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California Energy Dreaming Costs Consumers Billions

Dan McSwain , San Diego Union Tribue

Federal data indicates Californians paid $171 billion in higher costs for power over the last 20 years, compared to the national average.

I have a friend who periodically gets into trouble. Whenever we review the history of an episode, his explanation is always the same: “It seemed like a good idea at the time.”

Such hindsight leaps to mind as California lawmakers once again overhaul the state’s electricity industry. History suggests that consumers will pay dearly to see how this movie ends, regardless of whether the result justifies the price of admission.

Federal data indicates Californians paid $171 billion in higher costs for power over the last 20 years, compared to the national average. For perspective, this works out to roughly $12,300 per household, but bear in mind the total includes residential, industrial, commercial and government usage.

Those two decades included the 1996 partial deregulation, resulting power crisis and partial re-regulation in 2001, followed by a historic plunge into green energy that began in 2006.

Each policy seemed like a good idea at the time, to somebody.

Between fuel types and the mix of industry and residential consumption, there’s nothing simple about explaining why California or, say, New York pays vastly more for energy than another large state like Texas.

Still, electric utilities are highly regulated or publicly owned, so the hand of government is heavy. If you pay less or more than the national average, state regulators and lawmakers get the credit or blame.

And yet, unlike my reflective buddy, officials don’t routinely go back and examine how their decisions turned out.

Before we unpack the last, expensive 20 years, let’s glimpse the future.

On Sept. 11, the Legislature passed Senate Bill 350. It requires utilities to get 50 percent of their power by 2030 from so-called renewable energy, about double today’s level.

For good measure, California will somehow electrify its entire transportation system, the nation’s largest.

In addition, the bill will “double the efficiency goals” for all homes and commercial buildings in the state by 2030. Does this mean we all must insulate walls and replace windows until consumption falls by half? The bill isn’t clear, but this herculean task presumably will fall to property owners.

If it seems like I have almost no clue what this bill will really do, that’s because nobody else does, either. In typical Sacramento fashion, lawmakers crammed it together late in the session.

Worried about catastrophic costs for low-income drivers, Assembly Democrats stripped out Gov. Jerry Brown’s promise to cut petroleum use by 50 percent. Brown has indicated he will sign the bill anyway and work through administrative channels to overhaul the gasoline industry.

Similarly, lawmakers delegated the nitty-gritty of what’s left of SB 350 to a variety of state agencies. They include the Public Utilities Commission, which is the subject of a criminal investigation into contacts between regulators and utility executives.

As for intentions and good ideas, California seeks no less than to save the planet from climate change by slashing use of fossil fuels.

We’ll see how that turns out. But we can assume it will be expensive.

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