High electricity rates may thwart California climate goals: Report

Californians pay double the national average for electricity.  Newsom wants it to go even higher.  This is his way of getting the middle class to leave the State.  The poor and illegal aliens will get subsidies.  The rich, like him, don’t care, they can afford it.

“The state’s electricity rates have been increasing rapidly in recent years — not only growing faster than inflation but also outpacing growth in other states, the Legislative Analyst’s Office said in the report that warns that lawmakers will need to confront difficult decisions about how to balance the desire to both mitigate and adapt to climate change as well as to preserve affordability.

“Over the coming years, a key question facing the Legislature will be how to pay for the costs of the infrastructure required for electrification in ways that balance the state’s various goals, including related to technology adoption and electricity affordability,” Legislative Analyst Gabriel Petek, the author of the report, wrote.”

Sacramento Democrats do not care.

High electricity rates may thwart California climate goals: Report

A report by California’s Legislative Analyst’s Office warns lawmakers that the rapid increase of residential electricity rates, caused in part by a mandated transition to renewable energy, could undermine the state’s long-term climate goals.

Edvard Pettersson, Courthousenews, 1/7/25   https://www.courthousenews.com/high-electricity-rates-may-thwart-california-climate-goals-report/

(CN) — California’s high residential electricity rates, almost double that of the rest of United States, can become an obstacle to state’s goal to phase out fossil fuels by 2045 as consumers will think twice about switching to pricey electric vehicles or to electric heating appliances, according to a report issued Tuesday.

The state’s electricity rates have been increasing rapidly in recent years — not only growing faster than inflation but also outpacing growth in other states, the Legislative Analyst’s Office said in the report that warns that lawmakers will need to confront difficult decisions about how to balance the desire to both mitigate and adapt to climate change as well as to preserve affordability.

“Over the coming years, a key question facing the Legislature will be how to pay for the costs of the infrastructure required for electrification in ways that balance the state’s various goals, including related to technology adoption and electricity affordability,” Legislative Analyst Gabriel Petek, the author of the report, wrote.

“While relying on electricity rates can be attractive as they do not require the Legislature to dedicate funding from new or existing taxes, an overreliance on rates can contribute to already-high electricity rates and further burden lower-income households, among others,” he noted.

The state’s high electricity rates are mostly felt by customers of the investor-owned utilities — PG&E, Southern California Edison and San Diego Gas & Electric, who serve the bulk of the state. Customers of publicly owned utilities, such as the Los Angeles Department of Water and Power and the Sacramento Municipal Utility District, pay rates closer to the national average.

The reasons why in particular the investor-owned utilities charge as much as they do pertains predominantly to the huge costs they incur from the increasingly devastating wildfires caused by their equipment as well as by the investments they need to make to transition to renewable power sources as mandated by the state.

In addition, the analyst noted investor-owned utilities have to generate returns for their shareholders and generally can’t benefit from tax-exempt borrowing sources that are available to publicly owned utilities.

In California, utilities are on the hook for all the damage caused by their equipment even if this damage wasn’t caused by their negligence. This meant that in particular the investor-owned utilities, which serve the rural areas that have been prone to unprecedented wildfires caused by trees hitting power lines in recent years of extreme drought, have faced billions of dollars in damages.

As a result, the investor-owned utilities are spending additional billions of dollars to “harden” their infrastructure, such as by placing power lines underground, to limite further liability from wildfires. The utilities will seek to recover these additional costs from their ratepayers.

Before 2019, only a negligible portion of the rates the three large investor-owned utilities charged were for wildfire-related costs. This has grown to between 7% and 13% of the average bill that doesn’t include a discount under the California Alternate Rates for Energy program for lower-income customers.

On top of that, California’s requirement that utilities obtain more electricity from renewable sources, such as solar and wind energy, has driven up residential electricity rates because of the substantial investments needed to bring these renewable sources online.

Solar energy and wind farms are typically in remote areas of the state that require building a transmission network to connect them to the grid. Furthermore, solar power is only available during the day and will require additional investments in battery storage to make it available at all hours.

And in order to guarantee a stable electricity supply while the renewable energy transition is still sorting through its adaptive stages, California’s gas-powered plants need to remain online, adding to the fixed costs of the utilities.

Although higher residential electricity rates can be a good thing insofar as it promotes conservation and encourages consumers to switch to more energy-efficient appliances, it becomes a bad thing when in particular low-income people in inland parts of the state, where the summer temperatures get very high, can’t afford to run their air conditioners.

Lower-income ratepayers get a discount under the California Alternate Rates for Energy program, but they typically still pay a higher share of their income on their utility bill than wealthier ratepayers.

Moreover, the steady increase of residential electricity rates will make consumers wary of investing in zero-emission vehicles and home-heating appliances.

“High electricity rates can discourage households from investing in electrification because they increase the operating costs of electric-powered cars and appliances, making it harder for Californians to justify spending more on typically higher up-front purchase costs for such goods,” Petek said. “This dynamic could slow progress on the state’s climate goals.”

The Legislative Analyst’s Office’s report prompted a swift rebuke by state Senator Suzette Martinez Valladares, a Republican representing Santa Clarita, who accused the Democratic supermajority in Sacramento of driving up the cost of basic needs by what she called aggressive regulations.

“The affordability crisis in California is out of control,” Martinez Valladares said in a statement. “Families in this state pay nearly double in utility bills over those in any other state, pay more for each gallon of gasoline than in any other state, and struggle to find insurance for their homes that cost more than in any other state.”