California's utility rates are based on tiers. This means that the more electricity you use, the more you pay per kWh (see chart below).
Solar systems reduce the most expensive consumption first. If you consume enough to pay for electricity in the higher-priced tiers, solar will prevent you from spending at that higher tier's level, allowing you to buy only the lower-cost electricity from the utility.
As the price of the first two tiers is fixed by law, the highest tiers (where solar electricity removes your consumption) must increase far faster than this average long-term rate. If the average rate increase was 10%, tier 3 and above would need to rise 50%! This is further reason to believe that the historic average inflation rate is a conservative estimate of future solar electricity value (see Learn more: Future electricity prices.)
It is this higher electricity price and inflation rate against which a solar investment must be measured, since solar reduces your most expensive energy consumption first.