California Contradictions

California has contradictions, too, as the editors of the Wall Street Journal observe:

The contradictions of green energy policies are becoming more obvious in the real world, and now comes more evidence in a new study of California’s electricity rates. The policies even contradict green climate goals.

“California has charted an ambitious course towards decarbonizing its economy,” the study by nonprofit Next 10 and the University of California, Berkeley Energy Institute at Haas declares. “At the same time, California has among the highest electricity prices in the continental U.S. These two facts create a tension: decarbonizing the economy most likely requires electrification of transportation and space and water heating, but high prices push against such a transition. High prices also have troubling implications for equity and affordability.”

Meanwhile, California imports a third of its energy from other states. Since energy is fungible by which I mean you can’t tell the difference between energy generated from green sources and that generated from burning fossil fuels when it’s coming down the wire and if any of the energy you’re buying is being augmented by energy from non-green sources it renders the entire thing sophistry.

They continue:

And here’s the kicker: Folks with solar panels get paid for surplus power they don’t use—sometimes at two to three times the rate of wholesale power. So California pays the well-to-do to generate solar power it doesn’t need and then pays Arizona to take it.

We’ve written for years that state “net-metering” programs shift the grid’s fixed costs to low- and middle-income people without solar panels. The Next 10 study estimates that this cost shift translates into $230 more for an average annual electric bill and $124 for lower-income customers with subsidized rates in San Diego.

Yet 25% to 30% of all residential electricity is discounted for low-income customers, and “the cost of this subsidy is borne by all other customers,” the study says. In other words, the middle class ends up financing rate subsidies for the poor aimed at ameliorating the higher costs of solar subsidies for the well-to-do. California’s cap-and-trade program and utility “public purpose programs” like battery subsidies add several more cents per kilowatt hour.

The study concludes that the state’s electric rates are so regressive that they could discourage people from buying electric vehicles and electrifying their homes by replacing gas-fueled appliances. Instead of raising electric rates, the study suggests making policies more progressive by increasing income taxes to promote its climate goals. So subsidize the rich, then tax them more.

For politicians it’s win-win-win. They get cred for supporting green policies and provide subsidies for the rich and poor alike. But the subsidies for the poor aren’t large enough to make up for the contradictions in the policy.

Government of the poor by the rich for the rich. As somebody said an environmentalist is somebody who already owns a cabin in the woods.