A new dispatch from the Cautious Optimism Correspondent for Economic Affairs and Other Egghead Stuff.
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3 MIN READ - Media report: some California monthly power bills higher than rent… but it’s not California government's fault.
Yesterday’s Yahoo!/Benzinga story acknowledges California electricity rates are nearly the highest in the nation and that summer electricity bills are now eclipsing monthly rent payments for many Californians.
Yahoo: ”In recent years, many Californians have noticed a troubling trend: their electricity bills are climbing higher than ever, sometimes surpassing their rent. So, what’s causing this spike, and why are California’s electricity prices now among the highest in the nation, second only to Hawaii?”
”…Residents like Jessica Simpson Nehrer in Borrego Springs feel the squeeze in California. She shared with WSJ that her electricity bill soared to $1,873.90 in June, surpassing her $1,200 rent. Grocery store owner Rodger Gucwa, also in Borrego Springs, is struggling with monthly power bills nearly as high as his rent despite efforts to cut costs.”
But hold on, according to the article it’s not really about California’s green energy policies.
”California stands out with a 47.8% increase in electricity prices during this period, one of the highest in the country. The state's push to transition to green energy is often blamed, but a new report from S&P Global shows that this is only part of the story.”
It’s also Swiss-army-knife-boogeyman “climate change’s” fault.
”Over the past five years, electricity prices have soared across the U.S., particularly in California, as extreme weather fueled by climate change has increased energy demand. Record-high temperatures have kept many Americans indoors, cranking up their air conditioners, which only adds to the burden. Nationwide, average household electricity prices jumped 21.9% between 2018 and 2023, according to a recent report from S&P Global.”
The Economics Correspondent sees multiple holes in this story that CO readers have probably already identified.
1) According to the article itself, household electricity prices have “jumped 21.9% between 2018 and 2023.”
Sure, and according to the St. Louis Federal Reserve the Consumer Price Index (i.e. "inflation") has jumped 22.2% from the end of 2018 to end of 2023.
So national-average electricity prices haven't risen due to climate change, but entirely because of inflation. In fact the national average has slightly lagged inflation.
Doesn’t sound like a climate change is to blame for a nationwide spike that, when accounting for overall inflation, hasn't really happened.
2) Also recall the article mentioned California’s electricity prices have risen much faster… by 47.8%, or more than double the nationwide average.
Since climate change and global warming are supposed to be a “global” phenomena, one would think California and Hawaii wouldn’t be the only states experiencing higher rates due to a fever that we're told envelopes the entire planet.
3) And so long as we’re blaming climate change, a simple search on U.S. states with the highest and lowest electricity rates will help give us some perspective on how universal the problem is. According to saveonenergy.com, the ten states with the highest power rates in May of 2024 are:
Hawaii 44.14 ¢/kWh
California 34.31 ¢/kWh
Massachusetts 28.7 ¢/kWh
Rhode Island 28.09 ¢/kWh
Connecticut 26.76 ¢/kWh
Alaska 25.02 ¢/kWh
New York 23.6 ¢/kWh
New Hampshire 23.01 ¢/kWh
Vermont 22.3 ¢/kWh
Maine 20.48 ¢/kWh
And the tens states with the lowest power rates are:
Utah 11.01 ¢/kWh
Louisiana 11.49 ¢/kWh
Idaho 11.55 ¢/kWh
Oklahoma 11.7 ¢/kWh
Washington 12.16 ¢/kWh
Nebraska 12.22 ¢/kWh
Arkansas 12.27 ¢/kWh
Tennessee 12.46 ¢/kWh
Missouri 12.62 ¢/kWh
Wyoming 12.81 ¢/kWh
The correspondent would also like to add three particularly hot states—Arizona, Florida and Texas—whose rates are far lower than California’s:
Arizona 15.5 ¢/kWh
Florida 13.63 ¢/kWh
Texas 14.74 ¢/kWh
(link to Federal Reserve CPI chart and list of states by power rates available in the comments section)
Now if Yahoo's thesis is to be believed, California’s nosebleed power rates aren’t primarily California’s fault. Global warming is to blame along with the consequence of Americans everywhere cranking up their air conditioners to cope with rising temperatures.
Well according to the climate change theory, it’s not just California that’s supposed to get hotter. Florida and Texas are also very hot states (with a lot more humidity for the A/C to wring out) and Arizona is the hottest of them all. Yet all three states’ power rates per kWh are less than half California’s—far below half.
Meanwhile in what’s probably just a huge coincidence, nine of the ten most expensive states are blue/Democrat. In another huge coincidence, nine of the ten least expensive states are red/Republican.
Evidently climate change targets only Democratic states but skillfully bypasses Republican ones.
Verdict: Power rates in the country as a whole have simply kept place with inflation since 2018, and in red states power rates have risen slower than inflation. But feelgood green energy policies and regulations are heavily to blame not only for Californian’s sharply higher electricity rates/bills, but also those of blue states atop the price list.
The perfectly predictable outcome of consumer stress in heavily Democratic states, which green energy opponents warned of, was easy to see coming. And just as predictably the press has rushed in to paper the story over with damage control.
AI
