The Price Californians Will Pay

Jerry Brown signs the statewide ban on fossil-fuel power by 2045.

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Windmills lining the Altamont Pass generate electricity near Livermore, Calif.
Windmills lining the Altamont Pass generate electricity near Livermore, Calif. PHOTO: NOAH BERGER/ASSOCIATED PRESS

Gov. Jerry Brown on Monday signed a bill requiring that 100% of California’s electricity be generated by renewables like wind and solar by 2045. The price of his green virtue won’t be cheap.

“California is committed to doing whatever is necessary to meet the existential threat of climate change,” the Governor declared. “California has been doing stuff that the rest of the world is hoping to get to one day.”

Californians Pay MoreThe residential cost of electricity in cents per kilowatt hour, June 2011-June 2018Source: Energy Information Administration
 

That “stuff” is costing Californians dearly. See the nearby chart tracking residential electricity rates since 2011. Plunging natural gas prices—the wholesale price has fallen 28% since 2011—due to the shale drilling boom have curbed electricity rate increases in most states.

But California has moved most aggressively against fossil fuels, and what do you know? Its electric prices have risen the most in the country outside of New England, which suffers from a natural gas shortage due to inadequate pipeline capacity.

Since 2011 California’s electricity rates have surged 30% compared to an 8% increase nationwide and 15% in Washington. Rates in some states like Florida (-3%) and New Jersey (-2%) have fallen modestly. Seven years ago California’s electricity rates were 27% higher than the national average. Today, they are 53% higher.

California’s 100% mandate will require utilities to pay even more for new renewable generation, battery storage and transmission. The state will need about 200 times more energy storage than it currently has to compensate for gas-fired plants. Green cross-subsidies also drive up retail electricity prices. For instance, utilities pay rebates to homeowners with solar panels in addition to compensating them at the retail rate for surplus energy they remit to the grid.

Liberals say Californians won’t pay more for electricity because efficiency mandates will reduce consumption. But low-energy appliances are more expensive and can, well, backfire. Customers have complained that tankless water heaters in larger homes require additional equipment to expedite hot-water delivery that can end up driving up energy costs.

Gov. Brown has also directed the California Air Resources Board to develop a plan to achieve “carbon neutrality” by 2045 so that the state emits as much carbon dioxide as it removes. This would literally require everyone to drive electric cars and farmers to develop technologies to capture cow flatulence—long after Mr. Brown has stopped exhaling CO2 himself.

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