New Study: California’s Energy Policies Are Harming Low-Income Populations

New York, NY — A new study by the Manhattan Institute  has found that California’s energy policies are disproportionately affecting low-income populations. Renewable mandates and tiered pricing are designed to reduce energy consumption, but they are also reducing the affordability of energy. Using detailed US Census data, the report estimates that one million California households are spending more than 10 percent of their income on their energy bills. In all, about 650,000 of these households are living in “energy poverty” due to electricity bills alone. 

Authored by Dr. Jonathan Lesser, president of Continental Economics, Inc., the Manhattan Institute paper argues that California has imposed what is, in effect, a regressive energy tax on low-income households. The state’s policies have imposed the highest costs on inland areas of the state where household incomes are lowest, but summer electricity consumption is highest. And with California only part of the way towards its goal of having one-third of its electricity come from renewable resources by 2020, the number of California consumers in energy poverty is all but guaranteed to increase.

The paper recommends that California:

• Conduct unbiased and comprehensive analysis to determine whether GHG reductions will have measurable impact on climate.
• Review the state’s renewable energy mandates and their adverse economic impacts on low-income consumers.
• Deploy rate structures that allow for more equitable payment schemes so that wealthier homeowners are assessed a fair share of the economic burden that comes with the renewable-energy mandates and subsidy programs that disproportionately benefit them