Why Is SDG&E So Expensive?

San Diego Gas & Electric’s bundled residential rate rose to $0.464/kWh in April 2026. That’s the highest average rate of California’s three big utilities, ahead of both PG&E and SCE, despite SDG&E serving the smallest customer base of the three. The national average is around $0.173/kWh, so SDG&E customers are paying close to 2.5 times what most of the country pays.

I hear the same question constantly from SDG&E customers: how is the smallest utility also the most expensive? Here’s the actual answer.

A Small Customer Base Absorbing Big Fixed Costs

SDG&E serves roughly 1.4 million electric customers. PG&E serves about 5.5 million and SCE about 5 million. Wires, substations, and grid maintenance cost SDG&E almost as much per mile as they cost the larger utilities, but that cost gets divided among far fewer ratepayers. Fixed grid costs that would be a rounding error spread across PG&E’s customer base become a much bigger per-customer number at SDG&E.

Cal Advocates (the state’s independent ratepayer watchdog) tracked SDG&E’s residential rate rising roughly 98% over the ten years from January 2016 to March 2026, the steepest increase of the three major utilities over that stretch.

Wildfire Risk in a Small, High-Risk Service Area

SDG&E’s territory includes the fire-prone backcountry east of San Diego, one of the highest wildfire-risk zones served by any California utility. SDG&E has invested heavily in undergrounding and covered conductor since the devastating 2007 wildfires (Witch, Guejito, and Rice fires), and it points to having avoided a major utility-caused catastrophic fire since then as a direct result.

That safety record isn’t free. SDG&E’s April 2026 rate increase specifically cited recovery of costs from its 2019-2022 Wildfire Mitigation Plans plus 2024 general rate case Phase 2 rate design. Credit rating agencies also factor in California’s overall wildfire liability exposure when pricing SDG&E’s financing, and every utility in the state (regardless of its own safety record) pays a risk premium baked into borrowing costs that ultimately lands in rates.

Procurement and True-Up Charges Nobody Sees Coming

SDG&E’s January 2026 rate change (AL 4757-E) raised the bundled residential average rate by roughly 11.4%, driven overwhelmingly by two accounting mechanisms: a Power Charge Indifference Adjustment-style undercollection of about $621 million and a transmission-related true-up (TACBAA) of $172.2 million. Neither of those is new electricity generation. Both are the utility catching up on costs it under-collected in prior periods.

This is the part of a bill that has nothing to do with how much electricity you used and everything to do with regulatory accounting. It’s also largely invisible until the rate change hits.

Customers Who Switched to a Community Choice Aggregator Still Pay SDG&E

San Diego Community Power and other CCAs let residents buy generation from an alternative supplier. You still pay SDG&E for delivery, and you still pay a Power Charge Indifference Adjustment tied to the vintage of the long-term power contracts SDG&E signed on your behalf before you left. Unbundled (CCA) customers saw their delivery-only average rate rise from about 28.2¢ to 28.8¢/kWh in the same April 2026 change, so switching to a CCA reduces exposure to SDG&E’s generation costs but doesn’t eliminate SDG&E charges from the bill entirely.

What’s Baked Into Every SDG&E Bill

Every residential plan carries a $0.79343/day Base Services Charge, the state’s income-graduated fixed charge. That’s about $6/month if you’re enrolled in CARE, roughly $12/month on FERA, and $24.15/month for everyone else, regardless of how much electricity you use or whether you have solar. It’s a statewide change, not an SDG&E-specific one; see California’s new fixed charge, explained for the full mechanics, and why is PG&E so expensive and why is SCE so expensive if you’re comparing across utilities.

SDG&E’s rate plans also use different season boundaries than PG&E and SCE: summer runs June through October (5 months) and winter runs November through May (7 months), which shifts when peak TOU pricing applies compared to the other utilities.

What You Can Actually Do About It

Match your plan to your usage. SDG&E’s TOU-DR1 charges $0.7371/kWh on-peak in summer (4-9pm) against $0.4971 off-peak, roughly a 48% spread. Schedule DR’s tiered structure charges $0.3740/kWh for the first 130% of your daily baseline and $0.4709/kWh above it. Which one wins depends entirely on whether you can shift usage out of the evening peak. Model both against your real usage rather than guessing.

Shift load off the 4-9pm window. SDG&E’s baseline credit on TOU-DR1 covers up to 130% of your daily allowance (11.0 kWh/day summer, 9.0 kWh/day winter for a representative coastal home), so staying under that threshold and off-peak matters more here than on a flat tiered plan.

Solar and storage math changed. At $0.7371/kWh peak pricing, self-consuming solar production and discharging a battery through the evening peak is worth substantially more than any export credit SDG&E currently offers under net billing rules.

Look at community solar or a CCA if you’re renting. If you can’t install solar, San Diego Community Power’s generation mix may undercut SDG&E’s default bundled rate, even though delivery charges stay the same.

SDG&E didn’t become the state’s most expensive utility because of one bad decision. It’s a small customer base carrying wildfire, financing, and true-up costs that get divided fewer ways than at PG&E or SCE. The fix on your end is the same one that works everywhere: stop paying for the wrong plan.