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The editorial office
Apr. 26, 2021 at 6:26 ET
Solar panels on the roofs of a housing estate in Folsom, California, February 12, 2020.
Rich Pedroncelli / Associated Press
The contradictions in green energy policies are becoming more apparent in the real world and are now becoming clearer in a new study of California’s electricity tariffs. Politics even contradict the goals of the green climate.
“California has embarked on an ambitious path to decarbonise its economy,” he said study from nonprofit Next 10 and the University of California, explains the Berkeley Energy Institute in Haas. “At the same time, California has one of the highest electricity prices in the continental US. These two facts create tension: the decarbonization of the economy will most likely require electrification of transport and space and water heating, but high prices counteract such a transition. High prices also have worrying effects on equity and affordability. ”
In earnest. California’s myriad of green energy subsidies and mandates are incorporated into electricity tariffs, which are now about 80% higher than the national average in Northern California and twice as high in San Diego.
The state demands that renewable energies such as wind and sun account for 60% of electricity generation by 2030. The study says that renewable energy prices (albeit with subsidies) are now roughly on par with other power sources, but utilities signed long-term contracts with solar and wind producers years ago when prices were higher. Utilities also need backup power when it’s cloudy, which increases costs. Still, the state sometimes has to pay Arizona to use its excess solar power to avoid overloading the grid.
And here’s the kicker: people with solar panels get paid for excess electricity that they don’t use – sometimes at two to three times the rate of wholesale electricity. So California pays the wealthy to produce unneeded solar power and then pays Arizona to use it.
We have written for years that government net metering programs are shifting the fixed costs of the network to people with low and middle incomes who do not have solar panels. The Next 10 study estimates this cost shift means $ 230 more for an average annual utility bill and $ 124 for lower-income customers on subsidized San Diego plans.
Still, 25% to 30% of total household 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 funding subsidies for the poor to ameliorate the higher cost of solar subsidies for the wealthy. California’s cap-and-trade program and public utility programs like battery subsidies bring in several cents more per kilowatt hour.
The study concludes that the state’s electricity tariffs are falling so much that they could discourage people from buying electric vehicles and electrifying their homes by replacing gas-powered appliances. Instead of increasing electricity tariffs, the study suggests making policies more progressive by increasing income taxes to promote climate goals. So subsidize the rich and then tax them more.
This is especially funny as Sacramento Democratic lawmakers relied on utility companies to fund their climate spending so they wouldn’t have to divert general income from the fund away from welfare payments. Even so, the poor are punished.
Climate proponents insist it wasn’t the wind. Photo: ZUMA Press
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Published in the print edition on February 27, 2021.