March 6, 2021 - 9:02 pm
Green policies are costing low- and middle-income households a lot of green.
California has been one of the most aggressive states in moving away from fossil fuels. The state’s energy portfolio standard mandates that 60 percent of its electricity come from renewable sources by 2030. By 2045, its electricity must be carbon-free.
Last year, California Gov. Gavin Newsom signed an executive order requiring new vehicles sold in the state to produce zero-emissions by 2035. Transportation produces more than half of the state’s greenhouse gas emissions.
As a result, California residents can expect to use more electricity over the coming decades. This presents a different challenge. Californians pay some of the highest energy prices in the country. In San Diego, prices are twice the national average. Northern Californians pay 80 percent more. In other parts of Southern California, rates are 45 percent higher than the national average. That’s according to a study by NEXT 10 and the Energy Institute at UC Berkeley’s Haas School of Business.
California’s high prices “have troubling implications for equity and affordability,” the study’s authors write. “If the costs of decarbonizing the power sector are recovered through higher electricity prices, this could impose a large economic burden on low-income households amidst an increasingly unequal economy.”
Nice of them to notice.
Wealthier customers have the means to purchase expensive electric vehicles or to avoid inflated electricity rates by installing rooftop solar. One estimate found that households installing rooftop solar had a median income 40 percent higher than the overall median income. These sweetheart “net metering” deals force electric companies to buy excess power they don’t need from rooftop solar consumers at retail prices. Those households also avoid paying for the fixed cost of the energy grid — which they need when the sun doesn’t shine — which raises the prices for the remaining customers.
In San Diego, rooftop solar boosts the average electric bill for those with traditional power by $230 a year. To offset high costs, low-income residents can participate in a discount program. Around a quarter of customers do so. In San Diego, their increased annual cost is $124.
How this squeezes those in the middle should be obvious. Wealthy customers escape by installing rooftop solar and enjoying net metering or plug-in vehicle subsidies. Poorer customers receive a discounted rate. In other words, every new green energy edict or “incentive” leads to the need for additional subsidies, tax hikes or handouts necessary to mitigate the effects of previous edicts. It’s deceptive cost shifting — and the middle class is left holding the bag.
Another irony and problem with rooftop solar: Sometimes California produces so much solar energy that it has to pay neighboring states, including Nevada, to take it. That’s because too much power can hurt the electric grid, and electricity must be used very quickly.
The Berkeley study “concludes that (California’s) electric rates are so regressive that they could discourage people from buying electric vehicles and electrifying their homes by replacing gas-fueled appliances,” The Wall Street Journal noted. “Instead of raising electric rates, the study suggests making policies more progressive by increasing income taxes to promote its climate goals. So subsidize the rich, then tax them more.”
Gov. Steve Sisolak and legislative Democrats also claim to be strong proponents of green energy and low-income households. Yet such trade-offs and contradictions are rarely seriously considered in the rush to demonize fossil fuels. In a sane world, they need to be.