California Electricity Rates Explained: IOU TimeofUse, Tiered, and Net Billing

The most engineered rate system in North America

Short answer: If you are served by PG&E, Southern California Edison, or SDG&E, you are almost certainly on a time-of-use (TOU) rate by default: electricity costs most in the late-afternoon and evening peak, less overnight and midday, and your first block of monthly usage is priced lower under a baseline allowance. Solar households interconnect under net billing rules that pay far less for exports than the old net metering did. Everything about a California bill follows from those three facts.

This guide explains structure, not this month's prices: the California Public Utilities Commission (CPUC) approves the utilities' rates, and current schedules live on each utility's tariff pages. Municipal utilities (such as LADWP, SMUD, and Anaheim) run their own designs; the IOU structure below is the majority experience, not the universal one.

Piece 1: Time-of-use, default and deliberate

California moved most residential IOU customers onto TOU rates as a policy choice: the grid's expensive, emissions-heavy hours are the early-evening ramp when solar fades and demand stays high. Plans differ in exact windows and season definitions, but the shape is consistent: a peak period covering late afternoon into the evening, partial-peak shoulders, and off-peak nights and middays, with weekends gentler on some plans.

The behavioral consequence is the mirror of Ontario's: the 5-to-9 PM window is where California bills are won and lost. Cooking, cooling, laundry, and EV plug-ins at 6 PM buy the system's most expensive hours. Our time-of-use strategy guide shows how to model your intervals before contorting your life around a rate.

Piece 2: The baseline allowance

Layered under TOU is a tiered structure: a baseline quantity of electricity per day (set by climate territory, season, and whether your home is all-electric) priced at the lower tier, with usage above it at higher tiers. Coastal households get small allowances because the climate asks little; inland valley homes get larger ones because summer cooling is survival, not luxury. Exceed the allowance during peak hours and the two multipliers stack, which is how California produces its famously startling summer bills.

Practical reads:

• Know your baseline territory and watch usage against it early in the billing cycle, not after.
• Medical baseline and low-income programs (CARE and FERA) adjust the math for qualifying households; they are worth checking before any other optimization.
• Rate plan variants (different TOU windows, EV-specific plans) exist across the three IOUs; eligibility and windows differ by utility.

Piece 3: Net billing and the new solar math

For rooftop solar interconnecting since April 2023, California replaced net energy metering (NEM 2.0) with a net billing tariff: exported energy is credited at values based on the grid's avoided cost, which are typically much lower than retail, especially midday when solar is abundant. Imports are still charged at full retail TOU prices.

The consequence inverts the old strategy. Under NEM 2.0, the grid acted like a free battery and timing barely mattered. Under net billing, a kilowatt-hour you use yourself is worth the retail price you avoid, while an exported one earns the lower credit: self-consumption is now the prize. That is why our solar EV charging guide treats the car as the preferred midday load, and why battery pairings pencil out for more California households than they did before (see solar battery economics). Existing NEM customers keep their legacy terms for their grandfathering period; do not let anyone talk you off them casually.

Your levers, in order

1. Shift out of the evening peak. Pre-cool before it, delay laundry and dishwashing past it, schedule the EV into off-peak or midday solar hours.
2. Mind the baseline. Efficient cooling, envelope work, and lighting keep you in the lower tier where every hour is cheaper.
3. Choose your TOU variant. The three IOUs each offer more than one window structure, and EV owners qualify for specific plans in some territories; model against your intervals.
4. Check program eligibility. CARE/FERA discounts and medical baseline are structural savings bigger than any scheduling trick.
5. For solar shoppers, design for self-consumption. West-tilted production, storage, and flexible loads now matter more than raw annual kilowatt-hours.

How California compares

Texans shop a competitive energy price over fixed wires (Texas guide); Ontarians choose among three regulated designs (Ontario guide); Californians get one engineered design whose dials are timing and total volume. If you just moved states, unlearn the old game's lever before optimizing the new one.

