With inflation outpacing earnings, questions are being raised over the extent to which California energy policy is contributing to higher prices on electricity and other essentials that affect Californians struggling with pandemic-related economic realities.
The impact from high energy costs on working families is not surprising at all, Dr. Wayne Winegarden, senior fellow in business and economics at the Pacific Research Institute (PRI), said in an email response to the Northern California Record.
“It is the expected outcome based on the historical record; what is surprising is the lack of attention this issue is getting in Sacramento,” said Winegarden, author of PRI’s new study, Zapped! How California’s Punishing Energy Agenda Hurts the Working Class. "Policymakers should be alarmed at the large energy burdens and high rates of energy poverty. Instead of relying on untested and expensive energy sources, we should be alleviating these burdens.”
The study details how a host of laws and regulations have led to high electricity rates in California, which are 56 percent higher than the U.S. average as of 2020.
“These are the policies Sacramento has implemented in response to global climate change.,” Winegarden said. “They include cap-and-trade, a renewable portfolio mandate with a goal of 100 percent from zero-emission energy sources by 2045, the Advanced Clean Car Program, the low carbon fuels standard, net metering regulations that over-compensate homeowners with rooftop solar panels by paying retail rates for what is essentially wholesale power, and energy efficiency standards.
“Each one of these policies, by design, increases the costs of electricity.”
The policies over the last few years have made costs worse, Winegarden said.
“The tightening of the renewable portfolio mandate to 100% by 2045; Governor Newsom's moves to ban fracking this year – all these policies make it more difficult for working families,” he said.
Winegarden noted that the policies also have an unintended consequence of raising emissions.
“Take the fracking ban. Greenhouse gas emissions occur globally, and too much of the world relies on coal or other high emission sources,” Winegarden said. “Banning fracking in California, which would be one of the safest and cleanest operations globally, denies natural gas supplies to the world that could lower natural gas prices. Lower natural gas prices would encourage greater use of natural gas and have positive impacts on emissions (from a global perspective). Though this process is more ‘unseen.’ it shows how California's own global warming policies unintentionally undermine its own goals.”
In the pandemic economy, repealing the policies that inflate California’s electricity prices could meaningfully produce relief for many residents, Winegarden said.
“In their own way, each one of the policies adds to the cost of electricity,” Winegarden said. “Renewable mandates force electricity to be generated by sources that cost more. Cap and trade policies directly impose a tax on electricity use.
“Eliminating these taxes and mandates removes the costs, which will directly benefit families by lowering their electricity costs.”
The study includes a breakdown by county of average household electricity spending.
“California’s current approach to energy regulations imposes much higher financial burdens on lower-income families, particularly those families living in the Central Valley, Inland Empire, and eastern regions of the state,” Winegarden said. “Given that alternative policies exist that will promote low emission, yet affordable, energy sources these burdens are simply unjustifiable.”