SDG&E Electric Rates for January 1, 2026: 10% Bundled Increase but Procurement Isn't the Driver

SDG&E filed Advice Letter 4757-E to consolidate all CPUC- and FERC-authorized electric rate changes into a single filing implementing January 1 rates. (The filing will eventually be available on SDG&E's advice-letter page.)

AL 4757-E incorporates adjustments previously approved through SDG&E's General Rate Case Track 1, the CPUC's 2026 Cost of Capital decision, procurement forecasts, wildfire cost recovery, Public Purpose Program surcharges, and transmission charges. GRC Track 2 is not included (the Commission pushed consideration of those issues to its January 15 voting meeting).

AL 4757-E updates preliminary estimates that SDG&E filed in November (see our summary here) with final adopted figures.

SDG&E reports that system-average electric delivery rates (excluding the California Climate Credit) have increased by about 1.6¢/kWh, or 7.4%, while total bundled rates (delivery plus generation) have increased by 3.7¢/kWh, or 10.2%, relative to current rates.

For a typical bundled residential customer using 400 kilowatt hours per month, this translates to an average monthly bill increase of approximately $18.60 (10.5%) for non-CARE customers and $10.01 (9.7%) for CARE customers, excluding the semi-annual Climate Credit.

The filing reflects several major cost drivers.

• The Commission’s final 2026 Cost of Capital decision (D.25-12-043, summarized here);
• Wildfire-related charges (including a slightly reduced Wildfire Fund non-bypassable charge, summarized here); and
• Updated Energy Resource Recovery Account and Power Charge Indifference Adjustment calculations. These calculations reflect revised procurement forecasts and a change in how SDG&E uses banked Renewable Energy Credits (post-2018 RECs must now be utilized before pre-2019 RECs, affecting both bundled commodity rates and PCIA charges to departed load).

Additionally, large regulatory account balances – including a $296.7 million Portfolio Allocation Balancing Account undercollection (up $616 million from current rates) – are partially offset by overcollections in other accounts. FERC-jurisdictional costs see a net increase, driven almost entirely by a $172.2 million swing in the Transmission Access Charge Balancing Account Adjustment, or "TACBAA." (Base transmission revenue requirements actually came in $23.9 million below November estimates.)

Certain items have rolled off or declined (interim wildfire mitigation costs, some Public Purpose Program balances, and distributed generation overcollections), which partially offsets upward pressure on rates.

Illustrative rates are provided below our Instant Analysis. Protests are due January 20.

INSTANT ANALYSIS: The obvious headline here is a 10% bundled rate increase, which obscures a more interesting story about where California rate pressure is actually coming from. Energy procurement costs are not the driver (the ERRA revenue requirement dropped $67 million). Instead, look to capital recovery (the 2026 Cost of Capital decision, GRC base margin increases, program-specific rate base growth) and balancing account true-ups. The single largest swing is a $172 million TACBAA adjustment that reflects past transmission cost reconciliation, not new investment.

Meanwhile, the $616 million increase in PABA undercollection is a sign of continued tension in the bundled/departed load cost allocation that Community Choice Aggregators and Direct Access customers should be watching. Residential customers absorb a disproportionate share: delivery rates are up 19.4% versus flat-to-negative movement for agriculture and lighting. Last, GRC Track 2 matters were pushed to January 15, leaving those cost-recovery issues still unresolved.