In less than a year, three Orange County cities will be in the utility business. Fullerton, Costa Mesa, and Irvine have created a joint powers authority to purchase and distribute electricity to households and businesses in those cities, under what’s known as “community choice aggregation.”
It’s difficult to imagine how this model will result in lower electricity bills, although that’s one of the ways this program was sold to local elected officials who approved the plan. Southern California Edison will still be the primary supplier of electricity and will still manage the distribution. Since SCE only generates 19 percent of the power it distributes to customers, and purchases the other 89 percent, the costs to customers will only go down if this new joint powers authority outperforms SCE in their procurement efforts enough to offset the cost of the new bureaucracy.
As reported by the Orange County Register, “Unbound by long-term contracts many utilities hold, they can adjust the mix to take advantage of lower costs or to favor renewable energy — or both. Additionally, they can be more aggressive than private utilities in encouraging and developing clean local power generation and battery storage.” But which is it? Saving money? Or going green?
The problem with newly formed independent, city owned utilities being “more aggressive than private utilities” in developing clean renewable sources of energy is the existing state mandates are already the most aggressive in the nation, if not the world. California has mandated that public utilities deliver 100 percent carbon-free power by 2045. And SCE’s well on its way. In their 2019 Annual Report they claim they already deliver 48 percent carbon-free power to their customers.
There is a cost for “carbon-free power.” According to the U.S. Energy Information Administration, California’s residential rates for electricity in October 2020 were 20.8 cents per kilowatt-hour, compared to a national average of 13.6 cents per kilowatt-hour. In Texas, residents only pay 11.9 cents/KWh, in Utah, 10.3 cents/KWh. Even progressive Oregon manages to keep rates lower than the national average, at 11.37/KWh.
By now most rational observers realize that even if global warming is caused by anthropogenic CO2 emissions, the U.S. is only responsible for 15 percent of that, and California’s share is less than 2 percent. Readers of the latest BP Statistical Review of World Energy know that for everyone on earth to consume half as much energy per capita as Americans, global energy production would have to more than double, and that renewables in 2020 accounted for less than 4 percent of all global energy production. This is why China, India, and every other rising economy in the world is developing additional sources of gas, oil and coal as fast as they can, and there is nothing anyone can do about it.
So why are California’s legislators hell-bent on developing renewables?
The most charitable answer to this question is their desire to make California an example of environmental sustainability for the world to follow, and a belief that innovations pioneered in California will be emulated worldwide, delivering fantastic profits to Californian entrepreneurs at the same time as the planet is saved.
The problem with this noble explanation is that to accomplish these high minded objectives, California has been turned into an expensive laboratory, with 40 million captive subjects. While policies that elevate costs for electricity benefit public utilities and tech entrepreneurs, millions of ordinary Californians are driven into poverty. And this ideal, to make California a green beacon for humanity, finds expensive expression in far more than just electricity.
The green lobby in California has not only made electricity barely affordable for low and middle income households, but they have declared war on natural gas. In a state where electricity is four times as expensive as natural gas on an energy-equivalent basis, and in a nation where natural gas has never been as cheap or abundant as it is today, the movement to ban natural gas quietly gathers momentum.
As of November 2020, thirty-nine California cities have already enacted new ordinances limiting natural gas in new construction. The California Energy Commission is considering enacting a statewide ban effective in 2022. With a mandate already in place that requires new vehicle sales to be all-electric by 2035, it is clear that policymakers are determined to turn California into an all-electric, carbon-free state before anyone else, no matter what the cost.
This goal of a carbon-free society in California is also evident in housing policies, based on the theory that the denser California’s urban areas become, the less need for energy to be spent on transportation. While this theory rests on dubious foundations, it is already the primary rationale for countless local and state restrictions on development, which in turn is the primary reason housing is unaffordable in California.
Open land along freeway corridors is plentiful in California, but when attempts to develop it are mired in prohibitively expensive regulations and endless litigation, the only logical place to increase housing stock is within existing cities. The efforts in Orange County by local activists to advocate for this are typical. One such activist organization, People for Housing, announces on their website “Cities that are now on a new path.” They claim recent victories for their city council candidates in Costa Mesa, Huntington Beach, Garden Grove, Santa Ana, and Tustin.
One of the goals of these local housing advocates, echoed in pending state legislation such as Assembly Bill 68, passed in 2019, is to stimulate a “backyard building boom,” whereby homeowners can build new smaller homes in their backyards. Additional state legislation abounds, all of it designed to densify neighborhoods, and absolutely none of it designed to facilitate construction of new single family neighborhoods on open land. Meanwhile, residents who relied on zoning laws to preserve the spacious ambience of their suburbs are stigmatized as NIMBYs, racists, and “deniers.”
There is no effective opposition to California’s drive to confine its residents to existing cities, nor to challenge the move to a carbon-free, all-electric society. Both goals are impractical and extremely expensive. Shorn of the supposedly enlightened motivations behind these goals, their impact is explicitly misanthropic, and it hurts everyone.
The influence of environmental activists is the reason for California’s unaffordable cost-of-living. It is a form of economic oppression, justified on environmental grounds, but also a convenient cover for opportunistic special interests. Along with the high tech industry, the clean power industry, public utilities, real estate investors, and subsidized housing developers, California’s powerful public sector unions are big winners.
With every new regulation, and every time a private enterprise is coopted by a new government agency, more jobs are created in the public sector. This translates into more dues paying union members which results in more political spending by union leadership on the candidates of their choice. At the same time, whenever environmentalist activists block public spending on new infrastructure that might enable more suburban development, that money is redirected to pay and benefit increases for public sector workers.
There is a tremendous symbiosis between California’s economic elite, its environmentalist activists and their allies in the social justice movement, and the unionized public sector. But despite all the rhetoric about helping the disadvantaged, the biggest victims are those Californians who can least afford to fund the bleeding edge.