With utility prices pressuring family budgets in California, some are questioning the role played by “hidden taxes” derived from the state’s climate mandates.
These policies are derived from the state’s goals of achieving 90 percent “clean electricity” and a carbon-neutral economy by 2045, as defined by legislation passed in 2022.
“These energy mandates jacked up utility rates,” Assembly Minority Leader James Gallagher told The Epoch Times on Feb. 26. “All of this stuff has a cost.”
Californians paid about 67 percent more than the national average for electricity in 2022 and about 30 percent higher for natural gas, based on median prices. Some Golden State residents pay as much as five times the rate per kilowatt hour charged in the lowest-priced areas in the country.
Utility rates for some customers have skyrocketed by 127 percent since 2013, with 11 increases since 2019. Currently, more are under consideration by the California Public Utilities Commission, which could cause another 14 percent spike this year.
A 2023 study conducted by The Transparency Foundation, a nonpartisan, nonprofit organization headquartered in San Diego, found that $4.5 billion in California fees and taxes associated with pursuing climate-related agendas are causing consumer bills to increase by at least one-third and up to one-half. Some experts estimate the cost of the mandates borne by consumers to be in the high hundreds of billions—and potentially trillions—of dollars.
“The public has a right to know that they are being forced to pay higher utility rates than they should be paying—and policymakers need to take immediate action to provide relief,” Carl DeMaio, chairman of the foundation, said in a statement accompanying the study. “It is clear that California politicians are trying to force residents to finance the high costs of California’s early implementation of the controversial Green New Deal transition—and rates will likely quadruple within the next decade if this misguided transition continues.”
Rate increase requests to the state’s utility commission submitted by Pacific Gas and Electric in 2023 confirm the additional cost of complying with the state’s policies, with the utility company saying those added costs are driven by “the impact of the state’s decarbonization strategy.”
Blaming past decisions for the significant increases, Mr. DeMaio said politicians have the power to bring relief to consumers by reversing course.
“There are many ways state politicians can undo the damage they’ve done—but they have to act quickly,” he said in the statement. “I doubt they will act, however, without a substantial revolt by the public—and that will take a massive public education effort.”
As more mandates are implemented, including requiring vehicles sold in the state to be zero-emission by 2035 and the ban on the sale of natural gas appliances for homes and businesses effective in 2030, rates will continue to increase along with the demand that is forced onto the power grid, according to the study.
Additionally, all homes and businesses that exceed levels deemed appropriate by state-appointed regulators are charged a 25 percent tax for “high usage.”
Researchers additionally noted that regulations capping profit for utility companies don’t keep prices low—because costs for climate mandates are recouped by rate increase approvals.
“This is almost certainly the reason why utilities remain silent about the true drivers of cost increases to ratepayers,” researchers wrote in the report.
Mr. Gallagher agreed and said the net result is more profits for companies at consumer expense.
“They’re getting a guaranteed return on that investment,” Mr. Gallagher said.
Supply restrictions that limit natural gas and nuclear power production are further affecting consumers’ pocketbooks, according to the study, by forcing utilities to purchase power and fuel from other states.
Natural gas prices shot up approximately five-fold from February 2022 to January 2023, a shock to consumers that the utility commission said its investigating.
“It is essential that ratepayers and the [utility commission] acquire a full explanation of the root causes of the extraordinary high natural gas prices ... that are unsustainable,” Commissioner Genevieve Shiroma said in a March 2023 statement. “It is also essential that the [commission] determine if there is more that we can do to provide relief and understand whether other regulatory entities have the authority to do more.”
While the state was once a net exporter of natural gas, about 85 percent of the fuel used in the state is now imported due to bans on oil and gas production, the report found.
Cap-and-trade taxes that charge companies for emissions also increase the cost of energy, as all fees are passed on to consumers, according to experts.
“All of this stuff we’ve been doing on climate is super-expensive, and it’s just going to get more expensive,” Mr. Gallagher said. “It’s going to make us less efficient.”
Policies focusing on wind and solar production are also affecting consumers, as the power produced is more costly and less reliable, according to the report.
At night and when the wind is not blowing, the state relies on natural gas to power its electric grid, as evidenced by the energy supply dashboard maintained by the California Independent System Operator.
Additionally, poor forest management is causing utility prices to spike and is leading to more carbon emissions than are being saved by the state’s climate mandates, according to experts.
The U.S. Department of the Interior estimated that approximately 68 million tons of carbon emissions were produced by wildfires in 2018.
A study from the University of Berkeley’s forests program found that forests in the state with high levels of dead trees because of high density and limited management are reducing carbon sequestration—the process by which carbon is removed from the atmosphere by natural means—capacities and increasing the risk of wildfires.
Spending more on forest management to reduce fire danger is an option that some believe could prove more efficient and effective at reducing emissions.
“There are ways you can reduce carbon emissions at a lower cost, but the Democrats have chosen the most costly carbon reduction plan, and we’re all paying the price,” Mr. Gallagher said. “Their way of dealing with it is to make you pay as much as possible with minimal carbon reduction.”
