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Energy Business
Michael Cade
Michael Cade
·Posted in Energy Business

California IOUs' January 1, 2026 Rate Filings: Different Headlines, Same Basic Story

Over the holidays, California’s major investor-owned utilities filed their consolidated January 1, 2026 electric and gas rate implementations.

The surface results vary:

  • Electric bundled rates fall at PG&E and SCE but rise at SDG&E; and

  • Gas transportation revenues decline modestly across PG&E and SoCalGas/SDG&E's systems

Yet the filings point to a consistent underlying dynamic: cost pressure is shifting away from commodity energy and toward system access, reconciliation, and risk recovery.

Electric IOUs

On the electric side, the major electric IOUs enter 2026 with higher revenue requirements:

  • A $1.7 billion increase at PG&E;

  • A $444 million increase at SCE; and

  • Continued upward pressure at SDG&E from capital recovery, transmission reconciliation, and balancing-account true-ups.

The near-term bundled rate declines at PG&E and SCE are not driven by a shrinking cost base, but by timing: large prior-year overcollections and amortizations temporarily offset new costs. SDG&E, with fewer offsetting balances, shows the pressure directly: bundled rates are up 10%, residential delivery is up 19%.

And procurement is not the driver (SDG&E's Energy Resource Recovery Account revenue requirement actually dropped $67 million). Delivery-side costs, wildfire mitigation, transmission, cost of capital, and legacy true-ups dominate the filings. Departed-load customers see the trend most clearly.

At PG&E, Direct Access and Community Choice Aggregator customers face 19% increases on a class-average level as wildfire recovery, Power Charge Indifference Adjustment, Cost Allocation Mechanism, and Diablo Canyon extended-operations costs continue to migrate into non-bypassable, transmission-weighted charges. As energy becomes a smaller share of the bill, fixed system costs occupy a growing floor that procurement choices alone cannot avoid.

Natural Gas IOUs

Gas filings show a parallel pattern expressed through different mechanics.

Systemwide gas transportation revenues decline modestly at SDG&E, SoCalGas, and PG&E, largely due to balancing-account amortizations and cost-of-capital resets. But allocation rules matter. SDG&E and SoCalGas push increasing amounts of system risk into transmission and backbone services, with SoCalGas’s BTS customers absorbing a 54.6% rate increase despite an overall revenue reduction. PG&E’s gas true-up similarly reflects accounting cleanup rather than new spending, with lower end-use transportation charges offset by higher backbone and storage components.

Bottom line: Across both electric and gas systems, January 2026 rates are being shaped by accounting hydraulics, capital recovery, and the growing expense of maintaining a hardened, financeable, always-available system. Even where near-term bills decline, those reductions are largely timing artifacts. Energy is becoming a smaller share of customer bills. Access to the system (and its risks) is increasingly the product.


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