-billing terms change, so confirm your current rate and net-metering terms with your utility before you decide. MySolarFY does not provide tax or financial advice; consult a licensed professional about your own situation. Learn more about the MySolarFY team and how we work, and browse more from our California solar hub.
MySolarFY is a free service that matches homeowners with licensed solar installers. We are not an installer, financing company, or government program. “No up-front cost” refers to qualifying lease or PPA financing, where eligible homeowners may have no out-of-pocket cost at installation. Lease and PPA terms typically run 20 to 25 years, may include an annual price escalator, and total payments may exceed the cost of a cash purchase. Homeowners do not get the federal residential credit that ended after December 31, 2025; on a leased system the company that owns it claims any commercial credit (Section 48E). Solar panels are not free and monthly payments apply. Eligibility, savings, incentives, and rates vary and are not guaranteed. See our full disclaimer.
Related California guides: California solar overview, California NEM 3.0 net billing, PG&E solar, Southern California Edison solar, SDG&E solar, and the solar incentives overview. Ready to compare quotes? Get started.
