The Grid: California Edition

California claims to be the world’s fourth-largest economy. Stands on podiums. Prints it on press releases. Waves the GDP number like a trophy earned in combat.

Fine. Let’s take that at face value.

If we’re the fourth-largest economy on the planet — a GDP that rivals Germany’s — why are Californians paying nearly double the national average for electricity?

Why did the state’s residential rates climb 39% between 2019 and 2025 — the largest increase of any state in the nation?

Why is the utility company that provides power to 16 million of us a convicted felon?

The Pentagram Applied — Part 1: Energy

How the “4th Largest Economy on Earth” Meters Its Own Citizens Into Submission

Let’s start with the bill.

The national average residential electricity rate sits around 17 cents per kilowatt-hour. California’s average is approaching 34 cents. San Diego Gas & Electric customers are paying close to 40 cents. At peak hours under time-of-use pricing — which California mandates for most customers — rates can spike past 50 cents per kilowatt-hour. Fifty cents. For the same electricity that costs a family in Louisiana 12 cents.

Read that again. Not slightly more expensive. Not a modest premium for the privilege of living in the Golden State. Double. In some service territories, nearly triple the national average. In the fourth-largest economy on earth.

California is one of the nation’s largest electricity producers. Ranks fourth in the country. Generates enormous amounts of solar power — more than any other state. The raw energy is here. The sun hits this state with a ferocity that should make electricity nearly free for everyone who lives under it. The abundance is not theoretical. It is measurable, quantifiable, and relentless.

The scarcity is engineered.

The meter is the instrument.

The institution is the beneficiary.

The institution, in California, has a name. Three names, actually: PG&E, Southern California Edison, and San Diego Gas & Electric. Three investor-owned utilities that together serve the vast majority of the state’s residential customers. Three monopolies, sanctioned by the government, overseen by a regulatory body called the California Public Utilities Commission.

PG&E deserves special attention. Not because the other two are innocent — they aren’t — but because PG&E provides the single most damning case study of what happens when a survival-lever monopoly is allowed to prioritize shareholders over the people it claims to serve.

In November 2018, a worn suspension hook on a PG&E transmission tower snapped. The hook had been hanging in the Feather River Canyon for decades. PG&E knew about these hooks. Had fixed the exact same problem on other towers. Chose not to inspect this one — because inspections cost money, and money spent on maintenance is money not returned to shareholders. The hook broke, a power line dropped, sparks hit dry brush, and the Camp Fire became the deadliest wildfire in modern California history. Eighty-four people dead. The town of Paradise — 13,696 single-family homes and 528 businesses — essentially erased.

PG&E’s CEO stood in a Butte County courtroom and pleaded guilty to 84 felony counts of involuntary manslaughter. Said “guilty, your honor” eighty-four times while photos of the dead appeared on a screen. Many of the victims were elderly or disabled. Some were found in their cars, trapped in evacuation lines that didn’t move fast enough.

The maximum fine for 84 counts of manslaughter?

Three and a half million dollars.

Nobody went to prison.

PG&E did not lose its operating license.

PG&E filed for bankruptcy — its second in 16 years — emerged with $38 billion in debt, and continued to serve 16 million customers who cannot choose another provider.

Because there is no other provider.

Because it is a monopoly.

Because you accept what they charge or you sit in the dark.

The conviction didn’t change the rate structure.

The conviction didn’t change the relationship.

A convicted felon is still the only entity that can sell you the electricity you need to survive.

Let that settle. The fourth-largest economy on earth is powered by a utility that confessed to killing 84 people through negligent profit-seeking… and the citizens of that economy cannot take their business elsewhere. This is not a market. This is a hostage arrangement with a billing department.

Now let’s talk about what’s on the bill. Because the rate per kilowatt-hour is only part of the extraction.

California’s electricity rates are, according to the state’s own Legislative Analyst’s Office, close to double the national average — driven largely by the three investor-owned utilities. Those rates have been increasing faster than inflation and faster than rates in other states. The trajectory is projected to continue.

