PG&E Rate Changes 2026: What the IGFC + Per-kWh Cut Mean for Battery Payback

You may have heard PG&E rates "went up" in 2026. The full picture is more nuanced — and most California homeowners come out slightly ahead. PG&E restructured residential rates in March 2026: it added a new Base Services Charge of approximately $24/month (the IGFC under AB 205) and paired it with a per-kWh CUT of roughly $0.05-$0.07/kWh. The net effect is that typical residential bills are DOWN about $5.14/month, marking PG&E's fifth electric rate decrease since January 2024 (source). The structural change shifts how PG&E bills are built, and it changes — but does not eliminate — the case for solar and battery storage.

What Actually Changed in March 2026

Effective March 1, 2026, PG&E split residential bills into two pieces: a new fixed monthly Base Services Charge (the IGFC under AB 205) and a lower per-kWh usage rate. For most non-CARE customers the fixed charge is approximately $24/month, and the per-kWh portion dropped by roughly $0.05-$0.07/kWh. PG&E concurrently lowered residential electric rates by 1.8% — its fifth electric rate decrease since January 2024 and the third consecutive cut. The net effect is approximately $5.14/month lower bills for a typical bundled residential customer (source: PG&E investor relations, March 2026).

The mechanics of the restructure:

• Base Services Charge (IGFC): approximately $24/month for standard customers, $6/month for CARE, $12/month for FERA and Affordable Housing tenants. Covers fixed costs like grid infrastructure, energy efficiency programs, and customer service.
• Per-kWh cut: approximately $0.05-$0.07/kWh reduction in the per-usage portion of the rate, to offset the new fixed charge.
• Overall residential decrease: 1.8% on March 1, 2026; 13% cumulative since January 2024.
• Natural gas: small concurrent increase (~0.3%, $0.24/month).

This is a structural redesign, not a rate hike. The CPUC's intent under AB 205 was to shift cost recovery toward fixed charges (which can't be reduced by conservation or solar) so that per-kWh rates fall — making electricity cheaper at the margin and easier to use for electric vehicles, heat pumps, and other electrification.

The headline "$24/month new charge" reads like a price increase. In dollar terms for the average household, it isn't. But the restructure affects different homes differently, and it changes how solar and battery payback math works.

Current PG&E TOU Rates (2026)

After the March 2026 restructure, PG&E's default residential TOU plan (E-TOU-C) charges roughly $0.45-$0.50/kWh during summer peak hours (4-9 PM, June-September) and $0.35-$0.38/kWh off-peak. The summer peak-to-off-peak spread is approximately $0.10-$0.13/kWh — the difference a battery captures every day by storing cheap off-peak energy and discharging during expensive peak hours. Exact rates vary by climate zone, CARE/FERA eligibility, and the specific plan you're on.

These are approximate ranges as of mid-2026. PG&E publishes official tariff sheets at pge.com that update periodically through the year. Plus the Base Services Charge of roughly $24/month layered on top of usage.

SMUD vs PG&E in 2026

Sacramento County homeowners served by SMUD pay roughly 40-50% less per kWh blended than neighbors served by PG&E. On SMUD's Time-of-Day (5-8 PM) rate, summer (June-September) hours are: weekday peak (5-8 PM) $0.3765/kWh, mid-peak (noon-5 PM and 8 PM-midnight) $0.2139/kWh, off-peak (midnight-noon and weekends/holidays) $0.1550/kWh. SMUD has no equivalent fixed Base Services Charge of PG&E's scale. SMUD scheduled annual rate increases of 1-3% through 2027.

Battery economics on SMUD work differently than on PG&E. SMUD's peak-to-off-peak spread is approximately $0.22/kWh ($0.3765 - $0.1550) — wider than PG&E's $0.10-$0.13/kWh post-restructure spread. That makes a SMUD battery's TOU arbitrage value higher per kWh shifted. SMUD's My Energy Optimizer Partner+ program adds further value: a one-time enrollment incentive (up to $10,000 / $500 per kWh minus 20% holdback) plus ongoing quarterly payments for Tesla battery owners ($110/quarter for 1 battery, $220 for 2, $330 for 3+).

For PG&E customers, the lower per-kWh rates after March 2026 narrow the spread but the spread is still real and still meaningful. NEM 3.0 self-consumption value also remains: every kWh of solar you use yourself at peak rates is worth $0.45-$0.50, while exporting that same kWh earns only $0.05-$0.08 under NEM 3.0. The economic case for self-consumption (and the battery that enables it after sundown) is structural.

Battery Payback at the New Rates

A home battery's monthly savings come from three sources: TOU arbitrage (storing cheap off-peak energy and using it at peak), NEM 3.0 self-consumption (storing solar instead of exporting it at $0.05-$0.08/kWh), and VPP earnings (DSGS, ELRP, Tesla-PG&E). On post-March-2026 PG&E rates, a single Powerwall 3 typically generates $25-$60/month in TOU savings, $300-$575/year in VPP earnings, and additional self-consumption value if paired with solar. Payback runs 8-12 years for a battery-only retrofit and 7-10 years for solar + battery on PG&E.

The arbitrage math at the new rates:

• 13.5 kWh Powerwall 3, one full cycle/day
• Replace peak-hour usage at ~$0.47/kWh with off-peak charging at ~$0.36/kWh (or solar at ~$0)
• Off-peak grid arbitrage: ($0.47 - $0.36) × 13.5 = $1.49/day = $545/year
• Solar-charged arbitrage: $0.47 × 13.5 = $6.35/day = $2,320/year

Real-world batteries get charged from a mix of solar and off-peak grid power, so annual TOU savings typically land between $500 and $2,000 per Powerwall depending on configuration. Add VPP earnings of $300-$575/year (DSGS, ELRP, Tesla-PG&E — see our Virtual Power Plant guide) and total annual return per Powerwall in PG&E territory lands at $600-$1,300/year on the conservative end and $1,800-$2,500+/year for solar-paired systems.

