California Now Home to the Highest Average Annual Residential Energy Costs in the U.S.

The monthly energy updates have been published for May 2021 fuel prices (data from GasBuddy.com) and electricity prices and natural gas prices for March 2021 (price data from the U.S. Energy Information Agency).  As compared to our last month’s report, not only have energy prices continued to rise, but the average annual residential electric bill in California as of March surpassed the average for the rest of the U.S. for the first time. In addition, California continues to be the home of the most expensive gasoline in the entire country.  Given the realities of the July 1, 2021, Senate Bill 1 (2017), “gas tax” increase, California is likely to remain in the poll position on fuel prices.

But what is causing these price movements?  The current policy framework driving up electricity costs was put in place largely on the contention that while rates would likely increase some, rates didn’t really matter.  As articulated in their monthly report, the California Center for Jobs & the Economy recently stated that the California Legislature in “…defending SB 100 (Chapter 312, Statutes of 2018) requiring the state to shift to 100% zero-emissions electricity by 2045, proponents in fact claimed that somewhat higher rates were not a cause of concern, because there is a difference between rates and retail. When it comes to utility bills for residential customers, we are actually the fourth lowest in the United States… The fact that in the course of a decade California went from among the lowest to the 21st highest illustrates again the lack of hard economic analysis in the development of the State’s climate strategies, and more critically in the evaluation of the various measures as they have been rolled out.”

As we have discussed in previous articles, while higher-income households have been able to afford to live in the milder climate coastal areas and experience the economic benefits of lower utility costs, the lower-income interior regions have always had to use more energy for heating and cooling.  In fact, the most recent data from the California Energy Commission indicates that household electricity use ranges up to 76% higher in the interior regions compared to the milder climate coastal areas, and substantially higher when compared against the lowest use county (San Francisco).  The lower-income interior regions consequently have faced a much higher disparate cost effect from the rapidly rising energy rates in the State.

And shouldn’t costs matter? Consider that energy rates have risen dramatically: 64.1% higher for residential, 77.5% higher for commercial, and 128.0% higher for industrial since the beginning of the State’s climate change program.

As Energy In Focus continues to review these figures and numerous third party reports, it is clear that cost impacts continue to rise relative to the rest of the nation and these growing costs continue to impose a disparate burden to the lower wage households who have seen the highest loss of jobs as a result of the COVID-19 state-ordered closures.  

Given that California is now home to the highest primary transportation fuel prices in the nation, it is highly likely that all commodities that Californian’s buy will also go up.  While wealthier Californian’s may be able to weather the increased prices, those hit hardest by the pandemic closures will again suffer the most.  Consider that trucks deliver everything we buy. Gasoline and diesel fuel these trucks.  The increased transportation costs will be applied to everything we buy, so, your trip to the grocery store just got that much more expensive.  

Following are the current energy costs in California, which continue to move in the wrong direction:

California Prices for Gasoline in May are Highest in the Nation, Diesel is Second Highest in the Nation

1. •  The May average price per gallon of regular gasoline in California rose 17 cents from April to $4.16. The California premium above the average for the U.S. other than California ($2.94) rose to $1.22, a 41.4% difference.
2. •  In May, California again had the highest gasoline price among the states and DC. Californians paid $1.47 a gallon more than consumers in Mississippi, the state with the lowest price.
3. •  The May average price per gallon of diesel in California rose 9 cents from April to $4.15. The California premium above the average for the U.S. other than California ($3.10) was $1.05, a 33.9% difference.
4. •  In May, the California price diesel was second highest in the nation, among the states and DC, behind only Hawaii.
5. •  California Residential Electricity Prices in March – 6th Highest in the U.S. – The March Numbers Mark the First Time California Costs Exceeded the Average for all other States
6. •  California average Residential Price for the 12 months ended March 2021 was 20.86 cents/kWh, 64.1% higher than the U.S. average of 12.71 cents/kWh for all states other than California. California’s residential prices remained the 6th highest in the nation.
7. •  California’s average Residential electricity bill for the 12 months ended March 2021, was $1,451, or 46.0% higher ($457) than the comparable bill in 2010 (the year the AB 32 implementation began with the Early Action items). In this same period, the average U.S. (less CA) electricity bill for all the other states grew only 5.9% ($81). The March numbers mark the first time California costs exceeded the average for all other states ($1,446).
8. •  For the 12 months ended March 2021, California’s higher electricity prices translated into Residential ratepayers paying $7.9 billion more than the average ratepayers elsewhere in the U.S. using the same amount of energy.

Note:  Residential bills, however, vary widely by region, with the estimated annual household usage in 2018 as much as 59% higher in the interior regions compared to the milder climate coastal areas.

California Commercial (3rd Highest in the U.S.) and Industrial Electricity Prices (4th Highest in the U.S.) in March

1. •  California average Commercial Price for the 12 months ended March 2021 was 18.09 cents/kWh, 77.5% higher than the U.S. average of 10.19 cents/kWh for all states other than California. California’s commercial prices remained the 3rd highest in the nation and the highest among the contiguous states. Only Alaska and Hawaii had higher commercial prices.
2. •  California average Industrial Price for the 12 months ended March 2021 was 14.68 cents/kWh, 128.0% higher than the U.S. average of 6.44 cents/kWh for all states other than California. California’s industrial prices remained the 4th highest in the nation. Among the contiguous states, only Rhode Island was higher.

For the 12 months ended March 2021, California’s higher electricity prices translated into Commercial & Industrial ratepayers paying $12.0 billion more than ratepayers elsewhere in the U.S, using the same amount of energy. Compared to the lowest rate states, Commercial & Industrial ratepayers paid $15.5 billion more.

California Natural Gas Prices in March

Average prices ($ per thousand cubic feet) for the 12 months ended March 2021 and changes from the previous 12-month period for each end-user: