California Commercial Electricity Rates in 2026: What Shop Owners Need to Know
PG&E, SCE, and SDG&E rates keep climbing. We break down the current rates, time-of-use pricing, and demand charges affecting your auto shop.
California has the highest commercial electricity rates in the continental United States. If you run an auto repair shop, you're feeling it every month. Let's break down what you're actually paying and why.
Current Rates by Utility (2026)
PG&E (Pacific Gas & Electric)
Serving Northern and Central California
Average Commercial Rate
$0.28 - $0.35/kWh
Peak Rate (4-9pm)
$0.40 - $0.55/kWh
SCE (Southern California Edison)
Serving Los Angeles, Orange County, Inland Empire
Average Commercial Rate
$0.25 - $0.32/kWh
Peak Rate (4-9pm)
$0.38 - $0.50/kWh
SDG&E (San Diego Gas & Electric)
Highest rates in California
Average Commercial Rate
$0.35 - $0.45/kWh
Peak Rate (4-9pm)
$0.50 - $0.65/kWh
For Comparison
The national average commercial electricity rate is about $0.13/kWh. California businesses pay 2-3x more than most of the country.
Understanding Time-of-Use (TOU) Pricing
All California utilities now use time-of-use pricing for commercial customers. This means you pay different rates depending on when you use electricity:
| Time Period | Hours | Rate Level |
|---|---|---|
| Off-Peak | 9pm - 8am | Lowest |
| Mid-Peak | 8am - 4pm | Medium |
| Peak | 4pm - 9pm | Highest |
What this means for auto shops: Most of your business hours (8am-6pm) fall into mid-peak and peak pricing. You're paying premium rates during your busiest hours.
The Hidden Cost: Demand Charges
Here's what most shop owners don't realize: your bill isn't just about how much electricity you use. It's also about your peak demand—the highest amount of power you draw at any single moment.
When your compressor kicks on while the AC is running and someone's using the welder? That spike in demand can add $100-$300 to your monthly bill—even if it only lasts a few minutes.
Demand Charge Example
A 4-bay shop with a 50kW peak demand might pay:
- Energy charges: 3,000 kWh × $0.30 = $900
- Demand charges: 50 kW × $15 = $750
- Total: $1,650/month
Nearly half the bill is from demand charges alone.
Why Rates Keep Rising
California electricity rates have increased 40-50% over the past 5 years, and there's no sign of slowing down. The reasons include:
- Wildfire liability – Utilities are passing on billions in wildfire-related costs
- Grid upgrades – Infrastructure improvements for renewable energy
- Undergrounding – Burying power lines to prevent fires
- Regulatory costs – California's aggressive clean energy mandates
The California Public Utilities Commission has approved rate increases through 2028. Expect your bills to keep climbing.
How Solar Helps
Solar generates power during the day—exactly when mid-peak and peak rates hit. By producing your own electricity during business hours, you:
- Reduce energy charges – Use solar power instead of buying from the utility
- Lower demand charges – Solar reduces your peak draw from the grid
- Hedge against rate increases – Your solar cost is fixed; utility rates keep rising
The Math
A plug-and-play solar system costs about $0.05-0.08/kWh over its lifetime. You're currently paying $0.25-0.45/kWh. Every kWh you generate instead of buying saves you $0.20-0.40.
The Bottom Line
California commercial electricity rates are the highest in the continental US, and they're going up every year. Auto repair shops are particularly hard hit because of high daytime usage and equipment that creates demand spikes.
Solar won't eliminate your electric bill, but it can cut it by 40-50%—and lock in those savings while utility rates keep climbing.
See How Much You Can Save
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