More than 11.5 million California households will see automatic refunds on their October electricity bills, Governor Gavin Newsom has confirmed.
The payments, part of the state's California Climate Credit programme, will be applied directly to bills without residents needing to take any action.
In total, the refunds will return $700 million to households and a further $60 million to small businesses, according to the California Public Utilities Commission (CPUC).
How the Climate Credit Works
California will issue refunds this October through its Climate Credit programme, funded by the state's Cap-and-Invest system, which redistributes carbon fees collected from polluters back to households.
Customers do not need to apply for a refund; the refund appears as a line item on bills. The credit is available to customers of investor-owned utilities, including PG&E, Southern California Edison, and San Diego Gas & Electric. In contrast, most municipal utilities are excluded because they do not participate in the carbon trading scheme.
Governor Newsom described the October refund as 'a tangible return for Californians from one of the world's strongest climate programmes,' stressing that the credit illustrates how climate policy can deliver direct benefits.
The California Public Utilities Commission administers the refunds in partnership with the California Air Resources Board, which oversees the broader Cap-and-Invest framework.
What Households Will Receive
Refund amounts vary by provider. On average, households will receive approximately $61 in October, with most receiving between $56 and $81, and some as high as $259.
In total, the state expects to return over $700 million to households and an additional $60 million to small businesses.
With the earlier April refund included, the typical household will receive approximately $198 in credits during 2025, which will appear on bills under 'California Climate Credit.'
The size of the payment is tied to proceeds from California's quarterly carbon allowance auctions.
The latest auctions, held in August 2025, raised nearly $2.2 billion, providing funds for both bill relief and investments in clean transportation, renewable power, and wildfire prevention.
A Decade of Relief and Rising Pressure
The Climate Credit was launched in 2014 as part of California's landmark emissions trading regime. Since then, most households have received payments twice a year in April and October, although amounts fluctuate depending on carbon market revenue.
This year's refunds come as Californians face some of the highest electricity rates in the United States, driven by wildfire mitigation projects, grid modernisation, and broader inflationary pressures.
Average residential electricity prices in California are now more than 60% above the U.S. national average, according to the Energy Information Administration.
By providing automatic relief, the Climate Credit offers households a modest financial cushion while bolstering public support for the state's ambitious climate agenda.
What Comes Next
Looking ahead, several questions remain. Observers will be watching whether the size of the credits increases under the extended law, and how equitably the programme distributes benefits to lower-income households that spend a greater share of income on utilities.
There is also interest in how the scheme might influence utility behaviour and consumer energy use, particularly as the state pursues a 100% clean electricity target by 2045.
At the same time, policymakers are weighing whether Cap-and-Invest revenues can consistently fund both direct bill relief and wider climate initiatives, including electric vehicle rebates, solar incentives, and renewable energy expansion.
For now, Californians can expect a welcome break on their October bills, a reminder that climate policy is not only about regulation and emissions targets, but also about returning value directly to citizens.
