California was one of the first States to restructure its retail electric power markets. Under their restructuring plan, which started March 31, 1998, customers of California's three investor-owned utilities (IOUs) were allowed to shop for alternative sources of power. The plan also froze electricity prices for the same customers at June 1996 levels, and additionally, residential and small commercial customers received a 10-percent rate reduction in their electricity bills. These changes have resulted in significant decreases in California's average retail price since 1996. However, as noted below, this downward trend will likely change because of recent events.

• Through the early 1990s California's nominal retail electricity prices—prices unadjusted for the effects of inflation—increased, reaching a high of almost 10 cents per kilowatthour (kWh) in 1995. With the legislatively imposed price freezes for retail sales of IOUs and price reductions for some customers, nominal prices decreased to 9.34 cents per kWh by 1999 (see graph).
  
  
• From 1990 to 1992, real electricity prices—prices from which the effects of inflation are eliminated—increased, reflecting a precipitous increase in nominal prices for those years. However, with the leveling-off of nominal prices since 1993, real prices have been decreasing, reaching a low of about 9.0 cents per kWh in 1998 (see graph).
  
  
• In 1999, industrial customers in California paid an average 7.16 cents per kWh, while residential customers paid 10.71 cents per kWh (see map). Compared to most other States and compared to national averages, these prices were exceptionally high. The 1999 national average retail electricity prices were 4.43 cents per kWh for industrial customers and 8.16 cents per kWh for residential customers.
  
  
• On March 27, 2001, the California Public Utility Commission (CPUC) approved electricity rate increases of up to 46 percent for the State's two largest electric utilities. These two utilities, which serve approximately 68 percent of California's electricity customers, had been prohibited from passing high wholesale power costs to retail customers because of a rate freeze. Because of the rate increase, California's average retail electricity price will increase in the coming years.
  
  

Related Websites

• Energy Information Administration, Monthly Energy Review (Table 7.5):
  http://www.eia.doe.gov/mer/elect.html
• Energy Information Administration, Annual Energy Review (Table 8.13):
  http://www.eia.doe.gov/emeu/aer/electr.html
• Energy Information Administration, State Electricity Profiles: http://www.eia.doe.gov/cneaf/electricity/st_profiles/california.pdf
• Energy Information Administration, Electric Power Monthly (Tables 44-55): http://www.eia.doe.gov/cneaf/electricity/epm/epm_sum.html
• Energy Information Administration, The California Electricity Situation: http://www.eia.doe.gov/cneaf/electricity/california/california.html
• Energy Information Administration, U.S. Average Monthly Bills by Sector, Census Division, and State (Table 1): http://www.eia.doe.gov/cneaf/electricity/esr/esr_tabs.html
• Energy Information Administration, Electricity Revenue, Sales and Price for Power Marketers (Tables C1-C4): http://www.eia.doe.gov/cneaf/electricity/esr/esr_tabs.html
• Energy Information Administration, Electricity Revenue, Sales, and Price by State and Utility: http://www.eia.doe.gov/cneaf/electricity/esr/esr_tabs.html