Tom Steyer wants to make California electricity cheaper by doing what every insurgent gubernatorial candidate does: break the “monopoly,” add competition, and let technology do the rest. It’s a clean pitch—especially in a state where everything costs more, including what you need to run the air conditioner during fire season.

Steyer’s pitch is compelling: elect him and he’ll slash voters’ power bills by at least 25%, revise state rules to allow for retail competition and for property owners to generate and sell power to the public themselves.

The problem is that California’s power bills aren’t high mainly because the state lacks competition. They’re high because of a cluster of added fees — for wildfire mitigation and liabilities, major distribution-grid upgrades, and a stack of state-mandated programs financed through utility charges.

“Other states don't have legal monopolies. We have a legal monopoly, and so you can't compete,” Steyer, a cleantech investor and Democratic candidate for governor, told Forbes. “We need to introduce localized competition, making it possible for people to generate and do microgrids.”

He also thinks the state can squeeze more electricity out of existing powerlines with better tools, potentially a faster, cheaper option than heavy investment in grid upgrades. “The grid is maybe 35% efficient. And that's because of a whole bunch of rules designed to protect the grid for the highest one hour of the year, so we don't get a brownout or a blackout,” Steyer said. With some help from new real-time information technology and AI, he’s betting California could raise that to 60%. “That means you just found immense capacity on the grid, not for free, but at a fraction of the cost.”

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California residents are paying an average of 30.3 cents a kilowatt-hour, far above the national average of 17.45 cents/kWh, according to the Energy Information Administration. In Texas, which allows more competition in much of the state, residents pay just 15.7 cents. Only Hawaii, at 39.79 cents/kWh, charges its residents more.

“The biggest piece is energy distribution. Those costs have skyrocketed in the last decade, primarily due to investments being made to prevent wildfires and to pay for wildfires.”

Steyer, who's using his own money to fund his campaign, is locked in a three-way tie among leading Democratic candidates, all of whom lag the two Republicans in very Blue California. Forbes estimates he’s worth $2.4 billion, a figure he declined to confirm.

His proposals would likely matter most for customers of investor-owned utilities, such as Pacific Gas & Electric, that tend to charge more than municipal power companies. They may also help the state hit its goal of getting 100% of its electric power from non-carbon sources ahead of the 2045 target. (Currently, about two-thirds of California's electricity comes from clean sources.) But they aren’t likely to be as impactful statewide as he hopes because the cost of generating power and transmission in California isn’t why bills are higher than the rest of the country, said Severin Borenstein, faculty director of the Energy Institute at UC Berkeley.

Power “generation and transmission are, generally, a small part of the bill – and mostly in line with the rest of the country,” Borenstein said. “The biggest piece is energy distribution. Those costs have skyrocketed in the last decade, primarily due to investments being made to prevent wildfires and to pay for wildfires.”

That’s particularly true for PG&E, San Francisco-based Steyer’s utility provider. It’s on the hook for $13.5 billion in legal settlements related to multiple past wildfires linked to its transmission network. It’s also spending heavily to upgrade its lines, burying many underground, which makes the system safer but at a very high cost. Statewide, utilities are spending about $30 billion for upgrades, costs that are passed on to ratepayers.

But it’s more than just distribution costs. There are generous reimbursement rates the state’s utilities pay customers with rooftop solar power systems for energy they provide and state-mandated fees for energy efficiency. And beyond that, there are R&D programs and support for low-income residents to pay their power bills.

“We have a low-income program … that's paid for by raising the rates for everyone else,” he said. “We don't pay for Medicaid by raising medical rates for everyone else. We don't pay for our food stamp program by raising the price of food for everyone else. We pay for those out of a general budget. But we do for electricity, and I think it's because legislators like to have stuff on somebody else's budget.”

Microgrids — one of Steyer’s signature ideas — can add renewable power closer to where people use it, but they aren’t always the lowest-cost option for adding capacity, Borenstein said. Instead, utilities are increasingly building up large, relatively low-cost solar farms in the desert or fallow farmland with far greater power generation capacity.

“With microgrids, on the one hand, it's closer to where people live and you don't need as much transmission infrastructure,” Borenstein said, “But on the other hand, you don't get economies of scale. Even a rooftop system on a big box warehouse usually is about 1 megawatt, whereas a grid-scale system can easily be 500 megawatts.”

One such project, the Valley Clean Energy Infrastructure Plan, aims to begin construction in the next two years and would install 21 gigawatts of solar panels and 21 gigawatts of battery storage across 136,000 acres of idled farmland in California’s Central Valley. Backers say it would generate enough electricity to power more than 10 million homes.

The state’s costly high-speed rail project, meanwhile, has explored generating extra revenue by selling surplus electricity from solar farms planned along its right-of-way that will also power its trains. It’s also floating the potentially lucrative idea of boosting California’s grid by letting utilities locate transmission lines along its route, which may eventually run more than 400 miles from the San Francisco Bay Area to San Diego.

“California has had aggressive efficiency efforts through standards and building codes for decades – and these efforts work. Californians use much less electricity per person or per household than a typical Texan”

Peter Davidson, CEO of Aligned Climate Capital, which helps fund moneymaking renewable power projects, said an increase in microgrids in California would help ease pressure on utilities. “Don’t make the good the enemy of the perfect. It may not be as cheap as power from these huge solar fields, but it would still be a lot of additional supply, especially if state rules were changed to require utilities to buy it,” he said.

Steyer or any governor of California could also use eminent domain authority to speed up additions to the grid. “That alone could create substantial cost savings,” Davidson said.

To some extent, California’s electricity costs are also higher by design, said University of Texas professor Michael Webber.

“California has had aggressive efficiency efforts through standards and building codes for decades – and these efforts work. Californians use much less electricity per person or per household than a typical Texan, for example,” Webber said.

But that creates a “double whammy” for ratepayers. “The entire power sector’s costs are now divided out by fewer kilowatt hours of electricity, which makes the price higher per kWh,” Webber said. “So efficiency drives down electricity consumption, which drives prices higher, which drives down electricity consumption further, which drives prices yet higher again. It’s a compounding setup.”

Steyer’s background gives his argument some credibility with voters. Before his run for governor, he served as co-executive chair of Galvanize, a venture firm that helps fund clean energy companies and employs former U.S. Secretary of State and Senator John Kerry, one of the architects of the Paris Climate Accords, as co-chair.

“There are just amazing technological advances in energy, in electricity, in storage that are going on. It's frenetic,” Steyer said. This is also leading to a surge in independent electricity generation around the world, though not so much in California.

“The cost of renewable energy is plummeting. The cost of battery storage is plummeting. Everyone is having their rates around the world plummet, except us,” he added. “We have a legal monopoly from the early 20th century telling us that's illegal and all the technology's coming from us. All the stuff I'm talking about is originally California technology.”

Whether Steyer’s proposals move the needle on utility bills in California, energy researcher Webber said a broader shift is that electricity prices have become a major political issue nationwide. Last November, for example, the candidates who won governors’ races in New Jersey and Virginia also made high power prices core campaign topics.

“It's not something we used to talk about because we had other things to worry about. But now people are worried,” he said. “That's pretty interesting for me. Now you have to have a policy. You have to have a platform statement.”

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