The High Cost of California Electricity Is Increasing Poverty
Bottom Line: California should not be seen as the model for energy and climate change policy. For electricity, the state over relies on higher cost, less dependable renewable energy, such as solar and wind. And now, the goal is to ban natural gas used in new home and building construction, in favor of using electricity. On an energy-equivalent basis, however, electricity costs four times more than natural gas. Purposefully installing such higher energy prices will only serve to exacerbate California’s poverty problem, already in some ways the worst in the country. Natural gas and nuclear power must remain essential in the goal to reduce greenhouse gas emissions while also keeping system reliability.
Long the leader in renewable energy, California is now leading in the number of communities that have banned or restricted the use of natural gas in homes and buildings. But, these bans reduce energy optionality and will force consumers to buy electricity, which is four times more expensive on an energy-equivalent basis than natural gas.
Higher energy prices in an already very high priced state will only worsen California’s poverty problem. When factoring in the cost of living, California has the highest poverty rate in the country, at 18-19%. Rising electricity prices disproportionately impact lower- and middle-income families who lack the disposable income to absorb the extra costs.
There is no question than California’s renewable energy mandates have increased prices while decreasing the reliability of its grid. And the goal of more renewables and restrictions on natural gas will put even more stress on the system, which may have to rely on high emission diesel generators to avoid prolonged blackouts.
If California wants to avoid increasing the number of its people living in poverty, it must strive to keep energy affordable. More reliable and lower cost natural gas and nuclear power will remain vital to that effort.
Read the full study here.
California Electricity Rates vs. Rest of the U.S. (cents/kWh)
Findings:
- Unwisely so, California’s energy policies are widely cited as a model for others in combating climate change, a problem since such a focus on renewables have brought higher prices and less reliability.
- Now, California’s emerging policy goal of banning natural gas in favor of electricity in home and building construction will only serve to increase prices. For example, on an energy-equivalent basis, electricity in California costs four times more than natural gas.
- These higher energy costs ultimately hurt the poor the most. On a cost of living basis, California has the highest poverty rate in the country, effectively installing a regressive tax on the most vulnerable.
- Gas and nuclear power must remain essential in California’s goal of reducing greenhouse gas emissions while maintaining power grid reliability.
Read the full study here.