The California Climate Credit and other bill furniture

Twice a year, most IOU households see a California Climate Credit line: a credit funded by the state's cap-and-trade program allowance sales, applied automatically in the spring and fall. It is real money but it is not a strategy; it arrives regardless of your plan choice. Other furniture on the bill includes public purpose program charges, nuclear decommissioning, and wildfire-related charges that have grown into a visible share of delivered prices in recent years. None of these respond to your behavior, which is why this guide focuses on the parts that do: the TOU windows and the baseline tier. When you compare your bill year over year, strip the furniture out first, or you will credit (or blame) your scheduling for a change that came from a regulatory proceeding. Our bill breakdown shows how to separate the pieces.

Renters, master-metered buildings, and other edge cases

Not every Californian sees their own meter. Master-metered apartment buildings bill tenants through the property, sometimes under rules that cap what can be passed through; submetered buildings allocate by measured use but not always on the utility's TOU windows. If you rent, ask which arrangement your building uses before optimizing against a tariff you do not actually face; your lever may be your lease's utility terms rather than the CPUC's rate design. Renters who do face TOU directly should note that the cheapest renter moves are scheduling (laundry, EV if you have it, portable cooling) rather than equipment, and California's renter-specific programs through the utilities are worth an eligibility check before buying anything.

EV plans and the overnight household

Each of the big three IOUs markets EV-oriented rate plans or time-of-use variants with deeper overnight discounts, aimed at households that can move a car-sized load into the small hours. The evaluation is the same modeling as any TOU switch, with one California twist: check whether the EV plan's peak window matches the standard plan's, because living in the house during a longer or hotter peak can quietly tax back the overnight gain. Households that charge a car nightly and run little else after 4 PM are the natural winners; households with heavy evening cooking, cooling, and laundry for a family may find the standard plan cheaper in total even with the car paying more. Your interval data answers this in one sitting, using the method in our time-of-use strategy guide, and the car's own schedule usually supplies the off-peak discipline for free once it is set.

New housing, solar mandates, and what they mean for your rate future

California's building standards have required solar on most new single-family homes since 2020, which means a growing share of households meet the rate system first as small generators under net billing rather than as pure customers. If you are buying a new build, ask which interconnection vintage the system carries and whether storage was included, because a net-billing home without storage exports its noon surplus at low value while its evenings buy at peak. The rate literacy in this guide is rapidly becoming basic homeowner literacy in California, on both sides of the meter.

Frequently Asked Questions

Can I opt out of time-of-use in California?

The IOUs offer limited alternatives (such as a tiered non-TOU rate in some territories), subject to eligibility. Compare carefully: opting out removes peak prices and also removes cheap off-peak prices, which punishes EV owners and night-heavy households.

What is the cheapest hour to charge an EV in California?

Usually the overnight off-peak or the midday solar window on your specific plan; evening is the risk. Your plan's window table, not general advice, decides. Our charging cost guide shows how to fold your plan's windows into per-kilometer math.

Does net billing apply to my existing solar system?

Systems interconnected under NEM 1.0 or 2.0 generally keep those terms for a grandfathering period from their interconnection date. Expansions or changes can affect status; verify with your utility before modifying a legacy system.

Why is California electricity so expensive per kWh?

Delivered prices carry generation, transmission and distribution investment, wildfire mitigation and insurance costs, public programs, and fixed system costs spread over usage. The EIA publishes state average prices for context; your tariff sheet governs your bill.

What is a community choice aggregator (CCA)?

Many California communities buy power through a CCA (local government aggregation) while the IOU still delivers it and bills you. Your generation line then comes from the CCA at its rates; delivery and TOU structure remain the IOU's. Check which entity sets your generation price before comparing plans.

The bottom line

California prices the evening and rewards the flexible. Learn your peak window, defend your baseline tier, and if you add solar, design for using your own power first. In this market the calendar and the clock are the rate plan.

About the Editorial Team EnergyBS reviews public program rules, product specifications, utility rates, and reader-facing cost assumptions. Treat savings figures as estimates until you verify local prices, permits, rebates, and contractor quotes.