With oil prices falling by 45 percent in the last year, the California Public Utilities Commission (PUC) just decided the way utilities priced energy for 100 years is wrong and intend to mandate that 70 percent of Californians pay much more for energy.
The PUC “time-of-use” electricity pricing will also disproportionately increase residential energy costs on Democrat voters to pay for more wildly expensive renewable energy.
Established in 2002, accelerated in 2006 and expanded in 2011, California’s Renewables Portfolio Standard (RPS) is the most ambitious renewables requirement in the United States. The RPS program is trying to set a worldwide standard by requiring investor-owned utilities, electric service providers, and municipal power companies to double California’s percentage of “renewable” electric power from 18.8% to 33% over the next five years. Gov. Brown wants over half of the state’s power coming from renewable sources by 2030.
The “capacity factor” for direct costs of producing electricity from wind is 4.2 times and solar is 9 times more expensive than natural gas. But since renewables are very “intermittent and often non-dispatchable,” due to variations in wind and sunlight, the full renewables cost must also include indirect “stand-by” costs for fossil fuel capacity.
The comparative “combined cost” for wind is 12.3 times and for solar 33.8 times as expensive as natural gas power generation. The US, Germany and the UK as the world’s renewable leaders have converted 5.8 percent of their total power generation to renewable sources since 2002. The “combined cost” for this renewables initiative was $500 billion. But had conventional natural gas technology been used for the equivalent 31 giga watts of power, the combined cost would have been $31 billion, 1/16 as much.
To pay for the tremendously higher cost for renewables, the PUC already pushed up commercial and industrial electric to 11.9 cents per kilo-watt hour, the highest levels in the continental US. Given that manufacturing energy costs average about 150 percent more than labor costs nationally, the PUC cannot raise business rates without further costing California large numbers of manufacturing jobs. The stalled-out manufacturing sector since 2010 helps explain why California already has the highest poverty rate in America at 16.8 percent, according to the American Community Survey.
To pay for California’s next big push in renewables, the PUC staff just proposed a radical redesign of how California residential customers pay for energy. If upheld by a full PUC board vote, the policy change would abandon the fixed rate pricing structure for residential customers and implement time-of-use (TOU) electricity pricing that will charge different electrical rates for use of appliances based on the time of day.
TOU was immediately hailed by The Environmental Defense Fund as sending “the right signals to both utilities and consumers” that there should be a punitive higher cost for residential customers using energy at peak demand periods during the day.
But Evan Gillespie, director of Sierra Clubs “My Generation Campaign” said: “This proposal overhauls a more equitable system that was put in place to protect customers since the previous decade’s energy crisis. It jacks up bills for low income customers, lets energy hogs off the hook, and will slow the transition to clean energy. Meeting our climate goals just got harder. If you’re a utility, it’s everything you ever wanted.”
What the Sierra Club is worried about is the Ontario, Canada experience when the province converted to residential time-of-use pricing. From a fixed 6.5 cents per kilowatt hour rate, residential customers, beginning in 2011, were subjected to almost a doubling of electrical costs to 11.7 cents per kilowatt hour weekdays from 11 a.m. to 5 p.m.
Californians disproportionately impacted by the PUC’s new time-of-use energy rates to pay for more renewables will be the elderly, unemployed, mothers with young children, and the infirm that do not go to work each day. These lower and fixed income residents that traditionally vote disproportionately for Democrats will not be happy when they must turn off air conditioning, lights, and television or pay exorbitant rates for renewables.