What’s growing isn’t the cost of producing electricity. What’s growing are the non-energy costs embedded in your bill. Wildfire mitigation. Grid hardening. Climate-related mandates. Legacy policy obligations. These expenses are passed directly to ratepayers through regulated rate structures, which means your bill goes up even when fuel prices and electricity demand stay flat.

Read that sentence again.

Your bill goes up even when nothing about your electricity consumption changes. The utility spends money — on burying power lines it should have maintained, on hardening infrastructure it let crumble, on mitigating wildfire risk it created — and sends you the invoice.

PG&E’s wildfire-related expenses make up 21% of its revenue requirement. SDG&E’s wildfire costs account for 15%. You are paying a surcharge for the privilege of being served by a company that burned down towns because it couldn’t be bothered to inspect a hook.

The Subterfuge Principle: if the motive were safety, the cost of safety wouldn’t be on your bill. It would come out of shareholder returns — the returns that were prioritized over the inspections that would have prevented the fires that generated the costs you’re now paying. The institution broke it. The institution is billing you to fix it. And the institution’s investors are still getting paid.

Then came AB 205.

In 2022, the California Legislature passed a bill requiring the CPUC to implement a fixed monthly charge on electricity bills — a flat fee you pay regardless of how much electricity you use.

The utilities originally proposed charges as high as $128 per month. The CPUC settled on $24.15 for most households, with reduced tiers for low-income customers.

The language around this was beautiful. Equity. Affordability. Clean energy transition. Electrification. All the right words in all the right order.

The stated purpose: shift some fixed infrastructure costs out of the per-kilowatt-hour rate and into a flat charge, which would lower the volumetric rate by 5 to 7 cents and make electrification more attractive.

The effect: you now pay $24.15 per month before you flip a single switch. If you’ve invested in solar panels, if you’ve insulated your home, if you’ve done everything the state told you to do to reduce your consumption — you still pay the $24.15.

The charge is tied to your connection, not your usage.

You cannot conserve your way out of it.

You cannot solar-panel your way out of it.

It is rent for the wire.

A former CPUC president called it a departure from 50 years of California regulatory precedent — the principle that if you use more, you pay more, and that encourages conservation. That principle is now dead. The new principle: you pay for the infrastructure regardless, and the institution collects whether you need it or not.

The CPUC said no income verification would be required for the tiered charges. Existing programs like CARE and FERA already establish eligibility. The Senate Republican leader wrote to the CPUC expressing concern that the $24.15 was just the beginning — that the commission had been granted “unchecked power to increase this new charge at any time.”

Were the charge designed to stay modest, they would not need unchecked power to raise it.

Here’s where California’s Energy pillar becomes something the national version only gestures at. Because California didn’t just build the standard monopoly-meter-extraction machine. California built the machine… then punished citizens who tried to escape it.

NEM 3.0

Net Energy Metering was the program that made rooftop solar viable in California. You installed panels, generated more electricity than you used during the day, fed the excess back into the grid, and received a credit at or near the retail rate.

The math worked.

Solar paid for itself.

California built the largest residential solar market in the country — 1.5 million solar homes, 68,000 jobs. People were doing exactly what the state told them to do: invest in clean energy, reduce grid dependence, help meet climate goals.

In December 2022, the CPUC voted unanimously to gut it.

NEM 3.0 — officially the “Net Billing Tariff” — slashed the compensation for exported solar energy by approximately 75%.

Under the old rules, a kilowatt-hour you sent to the grid was credited at about 30 cents.

Under NEM 3.0, the average dropped to roughly 8 cents.

The payback period for solar-only installations nearly doubled. The financial case for going solar without adding expensive battery storage collapsed overnight.

The result was immediate and catastrophic.

Solar sales in California declined 77% to 85% annually.

Interconnection applications dropped 66% to 83%.

Thousands of solar workers lost their jobs in a state that had spent years telling them the clean energy economy was the future.

Environmental groups sued, arguing the CPUC failed to consider the full benefits of rooftop solar. The court upheld the CPUC’s decision. A state assemblymember introduced a bill to repeal NEM 3.0. It stalled. The utilities lobbied, as they always do, with money that comes from your rate payments — you fund the lobbying that restricts your ability to stop paying them.

