Rising Electricity Bills Threaten California Climate Goals – E&E News

Millions of Californians are paying among the highest prices in the country for electricity, a potential threat to the state’s plans to electrify cars and homes as it battles climate change.

Soaring electricity prices for the golden state’s three largest utilities are now at levels more than twice the national average, according to the US Energy Information Administration. Bills are expected to continue to rise as utilities address bushfire risks from their power lines and add electric vehicle charging stations. Taxpayers ultimately fund these costs.

As a result, the country faces a looming crisis, some analysts say. California wants residents to replace gasoline cars and natural gas heaters with electric models. But if energy rates continue to rise, it will be more expensive to deliver EV to the home than filling a gas tank, economists believe.

“It’s a big problem,” said Severin Bornstein, director of the Energy Institute at the University of California, Berkeley Business School. If people voluntarily added electric vehicles and home heaters and then “told their neighbors about the catastrophic electricity bills, that would be a huge problem.”

“Or we will impose electricity and then there will be a huge political backlash,” Bornstein added. “Charging electricity when charging 30 or 40 cents a kilowatt-hour to people would be very expensive.”

The hike in electricity prices comes as California analyzes how to achieve its climate goals, including cutting greenhouse gas emissions 40 percent below 1990 levels by 2030. It wants carbon-neutral electricity by 2045. Before that, it plans California to phase out conventional cars, which would require automakers to offer only zero-emissions models by 2035.

Already, the California Public Utilities Commission (CPUC) Office of Public Defenders said in a Report Last year, it was cheaper to fuel an internal combustion engine car than to charge an electric car in the San Diego Gas & Electric Co. service area.

This may also be the case in areas served by Pacific Gas & Electric (PG&E) and Southern California Edison Co (SCE) by the end of this decade, the analysis said. Its calculations were based on the cost of gasoline early last year, when California prices averaged about $3.27 a gallon.

All utilities offer different options for charging electric vehicles, and San Diego Gas & Electric (SDG&E) overnight rates are 10 cents per kilowatt-hour plus a fee of $16 per month. CPUC’s general attorney’s office said it looked at the overall rates to highlight the need for an electricity rate reform.

“If you want people to make big investments in electricity, there has to be some kind of reward for them,” Mark Tony, executive director of the Utility Repair Network, at the CPUC recently said. Workshop on electricity bills. “And the bonus should be that we make electricity prices seem very reasonable compared to the alternatives.”

He said the state did not have a “strategy to do this now”.

The three largest utilities provide power to more than two-thirds of California’s population. PG&E said its average bill in March was $165 for electricity. This does not include natural gas. SCE said its average bill is about $149. Most of its customers get their natural gas separately. Both PG&E and SCE said these amounts were 500 kWh.

San Diego Gas & Electric said its average electric bill was $150, not counting natural gas. That was for 400 kWh, making it the most expensive utility.

Californians who use air conditioners often pay more. The average customer in a hot climate would spend $186 per month on electricity with PG&E or SCE, and $223 per month with SDG&E, according to CPUC estimates for 2022. That will rise sharply by 2030, she said.

Many other large electrical utilities have much lower average bills. Georgia’s total energy bill for the same PG&E and SCE use is about $66, according to the Georgia Public Service Commission. The average monthly housing bill in February was about $89, said Commonwealth Edison, or ComEd, in Chicago and northern Illinois. The amount of use is not specified. Duke Energy Corp. said its average bill for all-electric customers in North Carolina in 2021 was $103 a month, twice the consumption of average PG&E’s and SCE bills.

Average bills at one location were higher than in California, but included higher electricity usage. National Grid said a customer in Massachusetts will pay about $179 for 600 kWh.

Climate impacts push the bills up

CPUC said it is studying how to curb future increases in electricity bills. It comes as utilities try to adapt to the effects of climate change, such as drought-induced wildfires that can be ignited by igniting power lines.

Utilities say this raises their bills. SDG & E recently Tell Customers say about 40 percent of what they pay is for “climate-related expenses,” including laying power lines underground, building electric vehicle charging stations and adding small networks “to keep vital resources running during extreme weather.”

The tool said it could not quantify how much each of these efforts contribute to its rates, which are among the highest in the country.

One of the biggest costs driving up bills is the tab for preventing catastrophic wildfires, which have plagued the state where drought and rising heat have produced dry, flammable trees and trees. The CPUC said wildfire costs add between $8 and $12 per month to the average housing bill, depending on utilities. It is expected to rise to $14.50 per month in 2030.

