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Why do our electricity rates keep growing?

November 5th, 2013 / By: Ed Sztukowski

Renewable energy is not to blame

To hear leaders in the coal, natural gas, and oil industries tell it, renewable energy is the sole reason electricity rates are rising in California.

A report from Californians for Affordable & Reliable Energy (CARE) says solar-friendly policies like the Renewable Portfolio Standard (RPS) and carbon pricing are forcing utilities to raise their electricity rates for consumers.

Considering that CARE is mostly made up of oil industry representatives, their negative positions regarding renewable energy and clean air policies are hardly surprising. Ultimately, CARE's report on rising electricity prices misses the mark.

Electricity rates ARE rising

The one thing CARE gets right in their report is that our electricity rates are rising. The California Energy Commission says rates throughout the state will rise by 26 to 42 percent by 2020.

But is renewable energy to blame?

Hardly. Renewable energy actually makes up a relatively small percentage of utility costs in California. According to the Union of Concerned Scientists, renewable energy made up just 11.3 percent of total utility costs in 2012.

It's true that renewable energy expenses are driven by RPS requirements, which states that utilities must get 33% of their electricity from renewable sources by 2030. To meet those standards, utilities have embarked on large-scale solar array projects that boost their renewable portfolios significantly.

CARE is taking issue with those projects, but ignoring the fact that they're becoming more affordable each year. Since 2009, utility-scale solar projects have fallen in cost by over one-third, and those prices are continuing to drop.

Further decreases in price will only continue to damage CARE's argument that solar is the primary culprit of rising electricity rates. So if CARE is wrong about the source of rising rates, where does the blame actually lie?

It's the grid

Rather than blaming new technologies for rising electricity rates, CARE should re-examine existing issues -- mainly California's expansive and out-of-date electricity grid.

Over time, grid infrastructure has become old and worn down, leading to inefficiencies in electricity transfer, storage, and more. Think of it as a car: without an oil change every now and then, your car can't operate efficiently. You end up spending more money on gasoline because the car isn't functioning to the best of its ability.

Soon, electric utilities throughout California will address growing concern about our aging energy grid and kick off some expensive projects.

According to the Edison Electric Institute, utility companies will spend $1.5 to $2 trillion on infrastructure growth and improvement by 2030. Where will they get that money? From the ratepayers, of course.

Even today, just maintaining our current inefficient power grid costs utilities millions of dollars. The Washington Post reports that as of 2013, grid maintenance costs are 43% higher than they were in 2002.

These high maintenance costs are pushed on ratepayers, but utilities would rather point fingers at renewable energy. That's because drawing attention away from the grid and toward renewables allows them to demonize clean energy technologies. They don't see the huge profits in renewables that they've traditionally gained from fossil fuels, and view the rise of solar as a danger to their business model.

Unfortunately, that is the real goal of oil-backed organizations like CARE. While their public emphasis is on "reliable" energy growth, the fossil fuel industry leaders who make up the organization see solar as a threat, and simply want to maintain business as usual.

"The oil industry's efforts to overturn California's popular clean air standards have been focused on manipulating data and spreading false information," said Bill Magavern, policy director at the Coalition for Clean Air. "They don't get that people are smart enough to know when an oil company says 'clean and reliable energy,' what they really mean is 'keep the status quo so we can destroy competition from clean energy producers.'"

Unless you take action personally, you're likely to continue to see your power bills rise in the future. Solar panels offer a way out, letting you generate your own electricity and reduce your reliance on the increasingly inefficient (and expensive) power grid.

Contact some installation companies today to learn more about how you can start saving and shrink your bills.