The new IGFC fixed charge of $24/month ($288/year) is NOT something solar or batteries can reduce — you pay it regardless. That means the value proposition for solar shifts from "wipe out your bill" to "minimize the per-kWh portion." Battery payback math is still positive, just on a slightly different basis than pre-restructure.

Who Wins and Who Loses Under the Restructure

The IGFC restructure is mathematically a wash for an "average" household, but real households aren't average. High-usage homes (heavy AC, EVs, pools, electric heat) benefit most because their per-kWh cut is large relative to the new fixed charge. Low-usage homes — particularly small households, snowbirds, and second-home owners — may see net bill increases because the $24/month fixed charge consumes more of their bill than the per-kWh savings can offset. CARE customers saw the biggest improvement (8.3% bill decrease), thanks to the lower $6/month CARE fixed charge.

• Winners — high-usage homes: Central AC + EV + heat pump households see the per-kWh cut amplified across hundreds of kWh/month. The $24/month fixed charge is a small fraction of a $300+ bill, and the per-kWh cut saves significantly more than $24/month for these homes.
• Winners — CARE/FERA customers: Reduced IGFC ($6 or $12/month) plus the per-kWh cut creates the biggest percentage savings, averaging 8.3% lower bills.
• Roughly neutral — average single-family homes: ~$5.14/month average savings; small win on most months, possible small loss in low-usage months.
• Possible losers — very low usage: Small households, vacation properties, and homes already heavily offset by solar (where the $24/month fixed charge is now a larger share of the bill than before).
• Solar customers (NEM 2.0 and 3.0): Net effect depends on consumption profile. The $24/month fixed charge can't be netted out by solar export credits. Battery storage helps by maximizing self-consumption.

What PG&E Customers Should Do Now

Three actions matter: confirm which TOU plan fits your post-restructure usage pattern, enroll in CARE or FERA if income-eligible (the reduced IGFC is significant), and evaluate solar + battery against the new rate structure rather than the old one. The economic case for battery storage on PG&E is still strong, but the math is now driven by TOU spread + NEM 3.0 self-consumption + VPP earnings rather than rising rates alone.

1. Re-check your TOU plan. E-TOU-C is the default, but it isn't always optimal. E-TOU-D's weekday-only 5-8 PM peak is better for households gone during workdays. E-ELEC has wider spreads (good for battery owners). EV2-A is for EV households. PG&E's rate comparison tool can pull 12 months of your interval data and show which plan would have cost least.
2. Check CARE/FERA eligibility. CARE provides a 35% bill discount; FERA gives 18%. Both also reduce the IGFC to $6 or $12/month. The 8.3% bill cut CARE customers saw in March 2026 is on top of the standard 35% discount.
3. Evaluate solar + battery at the new rates. The case is structurally unchanged: NEM 3.0 export rates are still $0.05-$0.08/kWh, peak-hour rates are still $0.45-$0.50/kWh, and the spread captured by self-consumption + TOU shifting is still strong. The math is a little less dramatic than under 2024 rates, but still positive — especially for high-usage homes (the same homes that benefit most from the restructure).
4. Check SGIP eligibility carefully. The ratepayer-funded SGIP general market, equity, and equity resiliency budgets closed December 31, 2025. The only active SGIP track is the RSSE income-qualified tier ($1,100/kWh, currently waitlisted) for PG&E customers at ≤80% AMI or CARE/FERA-enrolled. See our 2026 rebates guide for current program status.
5. Enroll in a VPP after install. Tesla VPP with PG&E pays during PG&E emergency events. DSGS and ELRP add $300-$575/year per battery. These programs typically stack on top of TOU savings. See our VPP guide.
6. Consider a Community Choice Aggregator (CCA). CCAs in PG&E territory typically save 1-5% on the generation portion of the bill — smaller than battery savings but stacks. Ava Community Energy (San Joaquin County), East Bay Community Energy, Marin Clean Energy, Sonoma Clean Power, Peninsula Clean Energy, and CleanPowerSF are the regional options.

How Stor Power Helps PG&E Customers Optimize at the New Rates

Stor Power pulls your actual 12-month PG&E interval data (not estimates), models the post-March-2026 rate structure against your real consumption, and shows you the honest payback math for solar + battery at the new rates. We model the IGFC fixed charge into the calculation explicitly so the projection isn't built on stale assumptions. We compare TOU plans against your usage, check SGIP RSSE eligibility, and recommend the system sizing that pays back fastest given your actual bill profile.

During the free site assessment, we evaluate:

• Your current PG&E plan and whether the post-restructure rates favor switching
• CARE/FERA eligibility (significant IGFC reduction)
• Actual peak vs off-peak usage breakdown from PG&E interval data
• Battery sizing based on real consumption (see our sizing guide)
• SGIP RSSE eligibility and current waitlist status
• NEM 2.0 grandfathering implications if you already have solar (see NEM 3.0 explained)
• VPP program enrollment options after install

Stor Power is a California-licensed contractor (Nanofy of California LLC, CSLB #1127639) serving Sacramento, Roseville, Elk Grove, Folsom, Stockton, Lathrop, Tracy, and Northern California. We install solar and battery systems for both SMUD and PG&E customers.