Rate Changes for California Businesses & Farms

Welcome to 2026! A new year brings new shifts in the energy market, and rates & energy charges remain top of mind for businesses across California. Looking ahead, here’s what we can expect for 2026 and how you can stay ahead of rising energy costs.

Current Rates

The good news: rates dropped starting January 1, 2026. PG&E customers saw small business rates fall around 7%, and Agricultural Time-of-Use rates drop 3-4%. These decreases were driven by lower market prices for electricity and natural gas, less power needed than previously forecast, refunds from past overcharges, and reductions in wildfire-related charges and public programs.

SCE customers saw a smaller overall reduction of about 2%, with similar benefits for business and farm accounts. These decreases were driven by falling market prices for power purchases and customer credits from the sale of state greenhouse gas allowances.

Future Increases Ahead

As we look ahead, we do see more rate hikes coming. PG&E has a pending General Rate Case (GRC), filed in 2025, that requests an 8% revenue increase for 2027 followed by 6% yearly boosts in 2028 and 2029 to fund grid upgrades. SCE’s approved 2025 GRC includes pending requested increases of 5.6% for 2026, 5.1% for 2027, and 4.9% for 2028. Additionally, Transmission and Distribution charges (aka the cost to deliver energy) are up 13% this year and are expected to continue growing for the next several years.

If you get your electricity through a third-party provider (like Direct Access (DA) or Community Choice Aggregation (CCA)), your delivery charges are expected to go up by about 23%. This increase affects your delivery fees and the Power Charge Indifference Adjustment (PCIA), often called an "exit fee.” Combined, these two costs usually make up half of your total monthly bill.

The hike is mostly due to higher PCIA rates. These fees are designed to cover the costs of older, more expensive energy contracts and to fix budget shortfalls. These "exit fees" have been a major point of disagreement since they were first introduced.

The Solution

As California businesses and farms navigate the ongoing rate volatility after the initial 2026 dip, behind-the-meter solar and battery storage become even more valuable. They provide a strong hedge against raising rates by delivering predictable energy costs locked in for 20-30 years, shielding operations from fluctuating utility charges.

Solar and battery storage systems significantly reduce the Levelized Cost of Energy (LCOE) by 50-70% over time. This translates to high ROI (often 10-15% annually), while reducing exposure to high demand fees that now comprise 50-60% of nonresidential bills. Additionally, batteries offer critical backup power during increasingly frequent outages from wildfires, grid strain, or extreme weather, ensuring uninterrupted business operations.

What’s Next

If you’re ready to combat rate volatility and lock in predictable energy costs with solar and battery storage, give us a call at (209) 668-5303. We’ll guide you through exactly how taking this step would benefit you and your business.

Let’s build your brighter future!