Last week, the state’s grid operator, the California Independent System Operator, issued a “flex alert” that asked the state’s consumers to reduce their power use “to reduce stress on the grid and avoid power outages.”
CAISO’s warning of impending electricity shortages heralds another blackout-riddled summer at the same time California’s electricity prices are skyrocketing.
In 2020, California’s electricity prices jumped by 7.5%, making it the biggest price increase of any state in the country last year and nearly seven times the increase that was seen in the United States as a whole. According to data from the Energy Information Administration, the all-sector price of electricity in California last year jumped to 18.15 cents per kilowatt-hour, which means that Californians are now paying about 70% more for their electricity than the U.S. average all-sector rate of 10.66 cents per kWh. Even more worrisome: California’s electricity rates are expected to soar over the next decade. (More on that in a moment.)
The surging cost of electricity will increase the energy burden being borne by low- and middle-income Californians. High energy costs have a particularly regressive effect in California, which has the highest poverty rate – and some of the highest electricity prices – in the country. In 2020, California’s all-sector electricity prices were the third-highest in the continental U.S., behind only Rhode Island (18.55 cents per kWh) and Connecticut (19.19 cents per kWh.)
Before going further, let me state the obvious: California policymakers are providing a case study in how not to manage an electric grid. Furthermore, that case study shows what could happen if policymakers at the state and federal levels decide to follow California’s radical decarbonization mandates, which include a requirement for 100% zero-carbon electricity by 2045 and an economy-wide goal of carbon neutrality by 2045.
Even though the state’s tattered electric grid can barely meet existing demand – and more rolling blackouts are almost certain this summer – California continues to pile bad policy on top of bad policy. The state has banned the future sale of cars powered by internal combustion engines which will result in dramatic increases in electricity demand and will require, according to a recent report by the California Energy Commission, the installation of 1.2 million new EV charging stations by 2030.