🔌 Why California Electricity Prices Are Surging — And What It Means for Households and Investors
By Scott Woodburn, Real Estate Knowledge Broker
Electricity prices are climbing fast in California — and if you’re feeling the pinch, you’re not alone.
While U.S. inflation has started to cool, California's electricity rates are projected to rise 26% from 2022 to 2025, putting pressure on household budgets and investor returns alike.
Let’s break down what’s driving these costs — and how to prepare.
⚡ Electricity Demand Is Exploding
California’s energy use is surging, largely due to the expansion of:
- AI and data centers
- Electric vehicle (EV) adoption
- Smart appliances and heat pumps
- Crypto mining
- Widespread electrification of homes
"The U.S. Department of Energy projects that data centers could consume 12% of national electricity by 2028 — nearly triple from 2023."
🛢️ Refinery Closures Add Fuel to the Fire
Two major refineries are shutting down:
- Phillips 66 – Los Angeles (139,000 bpd) → closing by end of 2025
- Valero – Benicia (145,000 bpd) → closing by 2026
These closures will cut nearly 20% of California’s refining capacity.
⛽ Fuel prices could jump to $6–$8/gallon, tightening energy markets statewide and inflating transportation, construction, and delivery costs — all of which ripple into electricity pricing.
🏗️ Grid Infrastructure Is Outdated
California’s electric grid is aging and struggling to keep up:
- Half of transformers are near end-of-life
- Equipment delivery times now 2–3 years, up from weeks
- Wildfires, heatwaves, and permitting delays stall expansion
- Transmission costs are rising — and passed on to ratepayers
🧾 Regional Disparities Make It Worse
| Region | Avg. Residential Rate (¢/kWh) |
|---|---|
| San Diego, Bay Area, L.A. | 25–30¢+ |
| Rural Inland CA | 15–18¢ |
| U.S. National Avg. | ~17¢ |
⏱️ Time-of-use pricing means electricity during peak hours is significantly more expensive — often catching consumers off guard.
🏡 What Homeowners & Investors Should Do Now
Here’s how to stay ahead of rising energy costs:
✅ Audit energy efficiency — solar, insulation, smart thermostats
âś… Tap into rebates for green upgrades
âś… Factor utility inflation into ROI models
âś… Adjust usage to avoid peak pricing hours
âś… Educate buyers on long-term utility impacts
🧠Bottom Line
California is facing an energy crunch: rising demand, shrinking fuel supply, and an overloaded grid.
If you’re a homeowner or investor, it’s not just about buying the right property — it’s about preparing for rising operational costs.
đź“š Sources
- U.S. Energy Information Administration (EIA)
- U.S. Department of Energy
- Reuters, AP, Politico: Reports on refinery closures
- J.P. Morgan Asset Management
đź’¬ Have you felt the impact of rising energy costs in your home or business? Share your story below or connect with me to talk strategy.
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#CaliforniaRealEstate #ElectricityRates #EnergyTrends #AIInfrastructure #GreenHomes #SmartInvesting #RealEstateStrategy #KnowledgeBroker #ScottWoodburn
