California’s progressive policymakers have gone all in for shifting the state from its reliance on fossil fuels to electric power as part of its aggressive climate-change agenda. The state has mandated an all-electric power grid by 2045 and banned the sale of new internal-combustion vehicles in 2035. Yet a new study from the Legislative Analyst’s Office highlights a huge flaw in this all-electric strategy.
“On average, residential electricity rates in California are close to double those in the rest of the nation,” LAO reported. The high electricity rates impose economic burdens, but they also “impede the state’s efforts to meet its ambitious climate goals by discouraging households from pursuing electrification through switching out their fossil fuel-powered cars and appliances.”
California and utility companies offer subsidies and rebates to incentivized residents to purchase EVs, but high electric costs negate the savings. EVs still cost less to power than ICE vehicles—although public fast chargers can make EV road trips costlier than a gas-powered car—but the smaller the savings, the less likely a switch will pencil out. And such vehicles still come with myriad inconveniences.
The LAO outlines some reasons for these nationally high rates. One—“significant and increasing wildfire-related costs—cannot be helped, especially after the LA wildfire tragedy. Another involves “differences in utility operational structures.” Translation: Most utilities are privately owned by operate in within a government-granted monopoly systems that limit competition.
Ironically, the LAO pins another main cause of higher rates on “the state’s ambitious greenhouse gas (GHG) reduction programs and policies.” That’s the most California reason ever. Because of their commitment to reducing greenhouse-gas emissions, officials have imposed myriad regulations and fees on electricity production. Those drive up the costs of electricity production. As a result, soaring prices have encouraged Californians to keep their ICE cars and natural-gas appliances.
The LAO concludes the “Legislature faces difficult choices around electricity rates.” We’ve watched the Legislature for long enough that we don’t expect lawmakers to make tough decisions. The best takeaway from the report: “These trends currently are on track to continue.”