CA's Solar Surplus Is Driving Up Your Energy Bill

CALIFORNIA — The Golden State is a powerhouse for energy production — especially solar energy. But what happens when the state produces more than its grid can handle?

A recent analysis by the Los Angeles Times found that the overproduction isn't saving California consumers a dime. Instead, other states are cashing in on the surplus of energy and paying less for it.

Over the past year, the state has curtailed production of 3.2 million megawatt hours, enough solar power to light 518,000 homes for one year, the Times analysis found. Meanwhile, Californians are still paying for that power, and they're paying roughly twice the national average.

"Curtailed energy is energy that has already been paid for but cannot be used," explains the Los Angeles Department of Water and Power.

“Ratepayers aren’t getting the energy they’ve paid for,” said Ron Miller, an energy industry consultant, told the Times.

Increasing curtailment for the past several years has also sounded the alarm about whether the state will be able to meet its goal of generating all power from carbon-free sources, like solar and wind, by 2045.

Why is this happening? Although California has some of the biggest solar farms in North America, the appropriate infrastructure is not in place to house or distribute that much solar power. And the state is increasingly letting solar and wind power go unused to avoid overloading the power grid, according to the U.S. Energy Information Administration.

"Grid operators must balance supply and demand to maintain a stable electric system," the administration said.

The agency added that such curtailments have rapidly increased since 2019 since solar generation has outpaced upgrades to the power grid's capacity. And while wind is another energy source that is curtailed, solar accounts for around 94% of the energy that Californians haven't been able to use.

According to a 2024 report from the Public Advocate's Office, electric bills are on the rise for Californians due to higher electricity use, especially in the summertime, when residents are running air conditioners.

The top energy suppliers in the state are PG&E, Southern California Edison and SDGE. Over the past three years, PG&E and Southern California Edison's residential rates have gone up 51%, while SDGE has gone up 20%.

What's more, nearly 1 in 5 households in California are behind on their energy bills, with Southern California Edison wracking up the most customer debt. The average SCE customer who is behind on their bill owes $1,013.

Conversely, Arizona's largest utility — which enjoyed $69 million in savings thanks to California — returned that money to its customers in the form of a credit on their bills, the Times wrote.

Other states that have seen millions of dollars in savings are New Mexico, Oregon and Washington.

And it isn't just neighboring states that are reaping the benefits. Traders are also buying and selling excess electricity on a wholesale market that the state runs.

Many such traders work for utilities trying to buy power as cheap as they can get it. Some, like Citigroups and hedge funds, don't distribute the power, they just make money off of it.

"Real-time power traders move power from markets that are currently less expensive and sell it in markets that are currently more expensive to make a profit," according to a blog post written by Jack Landis of Yes Energy, a consulting firm that tracks the state's wholesale market.

“Power traders need to make a living — which means it doesn’t make sense for them to move power from one market to another if prices are the same,” He said.