L A Times Editorial on How to Fight “Skyrocketing Electric Bills” Conceals Hugely Failed California Government Electricity Market Debacles

L A Times Editorial on How to Fight “Skyrocketing Electric Bills” Conceals Hugely Failed California Government Electricity Market Debacles

Essay by Larry Hamlin

The L A Times is proposing that the Government of California take further control of how Californian needs to address its decades long faltering electric energy policies with the absurd claim that additional new state government “Transmission agencies” can provide benefits to the people of California versus investor-owned utilities as described in their editorial shown below.

The Times offers the following “solution” as summarized below.

“You’re not alone if it seems like your electric bill is getting too damn high.

Californians pay some of the highest electric rates in the country. In the last decade households have seen their electricity rates nearly double even while their budgets are squeezed by inflation and rising temperatures from climate change mean they have to use more energy to cool their homes.

And it’s only going to get worse. State greenhouse gas reduction policies are pushing residents to adopt electric cars and appliances that will only increase their electricity consumption. Rate hikes have become bigger and more frequent, rising even faster than inflation for customers of the big three monopoly utility companies whose rates include costs for expensive wildfire mitigation, grid infrastructure projects and disaster-related payouts.”

The Times brilliant solution is that California government be mandated by the states politicians to fix the problems of the state’s chaotic electric system as addressed below.      

“Don’t make customers pay for everything”

“Much of what Californians are charged on their electric bills isn’t for the cost of the power but for other purposes including the operation and maintenance of the grid, projects to reduce wildfires (power lines have sparked some of the state’s worst ones) and energy efficiency programs.

If investor-owned utilities were stripped of their responsibility for much of the spending not directly related to the generation and delivery of electricity, it would reduce the amount they could collect from customers and thus lower electric rates for everyone. One idea proposed as recently as 2022 by state Sen. Josh Becker (D-Menlo Park) is to create a state authority to publicly finance transmission line projects at lower cost.”

Exactly how these on-going and growing necessary costs are to be paid for by the people of California is left completely unaddressed by the Times. Apparently, these costs will just disappear through use of government hidden magic and/or taxes on those businesses, organizations and citizens politically out of favor and expendable to the state’s Democratic party.   

The Times proposal has now transported us back to the nightmare era of AB 1890 known as “The Electric Utility Industry Restructuring Act” which provided for the creation of the “generation of competitive electricity” in California as of March 31,1998 through the development of a California government designed “new electricity market structure”.

This was achieved by mandating investor-owned utilities to sell their reliable cost-effective generation to “independent power producers” who, according to the geniuses in the state legislature, could “lower generation costs” (as hyped by the Times editorial for new “state transmission agencies”) through the “new electricity market structure.”            

The California AB 1890 government designed “new electricity market structure” was in full effect by the year 2000 (meaning that dozens of scheduled and unscheduled rolling blackouts occurred throughout the state impacting millions of people and businesses, that massively higher energy costs were occurring daily and that a completely out of control energy electricity market was in place) with these government driven electricity policy incompetent and disastrous results addressed in ugly detail in the California State Auditor report shown below that was unaddressed by the Times.

The California Department of Water Resources (a state agency with statutory authority to purchase and sell power for the state) was forced to take control away from the California government designed “new electricity market structure” and obtain emergency electrical power for state with the outcome summarized in the audit as follows:

“The new power-purchasing role was an immense challenge that would have been difficult even for an organization with the needed infrastructure in place. Through September 2001 the department had spent nearly $10.7 billion to purchase energy under contract or in the spot market to meet the daily needs of the ratepayers of the three investor-owned utilities. When implementing AB 1X, the department-along with its consultants and the energy advisers appointed by the governor-undertook an effort to sign long-term contracts with power generators in an attempt to calm power prices. Subsequently, the department entered 57 long-term power contracts at a total value of approximately $42.6 billion over the next 10 years.”   

The unplanned for energy spot market increased costs of $10.7 billion dollars and unplanned long-term power contract ten-year commitments of an additional $42.6 billion dollars that were required to bring control to the state of California’s electricity energy debacle represent and reflect the proven incompetent track record of the state of California government actions regarding its role in dealing with the state’s electricity energy market. 

The government of California has been incompetently meddling in the electricity markets in California since 1998 always with the promise of lowering costs or presently falsely hyped as fighting “climate change”.  