The Subterfuge Principle applied to NEM 3.0 is almost too clean, almost too obvious: if the state wanted you to go solar, it would not have gutted the program that made solar work.

California spent years building a solar market, spent years encouraging citizens to invest tens of thousands of dollars in rooftop systems, spent years positioning itself as the national leader in clean energy adoption — and then, when enough people actually did it, when the grid defection spiral I described in The Grid started to materialize, the institution changed the rules.

You found the partial exit. They bricked it up. In the fourth-largest economy on earth.

There’s one more mechanism that deserves naming, because it’s the one that makes California’s Energy pillar uniquely cruel.

Public Safety Power Shutoffs. PSPS.

When the wind blows and the fire risk is high, California’s utilities — primarily PG&E — shut off the power. Deliberately. To millions of people. Because the grid is so poorly maintained, so dangerously outdated, so neglected in the pursuit of shareholder returns, that the only way to prevent the utility’s own equipment from starting another catastrophic fire is to simply… turn it off.

Think about what that sentence describes. A monopoly provider of a survival resource — a provider you cannot leave, a provider convicted of 84 counts of manslaughter for its negligence — periodically turns off the resource you depend on because it failed to maintain the system you’ve been paying it to maintain. And during the shutoff, your food spoils. Your medical equipment stops. Your home security goes dark. Your business loses revenue. And when the power comes back on, your bill is waiting.

You pay them. They fail to maintain the grid. They shut off your power because of their failure. You keep paying them. They keep failing. They keep shutting it off.

California doesn’t just meter your survival. California occasionally suspends it — for your safety, of course — because the company you’re forced to pay couldn’t be bothered to trim the trees and inspect the hooks.

Zoom out.

California’s GDP rivals Germany’s. The state produces more solar electricity than any other. The innovation economy that drives the GDP number lives here — the companies that build the batteries, design the inverters, develop the software that could make distributed energy a reality. The talent is here. The sunlight is here. The technology is here.

What’s also here: the second-highest electricity rates in the nation. A convicted-felon utility. A regulatory commission populated by industry insiders. A solar incentive program gutted at the moment of its greatest success. A fixed charge that penalizes conservation. Periodic blackouts imposed by a monopoly too negligent to keep its own lines from starting fires.

This is the Energy pillar in California. Not a theoretical framework. Not an abstract critique of institutional power. This is the monthly bill, the shutoff notice, the NEM 3.0 letter, the $24.15 charge on an account that generated more electricity than it consumed.

This is what the fourth-largest economy on earth does to the people who power it.

The California boast works exactly the way the gas pump works in The Grid — it’s the screen.

The rate structure is the score. The CPUC hearing happened during work hours. The NEM 3.0 vote was unanimous. The fixed charge was approved over the objection of a former CPUC president. The utility that killed 84 people is still the only option.

The GDP is the sign. The energy bill is the barn.

The exits mapped in The Grid still apply here. Solar plus storage, behavioral reduction, efficiency upgrades, backup generation — all of them work in California. Some of them work better here than anywhere else in the country, precisely because the sun that makes this state so energy-rich doesn’t care what the CPUC decided about net metering.

The crap you take to exit is heavier in California than in most states. The permitting is slower. The HOA battles are fiercer. The utility’s response to your independence is more aggressive. NEM 3.0 is the proof — the institution will change the rules the moment your exit threatens its revenue.

Go solar anyway. Add storage. The $24.15 fixed charge means the wire costs you money whether you use it or not — fine. Let that be the floor, not the ceiling. Generate your own. Store your own. Use your own. Make the meter irrelevant even if you can’t make it disappear.

The institution that killed 84 people and charged you for the cleanup does not deserve your loyalty. It barely deserves your compliance. Give it the minimum the law requires, and route every other electron through the panels on your roof.

Were the fourth-largest economy designed to serve its citizens, they would not need to generate their own electricity to afford survival.