The monthly energy updates have been published for September 2020 fuel prices (data from GasBuddy.com) and electricity prices and natural gas prices for July 2020 (price data from the U.S. Energy Information Agency). As we look forward to the green policies that are being proposed, such as Governor Gavin Newsom’s recent proposal to ban the internal combustion engine by 2035, the full-complement of the current and proposed policies may likely have a crippling effect on California’s energy costs and economy.

The most recent energy costs data shows a sustained rise in California energy prices compared to the rest of the nation. The Golden State passes two unfortunate mileposts with this month’s data – residential electricity prices rose to the 6th highest (up from 7th highest) in the nation, and industrial prices to the 4th highest (up from 5th highest). Commercial prices remained at the 3rd highest.

While understanding what it will really take for California to get to a 100% renewable future has been a bit of a wild guess, we are now beginning to see a picture emerge.

The California Energy Commission (CEC) along with the California Public Utilities Commission (CPUC) and California Air Resources Board (CARB) produced the SB 100 Joint Agency Report, which suggests that to go 100 percent green will come at an added cost of between $66 billion and $74 billion for electrical infrastructure. On average, the draft report suggests that consumers will pay an extra $0.16 kWh. The report is silent on transmission planning, so there would likely be a massive additional cost to add the needed transmission upgrades – costs unknown – but expect it to be in the many billions of dollars.

Governor Newsom’s recent call for CARB to establish regulations requiring that all new cars and passenger trucks sold in California in 2035 be zero-emission vehicles (ZEVs) led CARB to release a preliminary report that says California will need to spend $15 billion to $30 billion in the next five years as a first step toward achieving the Newsom goal. In CARB’s draft 145-page report “2020 Mobile Source Strategy,” the agency says that the needed spending would not only move California toward meeting Newsom’s proposal, but also California’s broader climate goals and air quality standards.

President John F. Kennedy once famously pronounced: “We all cherish our children’s future.” Has California forgotten that quote? Consider the impact of these soaring costs, the impact to consumers, today’s children, and their future. Yes, it is in the name of climate change, but at any cost? Or should there be a moderated approach that sets broad emissions goals without picking technology winners? One that that will not forfeit the financial future of today’s children in the form of exacerbated energy costs for generations to come?

In public testimony before the California Legislature, Edward Randolph, Director of Energy Policy at the CPUC, told legislative members that for every $1 billion in investment by the in-state utilities, that translates into a seven percent increase in electricity rates to consumers. In a discussion last month to the Independent Energy Producer’s Association’s, a key California electricity industry group, Randolph said that the hardening the grid against future fire dangers as mandated by legislation, would result in rate increases of between 20 to 40 percent for the in-state utilities over the next two years.

How much can ratepayers really handle, and will California policy makers insist that getting to 100 percent green should happen at any cost? Will consumers react and speak up and out about these looming costs? This is the critical discussion that legislators and policy makers must have in 2021.

Following are the current energy costs in California, which continue to move in the wrong direction – for all ratepayer classes:

California Prices for Gasoline (2nd Highest in the US) and Diesel (2nd Highest in the US) in September

  1. •  The September average price per gallon of regular gasoline in California rose $0.01 from August to $3.23. The California premium above the average for the US other than California ($2.11) rose to $1.12, a 52.9 percent difference.
  2. •  In September, California had the 2nd highest gasoline price among the states and DC, behind only Hawaii. Californians paid $1.38 a gallon more than consumers in Mississippi, the state with the lowest price.
  3. •  The September average price per gallon of diesel in California eased $0.01 from August to $3.36. The California premium above the average for the US other than California ($2.34) rose to $1.02, a 43.6 percent difference.
  4. •  In September, California had the 2nd highest diesel price among the states and DC, behind only Hawaii.

California Residential Electricity Prices in July – 6th Highest in the US

  1. •  California average Residential Price for the 12 months ended July 2020 was 19.64 cents/kWh, 55.5 percent higher than the US average of 12.63 cents/kWh for all states other than California. California’s residential prices rose to the 6th highest in the nation.
  2. •  For the 12 months ended July 2020, the average annual Residential electricity bill in California was $1,284, or 29.2 percent higher ($290) than the comparable bill in 2010 (the year the AB 32 implementation began with the Early Action items). In this same period, the average US (less CA) electricity bill for all the other states grew only 2.9 percent ($40).
  3. •  Note: Residential bills vary widely by region, with the estimated annual household usage in 2018 as much as 59 percent higher in the interior regions compared to the milder climate coastal areas.

For the 12 months ended July 2020, California’s higher electricity prices translated into Residential ratepayers paying $6.3 billion more than the average ratepayers elsewhere in the US using the same amount of energy.

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

  1. •  California average Commercial Price for the 12 months ended July 2020 was 17.30 cents/kWh, 72.5 percent higher than the U.S. average of 10.03 cents/kWh for all states other than California. California’s commercial prices remained the 3rd highest in the nation.
  2. •  California average Industrial Price for the 12 months ended July 2020 was 14.06 cents/kWh, 121.8% higher than the US average of 6.34 cents/kWh for all states other than California. California’s industrial prices rose to the 4th highest in the nation.

For the 12 months ended July 2020, California’s higher electricity prices translated into Commercial & Industrial ratepayers paying $11.6 billion more than ratepayers elsewhere in the U.S., using the same amount of energy.

California Natural Gas Prices in July

Average prices ($ per thousand cubic feet) for the 12 months ended July 2020 and changes from the previous 12-month period for each end user:

Chart of California energy costs