Never underestimate the capacity of politicians to take a bad situation and make it worse. It seems no matter how bad things get, our representatives in Sacramento find creative new ways to make things worse.
The dictionary defines the word “absurd” as utterly or obviously senseless, illogical or untrue; contrary to all reason or common sense. This is the best way to describe the joint proposal submitted last month by Pacific Gas & Electricity (PG&E), Southern California Edison (SCE) and San Diego Gas & Electric (SDGE) to the California Public Utilities Commission (CPUC) for approval. This proposal doesn’t just come “out of the blue” but has been mandated by the passage of Assembly Bill 205 (AB205) and signed into law by Governor, Gavin Newsom almost a year ago. It’s a “done deal” and the utility companies are now simply complying with the law.
AB205 calls for nonwaivable, “income-graduated” fixed charges for electricity and directs the CPUC to come up with a new rate structure by July, 2024. For PG&E customers, for example, the proposal calls for a three-tiered billing scheme: households with annual incomes from $28,000 - $69,000 would pay $30 a month plus a KwH charge; households with annual incomes from $69,000 -$180,000 would pay $51 a month plus a KwH charge; and households with annual incomes above $180,000 would pay $92 a month plus a KwH charge.
The ultimate objective supposedly is to advance “electrification” by creating an environment favorable for electric vehicles (EVs). However, electricity rates in California are too high. They are more than twice the national average and this is not helping the sales of EVs even after the purchase subsidies and manufacturing subsidies are factored in. That is why only 16% of new car sales in California are EVs. Nevertheless, the State plans to phase out the sale of gas-powered cars by 2035. We are told that EVs are cleaner for the environment and will help save the planet from the ravages of “climate change”, a questionable assumption to say the least, yet to accomplish this, our wise politicians in Sacramento have decided to reduce the incentives for customers to install solar panels. So, once this proposal is approved, we will be replacing renewable solar power with non-renewable energy in the form of electricity generated by fossil fuels.
Let me run this by you again. We are going to encourage people to drive EVs so as to be less reliant on fossil fuels by encouraging people to use more electricity which will make us more reliant on fossil fuels. How more absurd can it get!
There’s a Mexican restaurant in my neighborhood with a sign on the wall that reads, “Save Water, Drink Tequila” I’m sure they see the humor in it but the politicians in Sacramento are deadly serious.
Those PG&E customers who took the trouble to install solar panels will now have to pay a fixed charge for electricity no matter how little electricity they consume from the grid. And if they are fortunate enough to sell surplus electricity back to the grid, they will now be receiving compensation at a reduced KwH rate.
Why are electricity rates so high in California? There are two main reasons. Firstly, companies like PG&E no longer make a profit by producing, transmitting and distributing electricity. Consequently, they don’t have an incentive to reduce costs and maintain facilities and equipment in optimum condition. This leads to waste and inefficiency. Secondly, the more customers install solar panels, the less PG&E can recover through billing and so their costs, which are mostly fixed, have to be spread over fewer and fewer customers, driving the rates still higher.
The proposed new billing scheme, therefore, is not intended to make electricity cheaper or more reliable but to make it easier for electric utilities to recover their costs and to arrange it so that the variable portion (charged by KwH) appears to be lower and therefore more attractive for EV owners to charge up their vehicles.
If adopted, this new billing scheme will result in the following:
- California residents will pay, in aggregate, more for electricity, not less.
- A whole new bureaucracy will be required to collect information about personal incomes and to enforce compliance, leading to even higher costs.
- The incentive to save electricity for most residents will be significantly reduced leading to more electricity consumption, not less.
- The incentive to install solar panels will largely disappear leading to more reliance on the grid, not less.
- Since renewable energy sources such as wind, solar and geothermal are essentially non-scalable, this new scheme will lead to more consumption of non-renewable sources for the production of electricity such as natural gas.
- More California residents will leave the State to escape the ever-escalating cost of living leading to fewer customers and continuing the vicious cycle of rate increases.
None of this will make electricity cheaper, or utilities more reliable, or even reduce our dependence on fossil fuels. So go figure!
May 11, 2023