Proposal includes operational efficiencies, efforts to address external cost pressures and innovative customer sharing mechanism  

San Diego Gas & Electric (SDG&E) today filed its 2028 rate request with the California Public Utilities Commission (CPUC), outlining a focused plan to maintain safe and reliable energy service while addressing rising costs driven by required safety, compliance and infrastructure needs, as well as external factors such as insurance and healthcare. Formally known as a General Rate Case, the request reflects actions to improve efficiency and reduce costs within the company’s control, including modernizing how the company operates and streamlining operations.   

“We recognize that any increase matters to our customers, especially with costs rising in many parts of daily life,” said Scott Crider, president of SDG&E. “Our focus is on prioritizing the essential work needed to safely operate the system, while continuing to improve efficiencies and service for our customers.”  

Lower electricity sales and increasing external costs create upward rate pressure

Over the last five years, costs for consumer goods and services in the United States have risen by approximately 25%, based on U.S. Consumer Price Index data. In California, electric rates have experienced similar upward pressure, driven by higher costs of goods and services and lower system-wide electricity consumption due to public incentives for rooftop solar and energy efficiency, as well as weather impacts. Requirements to maintain system safety and reliability, such as wildfire mitigation and hardening efforts, also impact overall costs. 

In response, SDG&E has been proactive, adopting a series of cost-saving measures. As a result, as a measure of wallet share in 2025, average residential electric bills in SDG&E’s territory were below the California investor-owned utility average and below the national average.¹

This request represents the next step in SDG&E’s efforts to continue improving the affordability of its services, while maintaining the safety and reliability of its energy delivery system. 

Cost discipline and operational efficiency

SDG&E has taken a disciplined approach to managing costs, reflecting sustained operational improvements and strong cost management embedded in how the company operates today. 

SDG&E implemented targeted actions using new technology, process improvements and reengineering to improve efficiency and manage costs across its operations. These efforts include enhancements in digital tools and automation, workforce optimization and improved sourcing and procurement strategies. 

For example, with technology and innovation, SDG&E has reduced the cost of strategic undergrounding in high wildfire-risk areas by approximately 50% per mile, helping lower the long-term cost of critical safety investments.  

“At SDG&E, there is an abiding commitment to leverage innovation and new technology to improve the safety and efficiency of our operations,” said Crider. “We live and work in the communities we serve and are committed to find new and better ways to make our services more affordable.” 

As another example, the company has expanded digital self-service options and increased adoption of paperless billing and electronic communications, lowering printing and mailing costs. Moreover, SDG&E has implemented automation and digital tools to streamline routine processes and resolve certain issues more efficiently, reducing manual work and avoiding unnecessary field visits. With a commitment to technology and innovation, these actions have improved productivity, streamlined operations and helped mitigate increases in operating expenses.   

Key operating cost drivers

A significant portion of the projected costs included in the proposal reflect operating and maintenance (O&M) expenses required to safely operate the system, comply with federal and state requirements and address cost pressures outside of the company’s direct control.

The most significant drivers of these operating costs include: 

• Rising insurance costs, including wildfire liability coverage required to operate in California’s high wildfire-risk environment, as the state continues to evaluate wildfire liability and insurance frameworks through Senate Bill 254 (SB 254)
•  Increasing employee medical benefit costs, reflecting broader healthcare trends across the United States 
• Compliance-driven safety activities, such as inspecting and maintaining natural gas pipelines in high‑risk areas 
• Ongoing system maintenance and operational needs required to deliver safe and reliable energy service 

Importantly, SDG&E is legally required to maintain $1 billion in wildfire liability insurance, and the associated cost of maintaining that coverage is forecast to be approximately 27% higher in 2028 than in 2025, even though the company has maintained a strong wildfire safety record.  

These rising insurance costs reflect broader challenges across California, where wildfire risk and the existing liability framework continue to drive higher costs for utilities, businesses and California families. As noted above, in 2025 the state passed SB 254 to examine wildfire mitigation, liability, and insurance dynamics. SDG&E supports efforts to improve wildfire victim protections, evaluate and reform liability frameworks and expand access to affordable insurance, which in combination would be expected to reduce long-term cost pressures for utility customers. 

In addition to insurance costs, employee medical benefit costs are projected to increase by approximately 25% compared to 2025, in line with broader national trends in healthcare. 