As described above the state government energy electricity meddling started with the failed “new electricity market structure” experiment and then evolved into the states mandated use in the year 2006 of nondispatchable and unreliable “renewable energy” as part of the states globally irrelevant “global warming solutions act” which further increased electricity prices and degraded electric system availability and reliability.

The Times proposes that California government once again intervene in the state’s electricity markets and “fix” the problems that it created in the first place. What could possibly go wrong – this time.

Provided below are the detailed records of California governments abysmal results and impact on the states average electricity prices (unaddressed by the Times) which have grown from being the 11th highest in the U.S. in year 2000 (based on EIA data presented below) to being the second highest in the U.S. in 2022 (based on EIA data presented below) and the highest by far in the contiguous U.S. with only the electricity prices in Hawaii (another state experiencing the magic of renewable energy increased costs and lowered reliability) being greater. 

This dismal record of California’s ever rising electrical energy costs (with more to come) was not created by the states investor-owned utilities but by the state governments incompetent mandated energy policy decisions and actions that allowed the states government agencies to dictate and control the state’s energy policy and supply markets during this 22 year-period.

U.S. Energy Information Administration (EIA) year 2022 average electricity price data for California, all 50 states and the U.S. average are shown below.

The EIA U.S. average electricity price in year 2022 was 12.36 cents/kWh compared to California average electricity price of 22.33 cents/kWh with the state’s electricity price 80.6% greater than the U.S. average electricity price.

The EIA U.S. average electricity price in year 2000 was 6.81 cents/kWh compared to the California average electricity price of 9.47 cents/kWh or just 39.06% greater than U.S. electricity price average as shown in detailed EIA average electricity price data obtained here and shown below (average price for each of the 50 states and U.S. average contained in the right most column).

Therefore, between the year 2000 to 2022 California’s average electricity price growth was 2 times greater than the U.S. average electricity price growth during this period while also becoming the highest in the contiguous U.S. 

Additionally, in year 2000 California’s average electricity price was only the 11th highest in the U.S. but in year 2022 California was the 2nd highest in the U.S. with only Hawaii being higher.

Looking at the Western U.S. states (shown below) the comparison of California average electricity prices and these states is even worse than for the contiguous U.S. 

To make comparisons of average electricity prices with the western states easier to view the EIA chart below for the year 2012 is used which presents a single table showing all of the 50 states and U.S. average electricity prices.

The U.S. average electricity price in year 2022 is 12.36 cents/kWh and 9.84 cents/kWh in 2012 with the California average electricity price in these years being 22.33 cents/kWh and 13.50 cents/kWh respectively.

This data establishes that California’s average electricity price growth was 2.5 times greater than the average electricity price growth experienced across the U.S. during this period.

EIA data shows California’s average electricity price grew from 13.5 cents/kWh to 22.33 cents/kWh during this period while the average electricity price of the other 10 Western states only grew from 8.23 cents/kWh to 9.78 cents/kWh during the 2012 to 2022 period.

This data establishes that California’s average electricity price growth was 3.47 times greater than the average electricity price growth experienced by the other 10 western U.S. states during this period

The California governments mind boggling “new electricity market structure” turned a promise to deliver lower costs to customers into a reliability and cost debacle requiring $10.7 billion dollars in unplanned for increased short term power purchases.

Even more significant was the unplanned need for additional firm capacity contracts to restore reliable power amounting to increased costs of $42.6 billion dollars in long term power contracts required for reliability and predictability of the state’s electric system. Californians are still paying off these costs even today.

Further, even after the state governments year 2000 cost and reliability electricity system debacle the state government again decided in 2006 (AB 32 Global Warming Solutions Act) to further meddle in the electric system by mandating unreliable, nondispatchable and costly renewable energy further driving up the state’s electricity costs and jeopardizing electric system reliability once again.

EIA average electricity pricing data for years 2006 (shown below) to 2022 establishes that California’s average electricity price growth climbed by 1.9 times greater growth increase than occurred for the U.S. average electricity price during this same period.

EIA electricity price data for California and the U.S states clearly shows how California’s government meddling in electricity markets has for decades been systematically driving up the state’s electricity prices hugely beyond increases being experienced elsewhere across the U.S.

Yet despite this incredibly flawed California government track record in “fixing” the state’s electricity markets (described above) the Times recommends rewarding the states decades long government massively costly incompetent interference in the California energy and electricity markets by mandating even more government energy and electricity incompetent shenanigans in our future while falsely maligning and scapegoating the state’s “investor-owned” utilities.