The San Diego utility spent several billion dollars on system upgrades after a devastating wildfire in October 2007. But these costs typically don’t emerge until several years after a fire has started, when the infrastructure is finally established. California’s three major utilities have spent billions of dollars on wildfire prevention in recent years.

However, the utilities did not clearly state how much wildfire costs they added to monthly bills, according to a 2021 report from Next 10. The researchers – from the University of California, Berkeley’s Haas School of Business – said they were unable to obtain the spending data related to the wildfires.

More information “Vital as bushfire mitigation costs are likely to be a major driver of price hikes in the near future” Report He said.

State policies also raise electricity costs. CPU specified At least 17 states are raising the price of power. These include legislative measures that increase the share of electricity that comes from renewable energy sources and energy efficiency programs.

Bigger bills outpacing inflation

Since 2013, rates have increased by 48% for SDG&E customers, 37% for PG&E rate advocates and 6% for those with SCE. This is much faster than inflation, according to the CPUC. These calculations were made before those utilities raised prices in January.

In addition to the costs of the wildfires, utilities have blamed higher bills on factors such as higher natural gas prices and a growth in the percentage of people who get help paying their bills. Programs to assist low-income rate payers are funded by other clients.

CPUC in February brought together experts to share ideas. These include transferring some costs to the state budget, including programs that help low-income people pay their bills.

Some argue that the state should pay more to reduce bushfire risk and damage.

“The state gets in on all kinds of other catastrophic damage and helps people,” said Bornstein, an economist at the University of California, Berkeley. “I don’t understand why the distinction is that because the tree is close to a power line, we pay to lower it through electricity rates. But all the other trees we need to deal with…the state budget.”

California also needs to weigh the costs and benefits of improving resilience to some wildfires, which can be less costly than stopping them all, said Michael Warra, director of Stanford University’s Climate and Energy Program. For example, he said, removing plants that can burn may be less costly and more effective than laying power lines underground.

“If the prescribed burn procedure was more cost-effective…well, maybe we should do that instead,” Warra said. And if the state does the prescribed burning, it will “likely be paid for from taxes” while laying power lines underground “is to be paid for from electricity prices,” which hurts low-income people even more.

There are also calls for more comprehensive price reform that moves away from the current model of charging customers for the amount of electricity they use, while including infrastructure costs. Instead, they will pay a flat monthly rate for the fixed costs of the utilities, in addition to the actual generation costs of the electricity used.

Electric car chargers, solar pump bills

Utilities also argue that the number of customers adding rooftop solar arrays is driving fixed costs to traditional customers.

It happens, they said, because solar customers benefit from net energy metering, which gives homeowners credits for sending renewable energy back to the grid.

The utilities said the cost transfer is $3.4 billion annually and “increasing” on file with the CPUC. This is partly because solar customers get a 20-year agreement through the net energy metering program when they install rooftop panels. The people who add them now get paid for the power they send to the grid at the current retail price, about 30 cents. But this amount will rise with the increase in electricity prices.

CPUC is reviewing, and potentially changing, the net metering software. It’s a hotly debated issue, with solar advocates arguing that proposed options such as adding large flat fees for solar customers only could stymie renewable energy growth.

The California Solar Energy and Storage Association (CALSSA) said that could carry over to other areas of the clean energy sector, such as energy storage.

“CALSSA’s goal is to build one million solar-charged batteries by 2030,” Bernadette Del Chiaro, CEO, in an email. “We need to grow the battery market just as we developed the PV market fifteen years ago – consistently, consistently and well-built. This leads to economies of scale, drives markets globally, and standardizes new technologies needed to combat climate change and reduce fossil fuel use.”

The group prefers to slowly drop the amount of money solar customers earn through the net metering program. By 2030, it will fall from 30 cents to 6 cents under CALSSA’s proposal, said Brad Hefner, the group’s director of policy.

The CPUC report said if California pushes to meet its greenhouse gas reduction goals, electricity demand in 2030 could rise by about 13 percent. Hefner argued that the increase in electricity consumption would help lower rates.

Scott Kreider, senior vice president of customer services and external affairs at SDG&E.

“When we ask customers to adopt more electricity for buildings and in their homes, the current structure is not sustainable,” Crider said at a CPUC workshop in February. “Simply maintaining the status quo is neither feasible nor affordable for customers.”

This story also appears in Energy Wear.

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