The California Public Utilities Commission is the regulatory body that approves every rate change for the state's three investor-owned utilities: Pacific Gas and Electric, Southern California Edison, and San Diego Gas & Electric. In 2026, multiple overlapping rate proceedings are moving through the CPUC simultaneously, each with the potential to significantly increase commercial electricity and gas rates. Understanding these proceedings is essential for any building operator trying to forecast utility budgets for the coming year and beyond.
The pace of rate increases has accelerated. California commercial electricity rates have risen approximately 40 percent since 2020, driven by wildfire mitigation costs, grid modernization investments, transmission upgrades to support renewable energy, and the ongoing retirement of natural gas power plants. Each of these cost categories is subject to separate CPUC proceedings, and the compounding effect of multiple approved increases has pushed California's commercial rates to among the highest in the nation.
This article breaks down the major CPUC proceedings that will affect commercial building rates in 2026, explains how to track their progress, and provides guidance on budgeting for the increases that are already in the pipeline.
General Rate Cases: The Biggest Driver of Rate Increases
Each California IOU files a General Rate Case with the CPUC every three to four years. The GRC is the primary proceeding through which the utility requests approval for its total revenue requirement, the amount of money it needs to collect from ratepayers to cover its costs of service plus an authorized return on equity. When a GRC results in an increased revenue requirement, that increase flows directly into higher per-kWh and per-therm charges on commercial bills.
SCE's 2025 General Rate Case
Southern California Edison filed a GRC requesting a revenue requirement of $9.66 billion for the 2025 test year, with annual escalation through 2028. This represents an increase of approximately $1.8 billion over the previously authorized revenue level. The CPUC has approved a significant portion of this request, though with some reductions to the proposed spending levels. For SCE commercial customers, the approved GRC is expected to add approximately 3 to 5 cents per kWh to effective rates when fully implemented.
The major cost categories driving SCE's increase include wildfire risk mitigation (vegetation management, grid hardening, and covered conductors), distribution system upgrades to accommodate the rapid growth of distributed energy resources and electric vehicle charging, and IT system modernization. Each of these categories is subject to detailed CPUC review, and the final approved amounts may differ from SCE's initial request.
PG&E's Rate Trajectory
PG&E's rates have increased approximately 10 percent year-over-year through a combination of its most recent GRC, wildfire cost recovery proceedings, and transmission cost updates. PG&E's authorized revenue requirement for 2026 reflects the ongoing costs of emerging from its 2019 bankruptcy, including securitized wildfire liabilities that add roughly 2.5 cents per kWh to rates. The utility has also filed for additional cost recovery related to the 2025 wildfire season.
PG&E commercial customers have seen their average effective rate climb from approximately 22 cents per kWh in 2020 to over 35 cents per kWh in 2026 on a blended basis (averaging peak and off-peak). Buildings on time-of-use schedules with significant peak-period consumption are paying effective rates well above 40 cents per kWh, with peak-period rates exceeding 50 cents for the largest commercial accounts.
Wildfire Cost Recovery Proceedings
Wildfire-related costs represent the single largest incremental expense being passed through to California ratepayers. The costs fall into several categories: wildfire prevention and hardening (proactive investments to reduce ignition risk), wildfire liability and insurance (costs of past wildfires and premiums for future coverage), and the California Wildfire Fund (a state-sponsored insurance mechanism funded by ratepayer surcharges).
PG&E's wildfire mitigation plan alone calls for over $5 billion in spending between 2023 and 2026, including undergrounding 10,000 miles of distribution lines in high-fire-risk areas. This undergrounding program is the most expensive single capital project in the utility's history, and its costs are being recovered through rates over a 30-year amortization period. Even amortized, the annual rate impact is substantial, adding an estimated 1 to 2 cents per kWh for all customers.
SCE and SDG&E have their own wildfire cost recovery proceedings, including costs for covered conductor installation, enhanced vegetation management, weather station networks, and AI-based ignition detection systems. Each IOU files annual wildfire mitigation plan updates with the CPUC, and the approved costs flow into rates through dedicated tracking accounts that update quarterly or annually.
