SMUD approves 3% rate hikes in 2026 and 2027 for all customers. Here’s what that means
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- SMUD board approved a 3% rate increase for 2026 and 2027 in unanimous vote.
- Average residential bills will rise by $4.35 in 2026 and $4.48 in 2027.
- Hike addresses wildfire costs, clean energy mandates, and rising capital costs.
SMUD rates will be going up 3% in each of the next two years, following approval Thursday by the utility’s board of directors.
The increase was approved unanimously and goes into effect. Jan. 1.
For the average residential customer, monthly bills will rise by about $4.35 in 2026 and $4.48 in 2027.
The public utility began evaluating a rate increase on Jan. 14. It held two public workshops for community organizations and sent more than 270,000 emails to customers, prior to the changes announcement, SMUD officials said Thursday.
SMUD staff rejected a proposal to limit the increase to 1% and tie solar compensation to time-of-day rates, citing financial shortfalls and lack of relevance to this rate package.
The utility’s rates are currently among the lowest in California, according to a Sacramento Municipal Utility District fact sheet. As of June 1, SMUD residential ratepayers had an average monthly bill of $145 using 750 kilowatt-hours per month.
The Los Angeles Department of Water and Power, as well as investor-owned utilities Southern California Edison and Pacific Gas and Electric Co. had average rates of $185, $265 and $326, respectively.
SMUD’s rate is projected to increase 5.6% this year, averaging $0.1755 per kilowatt hour. Even with the additional planned hikes, residential rates will remain roughly 50% lower than PG&E’s, which is charging $0.383 per kilowatt hour, according to SMUD.
A new optional time-of-day rate will also become available to residential customers with smaller electric panels rated at 125 amps or less, offering a lower fixed monthly charge and a higher per-kWh usage rate — a change designed to benefit low-use households.
During Thursday’s board meeting, Alcides Hernandez, SMUD’s revenue strategy manager, said the hikes were prompted by higher costs tied to wildfire prevention, state clean energy mandates and infrastructure.
“We’re investing a couple hundred million dollars in new equipment and stations that will help us continue with our reliability and keep the lights on,” Hernandez said., adding that inflation and wildfire costs “are adding pressure to the budget.”
Board member Heidi Sanborn said the changes would be in place to help prevent long-term rate shock and keep rates below inflation.
“I come from the waste management industry and the one thing I learned early on is that the public can usually absorb an annual, moderate increase like the cost of living,” Sanborn said. “What we’re trying to do by making sure we’re keeping up with the rate of inflation is making sure that you’re not going to end up with a very big rate increase in out-years. We’re trying to make sure this is balanced and metered and we keep it under the cost of living.”
This story was originally published June 20, 2025 at 12:13 PM.