Investments to support safety, reliability and ongoing electrification

In addition to ongoing operating costs, the proposal includes targeted capital investments to maintain the electric and natural gas systems, manage risk and prepare for future energy needs. These proposed investments are designed to support safety, reliability and compliance with federal and state requirements across both the electric and natural gas systems. The proposal prioritizes key investments to: 

• Reduce wildfire and outage risk, including hardening approximately 600 miles of distribution infrastructure in high-risk areas through undergrounding and covered conductor 
• Maintain and improve system reliability and resilience through replacement and reinforcement of aging electric infrastructure and ongoing system maintenance 
• Comply with federal and state requirements for natural gas system integrity and pipeline safety, including system-wide inspections and maintenance across approximately 15,500 miles of pipeline 
• Strengthen cybersecurity and technology systems to help protect critical infrastructure and reduce risks from evolving threats 
• Modernize infrastructure and grid operations through continued upgrades to equipment and systems 
• Support projected customer growth, electrification and increasing energy demand, including new service connections and capacity upgrades 

Taken together, these proposed investments are focused on maintaining system performance today while preparing for expected future needs. 

Supporting affordability through a comprehensive approach

In addition to managing costs within its control, SDG&E continues to advance actions to mitigate impacts to customer bills. This includes engagement in regulatory and policy processes to improve how certain state-mandated programs and system costs are structured and recovered over time, as well as efforts to spread those costs across a larger customer base by supporting customer growth and increased use of the electrical system from higher sales. 

Many of these broader cost drivers are shaped by public policy decisions, which influence the pace of electrification and how and when costs are reflected in customer rates. That is why SDG&E continues to work with policymakers and stakeholders to improve outcomes for customers while maintaining safety and reliability.

SDG&E is also proposing an innovative earnings-sharing mechanism, which if triggered would allow customers to benefit if the company’s financial performance exceeds its authorized return during 2029-2031, better aligning outcomes with customer interests. 

Overview of the request and customer impacts

As detailed in the application, SDG&E is requesting a 2028 estimated revenue requirement of approximately $3.8 billion, representing a $280 million or 8.1% increase over 2027 estimated levels. This includes $2.9 billion for electric operations and $900 million for natural gas operations.  

The natural gas request primarily reflects the timing of required safety and compliance work, including pipeline safety programs conducted on defined inspection and maintenance cycles and required under strengthened federal and state laws in California over the past 15 years, along with proposed recovery of major pipeline investments already in service. 

If approved by the CPUC, a typical residential customer would see an average monthly electric bill increase of approximately $14.03, and an average monthly natural gas bill increase of approximately $8.45, resulting in an estimated overall combined bill impact of approximately 8.6%.² As a percentage of wallet share, the company forecasts that the electricity portion of its average residential bill will continue to trend below the investor-owned utility average in California and below the national average, with natural gas bills continuing to be among the lowest in the United States.³ 

Focused and transparent plan

SDG&E’s 2028 GRC reflects:

• Continued focus on core utility operations 
• Continued disciplined in managing costs
• Targeted infrastructure improvements in safety, reliability and cybersecurity resilience 
• Strong emphasis on innovation and technology to improve customer value

The application will now undergo a detailed public-review process before the CPUC, with updated rates proposed to take effect January 1, 2028, if approved.

Footnotes:
1 - EIA Form 861M, Federal Reserve Bank of St. Louis. Affordability is measured as the average monthly residential electric bill divided by the state’s median household income. Reflects 2024 data (latest available), based on 2025 average residential bills. California average includes SDG&E, PG&E, and Southern California Edison. Peer group includes the 100 largest U.S. investor-owned electric utilities.
2 - The bill increase compares illustrative 2027 bills with those projected for 2028.
3 - AGA, EIA Form 857, Bureau of Labor Statistics (BLS), Federal Reserve Bank of St. Louis. Affordability is measured as the average monthly residential natural gas bill divided by the state’s median household income. Reflects 2024 data (latest available). Peer group includes the American Gas Association’s (AGA) 50 largest U.S. gas corporations by number of residential customers. EIA Form 861M, Federal Reserve Bank of St. Louis. Affordability is measured as the average monthly residential electric bill divided by the state’s median household income. Reflects 2024 data (latest available), based on 2025 average residential bills. California average includes SDG&E, PG&E, and Southern California Edison. Peer group includes the 100 largest U.S. investor-owned electric utilities.

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