Transmission Cost Increases
California's ambitious renewable energy targets, which require 60 percent of electricity to come from renewable sources by 2030 and 100 percent from clean energy by 2045, are driving massive investments in new transmission infrastructure. The renewable generation being developed in the desert Southwest, the Central Valley, and offshore requires new high-voltage transmission lines to carry that power to the population centers along the coast.
The California Independent System Operator has approved a 20-year transmission plan with over $30 billion in proposed projects. These costs are allocated to all California ratepayers through the Transmission Access Charge, which has already increased from approximately 2 cents per kWh in 2020 to over 4 cents per kWh in 2026. Further increases of 1 to 2 cents per kWh are expected over the next three years as approved projects enter construction.
For commercial building operators, transmission costs are entirely non-controllable and non-negotiable. They cannot be avoided through competitive supply procurement, demand management, or even on-site generation. The only partial hedge is battery storage, which can reduce peak-period consumption and thereby reduce the transmission charges embedded in peak-period rates.
Tracking Rate Proceedings That Affect Your Buildings
The CPUC maintains a public docket system where all proceedings are filed and tracked. Each proceeding is assigned an application number (e.g., A.23-05-010 for SCE's GRC) and a docket page where all filings, rulings, and decisions are published. While the volume of filings can be overwhelming, the key documents to monitor are the Proposed Decision (PD) issued by the assigned Administrative Law Judge and the Final Decision (D.) voted on by the full Commission.
For practical budgeting purposes, commercial building operators should focus on four categories of proceedings: General Rate Cases (filed every three to four years per utility), wildfire cost recovery applications (filed annually), transmission cost updates (processed through FERC and CAISO), and specific surcharge proceedings related to state mandates such as the California Climate Credit or public purpose programs.
Your utility's regulatory affairs department publishes rate change summaries when new rates take effect. These summaries are more accessible than the full CPUC proceedings and provide the specific per-kWh and per-kW rate changes that will appear on your bill. Request to be added to your utility's commercial customer notification list to receive these summaries directly.
Budgeting for Continued Rate Escalation
Based on the proceedings currently in the CPUC pipeline, California commercial electricity rates are projected to increase 6 to 10 percent annually through at least 2028. This compound growth means a building paying $100,000 per year in electricity today should budget for $130,000 to $150,000 by 2028, assuming no change in consumption. For a portfolio of 50 buildings, that delta of $1.5 million to $2.5 million in annual electricity cost growth demands proactive management.
The most effective budgeting approach combines a baseline assumption of 8 percent annual rate growth with building-specific adjustments based on rate schedule changes, planned capital investments, and occupancy projections. Buildings that are investing in load shifting, solar-plus- battery, or energy efficiency improvements should see their cost growth moderate relative to the portfolio average, while buildings with no active management will track or exceed the rate increase trajectory.
For California buildings on competitive supply contracts, monitor the difference between your contracted rate and the utility default rate quarterly. As utility rates increase, competitive supply contracts signed at lower rates become more valuable, but only until they expire. Plan your contract renewals well in advance and consider locking in longer terms if the forward curve suggests continued rate increases.
Industry Advocacy and Ratepayer Engagement
Commercial building operators and property management firms can participate in CPUC proceedings as interveners or through trade associations that represent commercial ratepayer interests. Organizations such as the California Large Energy Consumers Association and the Commercial Real Estate Development Association actively intervene in rate cases to advocate for cost containment and equitable rate design.
Even without formal intervention, commercial customers can submit public comments on Proposed Decisions and attend public participation hearings held in each utility's service territory. The CPUC is required to consider public comments, and strong commercial ratepayer engagement has historically influenced the Commission's decisions on rate design, demand charge structures, and the allocation of costs between customer classes.
California commercial electricity rates have risen 40 percent since 2020, and the proceedings currently in the CPUC pipeline indicate another 25 to 35 percent increase by 2028. Proactive rate management is no longer optional for building operators in this market.