It's too darn hot. And every time my air conditioner turns on, I hear the sound of another dollar fluttering away. I tremble every time I open my mailbox in anticipation of my monthly bill from Southern California Edison. The question isn't how much I'll pay, but rather how many more projects I can take on to meet these expenses.
I exaggerate, but only a little. California has among the highest electricity rates in the nation. And those are on a one-way, upward trajectory. Market forces and “greedy” power companies have nothing to do with it. This is state policy that a majority of Californians support.
California mandates that by 2020, one-third of the state's electricity supply must come from renewable sources, such as windmills and solar panels. Assembly Bill 32, the Global Warming Solutions Act of 2006, also demands that our greenhouse gas emissions must be 40 percent below 1990 levels by 2030. Gov. Jerry Brown announced in January that he wants half of all electricity to come from renewables by 2030.
The Manhattan Institute, where I am an editor with City Journal magazine, published a new study last week by economist and energy expert Jonathan A. Lesser that underscores the punishing cost of battling climate change.
Lesser discussed his paper at a recent dinner in Los Angeles last week. The problem with Brown's renewable energy aspirations, he said sardonically, is that “it gets dark and the wind doesn't always blow.”
Another problem? Wind and solar don't price out. Even with a plethora of incentives and subsidies, renewable generation remains far and away more expensive than electricity derived from coal- and natural gas-fired plants. In the decade between 2003 and 2013, Lesser noted, the overall average cost of renewable energy rose by 55 percent.
You don't need a Ph.D. in economics to understand the dynamic at work here. Legislators pass laws that mandate more renewable energy and discourage consumption. Marginal costs go up. Way up. The result? The rich can absorb the increase; families with low- or fixed incomes cannot. Nearly 1 million California households in 2012 spent more than 10 percent of their income on energy bills. Economists have a term for that: “energy poverty.”
And we're not talking about Newport Beach or San Francisco. Lesser found that Inland counties – including Riverside and San Bernardino, but Imperial especially – really take a beating.
We're a rich state. We're also a remarkably poor state. And for all our progressive policies, California is not a great place to live if you're poor or even middle class.
Surely, we can subsidize these people and the problem would be solved, right?
“Utility customers in 2012 paid $1.2 billion for the California Alternative Rates for Energy program, which allows low-income residents to pay about 30 percent to 35 percent less for electricity and natural gas on average. ”
We already do. Utility customers in 2012 paid $1.2 billion for the California Alternative Rates for Energy program, which allows low-income residents to pay about 30 percent to 35 percent less for electricity and natural gas on average. And yet, Lesser points out, CARE hasn't made much of a dent in energy poverty because tiered rates are so high – especially this time of year.
What's the answer then? Obviously, a Democratic-controlled state Legislature and our green high priest of a governor aren't about to repeal AB32 or dismantle our cap-and-trade program.
In lieu of the impossible, Lesser offers two practical suggestions. First, the state should undertake a comprehensive cost-benefit analysis of its energy policies. The question at the heart of any such analysis, Lesser writes, should be: “Do the benefits of California's proposed [greenhouse gas] reduction – which, even if realized, will negligibly affect global emissions and climate – outweigh their considerable and rising cost to local businesses and households, particularly low-income Californians?”
Second, Lesser argues that if the state is going to stick with this folly, we should at least ensure that wealthier households bear a greater share of the burden and avoid dumping so much of the cost on low-income households.
Lesser's recommendations appear modest, but they could have the salutary benefit of causing some of our number-crunching policymaking masters to re-examine their pious devotion to the cult of climate change. Unless, of course, the point of these policies isn't so much about saving the planet as they are about making California an inhospitable place to live for almost all but the very wealthy. It's a point worth pondering when your next Edison bill arrives.
This piece originally appeared in The Press Enterprise