Fact Sheet: How SB 905 Saves Californians Money on Electric Bills
California’s energy system should work for families, not just shareholders.
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Fact sheet from TURN and Deploy Action
California families have seen their electricity bills nearly double in the last decade — driven by wildfire costs and a regulatory system that rewards utilities for spending more, not less. SB 905 takes aim at root causes: lowering utility profits on wildfire spending, tying executive pay to affordability, aligning utility shareholder incentives with ratepayer interests, and exploring cheaper ways to finance grid infrastructure— so California’s energy system works for families, not just shareholders.
California voters want leaders to take action to reduce bills and strengthen California’s grid:
83% of voters say reducing electricity bills should be a top or important priority for lawmakers.
86% support requiring utilities to show they are making efficient use of the existing grid before building new infrastructure and passing those costs on to customers.
86% support tying utility executive pay to customer bill affordability, while nearly three in four support reducing investor-owned utilities’ guaranteed profit levels.
The bill includes six key components aimed at lowering costs and shifting utility incentives:
1. Lowers Profit Margins on Wildfire Spending
Wildfire mitigation is the single largest driver of rising electricity bills in California. California residents are already paying for that work — but utilities are also collecting inflated profits on top of it, even though wildfire spending actually reduces their own financial risk. SB 905 directs the CPUC to consider lowering profit margins for wildfire mitigation and other utility investments that are subject to less CPUC review or primarily reduce utility risk — so California residents stop being overcharged for making the grid safer.
2. Ties Executive Pay to Keeping Bills Affordable
California families have seen their electricity bills nearly double in the last decade. Over that same period, utility executives have collected tens of millions in compensation and bonuses. SB 905 creates a direct incentive for a wide range of executives to prioritize affordability by requiring utilities to tie a portion of executive pay to keeping electricity rates from rising faster than inflation over a rolling three-year period.
If bills keep climbing, executive paychecks should feel it too.
3. Strengthens Utility Performance Accountability
California regulators currently track whether utilities keep the lights on — but there’s no equivalent standard for keeping bills affordable. SB 905 begins to change that, directing the CPUC to develop a comprehensive performance framework for utilities that includes affordability as a core metric for the first time — and requiring that data be published on a public dashboard so California residents can see for themselves how their utility is performing. The CPUC may use this framework to set targets to improve utility performance over time.
4. Get More Out of the Grid We’ve Already Paid For
When utilities build new infrastructure, they earn guaranteed profits on it — which means they have a financial incentive to build more, not make smarter use of what already exists. California families end up footing the bill for costly new construction that may not have been necessary in the first place.
SB 905 tackles this by requiring utilities to publicly report how much capacity their existing distribution grid has, where it’s being underused in off-peak times or where it could be better balanced in peak times, and where new homes, businesses, and clean energy resources could connect without expensive new infrastructure.
It also allows grid planners and utilities to see where new infrastructure to address capacity-constrained areas is most cost-effective and necessary, supporting system reliability and prioritizing affordability. Finally, the bill requires the CPUC to consider whether to set targets and a timeline by which each utility should meet the metrics, and incorporates grid utilization metrics into utilities’ existing distribution planning process.
5. Lower-Cost Financing Means Lower Bills
When utilities finance infrastructure using shareholder dollars, they earn guaranteed profits on that investment — and customers pay both the construction cost and the profit markup on top of it. SB 905 directs the CPUC to explore cheaper financing options that could deliver the same infrastructure without the profit markup, lowering long-term costs for California families. These financing options, which include the use of private bonds and public debt, can reduce costs passed onto ratepayers by 1/3 or more.
Conclusion
California residents are paying too much to power their lives while utilities bring in record-breaking profits off a system that rewards over-spending – not pursuing low-cost, efficient options. Reforming the system will support efficient and sustainable grid infrastructure and lower bills for families.